The way to go: fewer cars, better bus services


Bigger role for buses can work if service standards rise dramatically

Two topics stood out when Transport Minister Lui Tuck Yew had his maiden sit-down interview with reporters – the supply of cars and buses.

Mr Lui, barely five months into the job, disclosed that the annual vehicle population growth ceiling, currently at 1.5 per cent, will be lowered when the new certificate of entitlement (COE) quota year starts in February.

He would not say by how much – just that it will not be “zero”, which must be a relief to car buyers and sellers alike. 

It would be a very small relief, though. 

Even if the cap is halved to 0.75 per cent, next year’s supply of COEs for cars – where the bulk of COEs go to – will fall from about 30,000 this year to an all-time low of around 25,000, all else being constant.


This will likely drive COE premiums higher than they already are. Premiums are now averaging $51,000 for cars up to 1,600cc and $67,000 for bigger models – treble what they used to be just two years ago, when there were about 64,000 car COEs.

So next year, if the economy does not tank, we could see these two categories of car premiums rising by the same quantum as the supply shrinkage, meaning COE for smaller cars testing $60,000, and the one for bigger cars, $80,000.

Those looking to change their cars will have to spend a lot more to buy one, whether new or used; those aspiring to own a car will have to wait a bit longer. 

And the car industry will have to tighten its belt even more. The only companies that will continue thriving will be those representing premium brands, because they have fatter profit margins to outbid others for COEs; their customers are also far less price sensitive than the those buying the Toyotas and Nissans.

Mr Lui said lowering the growth ceiling is necessary because "1.5 per cent is not sustainable".

Seeing how small Singapore is, you cannot argue with that. Roads already take up about 12 per cent of land, versus 15 per cent for housing. 

A 1.5 per cent growth rate is unsustainable also because motorists drive a lot here. On average, they chalk up 20,000km a year, higher than those in many cities. 

This is because the cost of driving a car – once you have bought one – is relatively low here. Parking is plentiful in the city, and the Electronic Road Pricing rates are fairly painless, unless you pass three gantries in the peak hour in one journey. To top it off, traffic is generally smooth-flowing. 

So, given a choice between commuting in the comfort of your own private space and standing shoulder-to-shoulder on a bus or a train, most people will choose the former. 

This brings me to Mr Lui's bus plan. The minister reckons buses can play a bigger role in the scheme of things. He is adding capacity, first by extending the statutory lifespan of buses, and then by getting operators to bump up their fleets. 

He also wants to beef up the predictability of bus travel by having more bus-priority schemes such as full-day bus lanes; he also wants to provide more bus arrival information and even onboard information, such as the number of seats available.

He has indicated that the Government could support the bus operators in this cause, either in ramping up infrastructure or the fleet.

This would represent a fundamental shift in the land transport arena, because the Government has, up until now, focused most of its financial resources on the rail system.

Details of Mr Lui's bus plan will be out once a thorough review of the industry, centred on capacity and service standards, is completed by the year’s end. 

Meanwhile, he seems to be putting on the back-burner his predecessor Raymond Lim’s idea to open up the industry to new players and thus keep operators on their toes by injecting contestability into the industry. 

Mr Lui noted that while it is conceptually "the right thing to do", it is "not so straightforward a process"; the main difficulty lies with how to package routes into parcels that make sense. 

So, for the moment, SBS Transit, the main bus operator here, and its shareholders can breathe easy. No one is about to share its lunch – at least not just yet. 

Mr Lui's reduction of the vehicle population growth rate ties in with his bus plan: Checking the car population will leave more road capacity for public buses, which do not require COEs.

And if bus service standards can really be improved dramatically, they may go some way to appease aspiring car owners who have to wait a while yet to own a set of wheels.