Some cheer for new car buyers but not for long -Singapore

Some cheer for new car buyers but not for long  -Singapore

Industry players say cut in COE numbers will up premiums
By Christopher Tan, Senior Correspondent

FOLLOWING cuts announced yesterday to road taxes and registration fees, car industry players expect buyers to be happier initially, although car prices may not necessarily fall in the long term.
‘Buying a car now will probably save you some bucks compared to buying next year,’ said Motor Traders Association president Michael Wong, referring to shrinking COE supplies ahead, which would push premiums up.

But the 15-per-cent cut in road tax taking effect from July will cheer new buyers and existing car owners alike.

The road tax cut is meant to offset the addition of 16 ERP gantries coming up this year, bringing the total in operation to 71.

Those who drive more powerful ‘green’ cars, like hybrid sedans, could enjoy savings of around 35 per cent on road taxes under the new plan.

Mr Mark Choong, managing director of Toyota distributor Borneo Motors, said this would make bigger hybrids more attractive.

TOO AGGRESSIVE
‘The reason the 50-cent increases were not effective was that there was no real alternative to driving. But with all the plans to improve public transport now, you may not need to go for $1 increases.” - MR BERNARD TAY, Automobile Association of Singapore president

‘One of the main issues with these cars is the high road tax,’ he said. ‘Buyers feel they’re being punished.’

Besides the road tax reduction, which will cost Government coffers $110 million a year, car buyers can look forward to a 10 percentage point cut on a car’s Additional Registration Fee (ARF) - the main car tax.

That translates to a savings of $1,650 for a car like a Toyota Corolla and $5,000 for a luxurious Mercedes E-class.

But Automobile Association of Singapore president Bernard Tay said the registration fees could have been cut more.

He also said the decision to raise future ERP prices by at least $1 at a time - up from the current increment of 50 cents - was too aggressive.

‘The reason the 50-cent increases were not effective was that there was no real alternative to driving.

‘But with all the plans to improve public transport now, you may not need to go for $1 increases,’ he said.

While the ARF cut will help buyers save money up front, owners will get back less when they eventually scrap their cars. This is because the scrap rebate is based on the ARF.

While most motor traders welcome the tax cuts, they said a decision announced yesterday by Transport Minister Raymond Lim to limit the growth of the number of new cars on the road to 1.5 per cent annually could drive COE prices up. The old rate, in place since 1990, was 3 per cent.

Motor Traders Association’s Mr Wong said the cut was ’steep’, and reckoned car COE premiums would eventually rise to the $30,000-$40,000 region - from around $14,000 now. Car dealers said this could have a profound effect on the popularity of certain makes.

Singapore Vehicle Traders Association president Neo Nam Heng said sales of high-end cars will be least affected, while a $5,000 increase in COE rates could wipe out ‘one third’ of entry-level models.

This trend emerged in the mid-1990s, when COE prices shot to as high as $110,000. Back then, Mercedes-Benz was a bestseller with an unprecedented market share of up to 14 per cent. It is now back to more earthy levels of 4-5 per cent.

The COE back then cost much more than the car itself, pricing many ordinary buyers out.

Going down
ROAD TAX

Road taxes will be cut by 15 per cent for all vehicles from July. Motorists will save $110 million.
The owner of a $30,000 0.8 litre Chery QQ will pay $354 a year instead of $417, saving $63.

For a 1.6 litre Toyota Corolla, the tax will go down from $874 to $743, saving $131.

At the other end of the scale, the owner of a $1.5 million 6.75 litre Rolls-Royce Phantom will pay $8,248 instead of $9,704, saving $1,456.

Owners of green cars will benefit too. For example, road tax for a Lexus RX400h, which has a 3.3 litre engine and two electric motors, will be $2,870 - 36 per cent less than the current $4,482.
ADDITIONAL REGISTRATION FEE

The Additional Registration Fee for new cars will be lowered from 110 per cent of the open market value to 100 per cent from March. The Government will forgo $200 million in revenue.

