Singapore freezes car numbers and boosts public transport

25 October 2017

Singapore will freeze the number of privately owned cars on its roads next year, while allowing buses and goods vehicles limited growth until 2021.

The country’s transport regulator, the Land Transport Authority (LTA), said starting from February 2018, the annual growth rate for cars and motorcycles will be cut from the current 0.25% limit to zero.

The growth rates will be reviewed again in 2020, it added.

It is allowing the population of goods vehicles and buses to continue growing at the current rate of 0.25% per year until March 2021 “to provide businesses more time to improve the efficiency of their logistics operations and reduce the number of commercial vehicles that they require”, the regulator said. 

The LTA cited land scarcity and growing investment in public transport as the main reasons for its decision.

“Today, 12% of Singapore’s total land area is taken up by roads,” it said.

“In view of land constraints and competing needs, there is limited scope for further expansion of the road network.”

Singapore, whose population of 5.65m has grown nearly 40% since 2000, tightly controls the ownership and sale of vehicles through a bidding process and an annual growth rate that caps the total number of vehicles on the city-state’s roads.

There were just over 600,000 private and rental vehicles on Singapore’s roads in 2016, according to government statistics. These include cars used by drivers that work with ride-hailing services such as Grab and Uber, which are becoming increasingly popular in the country. 

Jeremy Soh, Singapore Vehicle Traders Association honorary secretary, said the move to cut vehicle growth was expected and car dealers would have to diversify their operations.

“The writing’s already been on the wall for the past few years, so I don’t think it comes as a surprise,” he said.

“The cake is not going to get any bigger, it will stay the same size so car dealers will have to start looking outside what they are naturally doing.”

Car dealers would be focusing more on after-sales services, like workshop repairs and insurance renewals or turning into a car rental services, he said.

The LTA said that over the next five years, it will invest S$20bn in new rail infrastructure, $4bn in rail upgrades and a further $4bn in bus subsidies to ease the impact of the new limit. 

Lee Der Horng, National University of Singapore transport researcher, told Bloomberg that private-hire services, such as ride-hailing services Grab and Uber, along with upcoming car-sharing programmes could benefit because of current public transport reliability issues. 

“Given our rail system breaks down from time to time, I think people may not buy the suggestion that ‘I can get rid of my car and just switch to public transport’,” he said. 

“You can always reduce the supply of vehicles but if you don’t have the necessary improvement in public transportation, what you will produce at the end of the day is a large number of disgruntled commuters. However, we do have an abundance of private-hire services and an upcoming car-sharing programme that people may turn to in place of self-driving.” 

Every vehicle purchased in Singapore requires a certificate of entitlement (COE), which lasts 10 years. These permits are limited in supply and auctioned annually by the government.

This system is combined with congestion pricing and a high automobile sales tax to discourage car ownership.

COE premiums were between $41,617 to $52,000 for cars and $4,903 for motorcycles in the last COE bidding exercise on October 19, according to government figures

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