The Straits Times
Published on Dec 29, 2012

High car prices a strain on SMEs


I DISAGREE with Mr Jack Lin ("COE system is working fine"; Thursday). The certificate of entitlement (COE) system is not fine. The prices are like a runaway train with no relief in sight.

The COE system not only affects private car owners but it also adds to escalating business costs. Higher transport costs simply mean a greater strain on small- and medium-sized enterprises (SMEs).

Not only does it mean it is harder for people to sustain businesses, it also discourages people from starting businesses. Higher transport costs mean higher consumer prices and the consumer inevitably suffers from the impact.

The price of the COE premium for small cars is itself higher than the price of the cars many of us purchased years go.

To tackle the problem, I suggest a tweak to the system whereby the car buyer bids for the COE directly and not via the car distributor/dealer. Once the car buyer has acquired the COE, they can then buy the car from anyone.

The current system where the dealer bids on behalf of the buyer only drives up prices. Dealers have a direct interest since without COEs, they cannot sell their cars.

When the power returns to the consumer, and not the car-selling conglomerate, coupled with other tightening measures, then we might see a softening of prices.

Chong Yee Min