This translates to a possible cut in price of about $1,600 for a car like a Toyota Corolla and $5,000 for a luxurious Mercedes E-class.
Source : Straits Times  - 31 Jan 2008

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More cars causing jam, so Singapore ERP changes a must

More cars causing jam, so Singapore ERP changes a must

Current system coming under strain after 10 years, says Transport Minister

By Goh Chin Lian
ENSURING SMOOTH FLOW: Following the opening of the Kallang-Paya Lebar Expressway’s maiden 3km stretch from Sims Avenue to Fort Road in the East Coast Parkway last October, the rest of the KPE will open on Sept 20 this year. But even with the addition of new expressways, motorists are not assured of smooth travel without ERP charges. — PHOTO: LIANHE ZAOBAO

HAVING paid the Electronic Road Pricing (ERP) charges, some motorists still find themselves still stuck in a jam on roads and expressways here.
Transport Minister Raymond Lim said yesterday that this happens because there are many more cars on the road today than 10 years ago when the ERP system was introduced.

‘Our ERP system has served us well, but it is coming under strain,’ said Mr Lim.

Cars are also used more intensively here, clocking 21,000km a year on average, compared to 9,100km in London.

Also, the 50-cent increases to ERP rates are no longer enough to keep traffic going, seeing as how after it went up nine times in 2006, another 25 rate hikes were needed last year.

The new changes announced yesterday aim to fix this problem:
ERP will kick in much earlier under a new formula;

The basic ERP charge will go up from July to $2, from $1 now, and each subsequent jump will be $1, instead of 50 cents;

Sixteen more gantries will be put up, all to help ease congestion in the city area as well as on major roads islandwide.
Currently, the gantries go active once the speed of half the motorists travelling on a particular stretch over a 30-minute period falls below the optimal level of 45kmh for expressways and 20kmh for major roads.

However, in practice, many motorists will be travelling far slower. For example, speeds measured from 7.30am to 8am on a stretch of the Pan-Island Expressway this month showed that up to 38 per cent of the motorists were actually travelling below 45kmh, despite paying the ERP.

‘This also explains why there is at times a disconnect between what the Land Transport Authority says and motorists’ actual driving experience,’ said Mr Lim.

Under the new formula, ERP charges will kick in when, in line with international practice, just over 15 per cent of vehicles fall below ideal speeds.

So, at least 85 per cent of motorists will be assured of smooth travel when they pay the ERP charges,Mr Lim said.

Mr Lim expects that with the higher basic charge and larger increments, rate changes will be less frequent.

The new formula and higher charges will be phased in to give people time to adjust.

They will start in July in the Central Business District (CBD) and Orchard Road, after more bus and train trips come on line, and then to other roads in due time.

The number of gantries will also go up in phases, from 55 now, to 60 in April, 65 in July and 71 in November.

The focus is on the city area. Speeds on major roads in the CBD have fallen by over 25 per cent, from five years ago.

To cross major junctions, say, between North Bridge Road and Bras Basah Road, motorists must wait for three or more traffic light changes.

So, ERP will be used to discourage those motorists who are just passing through the already packed Suntec City, Bugis and Marina Square shopping areas in the evenings, and on Saturdays. They make up a third of the traffic now.

The ERP changes will have an effect on motorists like retiree William Chan, 65.

He said: ‘If ERP prices keep rising, we may switch to public transport, but we’ll still retain the option of driving to places that are far away.’

Others, like manager Chua Xin Kai, 28, will not make a switch - yet.

‘I’m paying so much for the car and after driving for 10 years, I am just lazy to take public transport. Maybe when I have to scrap my car in three years, I’ll reconsider.’

Until then, the Government expects to collect from such motorists $70 million more a year as a result of the changes.

And to show that this is not an excuse to raise revenue, but really to curb congestion, road taxes will be cut 15 per cent to the tune of about $110 million.

Mr Lim said: ‘If motorists were to drive less, the Government would be happy to collect less ERP revenue.’
ERP changes
April 7: Five gantries in Upper Bukit Timah Road, Toa Payoh Lorong 6, Upper Boon Keng Road, Geylang Bahru Road and Kallang Bahru Road will be switched on from 7.30am to 9.30am on weekdays.

July 7: Five gantries along the Singapore River, from Clemenceau Avenue to Fullerton Road, will be switched on from 5pm to 8pm on weekdays.
Two of them, in Eu Tong Sen Street and Fullerton Road (towards Esplanade Drive), will operate on Saturday from 10am to 8pm.

ERP operation hours on weekdays will also start earlier for the Central Business District, at 7am, and Orchard Road, at 10am.

New ERP formula, including the possibility of a $1 rate increase, will apply to these roads.
Nov 3: Six gantries will be switched on in Commonwealth Avenue, Jalan Bukit Merah, Alexandra Road, Ayer Rajah Expressway (west-bound, near Alexandra Road), Pan-Island Expressway (west-bound, near Eunos) and Serangoon Road.
New formula will apply to more roads with gantries, including in such areas as Toa Payoh, Dunearn Road and Bendemeer Road.
February 2009: New formula will apply on all roads with gantries.
THE ONLY WAY OUT

‘Without ERP, Singaporeans would be spending many hours in traffic snarls, just like people in Tokyo, Los Angeles and many other US cities, who pay for congestion, not with their wallets, but with the time that they have lost, stuck in traffic gridlock.’

TRANSPORT MINISTER RAYMOND LIM

Road pricing through the years
1975
The first road pricing scheme, known as the Area Licensing Scheme (ALS), is introduced.

This scheme covers the more congested parts of the Central Business District, designated as the Restricted Zone.

Cars with three or more passengers, excluding the driver, are exempted.

Motorists must buy a paper licence at $3 a day, before passing through control points on the roads, monitored by enforcement personnel.

Operations hours are from 7.30am to 9.30am daily, except Sundays and public holidays. It is later extended to 10.15am.

JUNE 1989

The scheme is extended to evening peak hours, from 4.30pm to 7pm on weekdays, following rapid growth in vehicle population.

January 1994

Restricted hours are further extended to 10.15am to 4.30pm on weekdays and 10.15am to 3pm (later to 2pm) on Saturdays. Car pools are abolished because private cars are picking up bus commuters.

SEPTEMBER 1998

Electronic Road Pricing (ERP) system replaces the manual ALS, starting with 33 gantries.

SEPTEMBER 1999

ERP is extended to some key roads beyond the Restricted Zone.

AUGUST 2005

Evening ERP kicks in on the Central Expressway. In the Orchard Road area, more gantries are introduced and operation hours are extended to 8pm on weekdays, and on Saturdays, from noon to 8pm, to control traffic flow in and out of the shopping belt.

JANUARY 2008

Announcement of fundamental changes to ERP system.
Source : Straits Times  - 31 Jan 2008

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Valuation wrong, so Singapore Strata board rejects sale of Regent Garden

Valuation wrong, so Singapore Strata board rejects sale of Regent Garden

In an unusual case, it says $34m price agreed on by owners and developer is well below market value

By Joyce Teo, Property Correspondent

AN UNUSUAL battle over the en bloc sale of Regent Garden intensified yesterday when the Strata Titles Board (STB) threw out the sale - ruling the $34 million sale had not been done in good faith.
The showdown over the fate of the 31-unit West Coast Road condominium site is now headed for the High Court.

The case is unusual because all six dissenting minority owners had withdrawn their objections to the sale, which was inked last April.

It is now the majority owners, who signed off on the sale, who are trying to back out of the deal with buyer Allgreen Properties.

The STB said it rejected the deal because it was not done in good faith, as Regent Garden’s valuation - on which the final price was based - was wrong.

It said that Regent Garden’s $34 million sale price was well below its market value.

The deal needed STB’s formal approval as there had originally been objections to the sale.

The dispute also involves alleged extra payments made to minority owners to quell those objections.

The majority owners filed an originating summons in the High Court this month trying to overturn the sale.

They argued that the $34 million sale price was wrong partly because of a wrongly estimated $7.2 million development charge - a charge for redeveloping a site to enhance its value. The charge, payable by developers, turned out to be just $950,000.

The large disparity is not common, and a consultant said it could be due to historical reasons, as the Regent Garden site permits more space to be built than usual.

Unless those involved knew the project’s development history, they would have been unaware of this, he said.

Allgreen has also gone to the High Court to ask for an order requiring the majority owners to complete the sale deal by Feb 28.

The two cases are likely to be heard together on a date that has yet to be fixed, said a sale committee member.

Another high-profile disputed collective sale, at Horizon Towers, as well as smaller cases such as Finland Gardens, are also due to be heard by the High Court.

The STB delivered its decision yesterday in an oral statement at the end of a half-day hearing, and has yet to give the grounds for the decision.

In a statement yesterday, Allgreen said it was surprised at the STB decision to hear the case despite pending court proceedings and the fact that there had been no objectors.

A property industry source who declined to be named said the case is unique as the STB took the effort to hear the merits of the case and threw it out even though there were no objections.

In a case where there are withdrawn objections from minority owners, these owners must sign the collective sale agreement in order to be a party to the deal. If not, the STB still has to rule on it.

However, in past cases, the STB just approved a sale, and did not look into the merits of the case as there was no need to, said the source.

Allgreen said that the STB decision would have no bearing on the case in the High Court.

Its fixed sale price of $34 million was the highest among all bids, it said. Also, it had offered owners the option of a floating sale price subject to the development charge.

But the sale committee had asked for the $34 million fixed price and refused advice to pay for an official figure.

The majority owners’ allegations are ‘nothing more than belated attempts to reopen a concluded bargain and to extract a better price for themselves’, said Allgreen.

‘We will rigorously pursue our case in court.’
Source : Straits Times  - 31 Jan 2008

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Singapore ERP network widened, charges going up

Singapore ERP network widened, charges going up

16 new gantries and other changes are aimed at ensuring that 85% of motorists enjoy a smooth ride

By Christopher Tan, Senior Correspondent

THE bitter medicine aimed at easing road congestion was spooned out yesterday.
Motorists will have to pay more to use the roads, said Transport Minister Raymond Lim, as he unveiled the third and final instalment of the Land Transport Review.

Congestion levels have gone up by about a quarter since 1999, he noted. To arrest this, 16 new gantries will go up between April and November, making 71 in all.

On top of this, a new price structure will be introduced gradually from July: From then, passing each gantry will cost motorists at least $2, up from $1 now; and subsequent jumps in the road pricing fee will be $1, instead of 50 cents.

‘Instead of resorting to so many small adjustments, it would be more effective to make larger rate increments,’ Mr Lim said.

The Government will change the criteria for deciding which roads will be priced under the Electronic Road Pricing (ERP) system. It will also change the ‘trigger point’ for increasing the ERP rates along roads already priced.

Now, as long as average speeds on expressways and arterial roads fall in the 45kmh to 60kmh and 20kmh to 30kmh ranges respectively, all is well.

Soon, 85 per cent of road users must be able to move at these speeds to stave off ERP or a rise in the ERP fee.

Bitter as the medicine is, the Government is also offering some sugar to go with it.

Road tax, cut just last September by 8 per cent, will be cut by another 15 per cent - which will more than offset motorists’ ERP expenses. This tax cut will cost the national coffers $110 million a year.

Mr Lim stressed that ERP was never meant to be a Government revenue earner, and that the long-term policy was to shift vehicle taxes from ownership to usage.

And by beefing up public transport - changes to the bus and rail systems have been announced over the last two weeks - the Government also hopes to coax car owners onto buses and trains.

Two other sweeteners were unveiled yesterday for motorists: a cut to the additional registration fee (ARF) and new road projects.

The ARF, now at 110 per cent of the vehicle’s open-market value, will be cut by 10 percentage points from March and cost the Government $200 million a year. The change will apply to cars bought with certificates of entitlement secured from the March tender on.

As for road projects, $14 billion will be spent on building roads over the next 12 years, a leap from the $3.4 billion spent in the last decade.

One of them is the 21km North-South Expressway to link Woodlands to the East Coast Parkway. Ready by 2020, it will cut commutes from the north-east by 30 per cent.

The Marina Coastal Expressway linking the Kallang Expressway to the Ayer Rayah Expressway will be ready in 2013; the Tampines Expressway and the Central Expressway will be widened.

Going forward, fewer roads will be built, said Mr Lim. This is because 12 per cent of Singapore’s land space is already taken by roads, nearly as much as the 15 per cent now sitting under housing.

Besides, he said, building more roads ‘is like telling a person who’s suffering from obesity that the solution…is to buy bigger trousers’.

To give motorists an attractive alternative to driving, the frequency of bus services along corridors affected by the ERP expansion will be upped to one every 12 minutes by June, from one every 15 now.

And for the first time since mass transit started here two decades ago, bus services will be allowed to duplicate sections of mature MRT lines.

The land transport masterplan, the result of a year-long review, aims to get 70 per cent of morning peak-hour trips made on public transport, from 63 per cent now.

The medicine may already be working, at least with marketing executive Loh Ye Ling.

The 23-year-old is revising her year-old plan to buy car. She realises now that if she drives daily from her Hougang home to her Bugis office, she would spend far more than if she were to take a bus.

She said: ‘I can’t afford to spend so much on ERP, though road tax will be cut.’

Mr Cedric Foo, who heads the Government Parliamentary Committee for Transport, said: ‘I don’t think it’s easy, once you get a car, to move to public transport. But as we narrow the gap between private transport and public transport standards, motorists would, over time give up their cars.’
Source : Straits Times  - 31 Jan 2008

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Mindy Yong

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