There are many ways to get from point A to point B. For many, it would be as simple as
getting into a car, entering the location into your preferred navigation system,
and driving to your desired destination. You may use your own car, or if you are sharing
the car with someone else, you may have to ask to be sure they are not using it.
While this is true for someone living in a country like the United States,
where car ownership is above 85%, it is simply not the case for most people living in Singapore.
The truth is, for the majority of people living in Singapore, car ownership is just not possible.
The low rate of car ownership in Singapore isn’t because Singaporeans are poor,
nor it is because the country doesn’t have the infrastructure to support car ownership. In fact,
people in Singapore enjoy one of the highest average incomes in the world,
ahead of countries like France, Germany, and Japan. They also have a robust road network, and
the quality of their infrastructure is among the highest in the world. Despite having all of these,
car ownership in Singapore is less than 12%—one of the lowest among developed countries. So why
is that? Why is car ownership in Singapore so low? To understand why most Singaporeans don’t drive,
we have to understand Singapore's geography. Singapore is a small country—so small that
you can drive across the whole island in under 45 minutes. With an estimated population of over 5.8
million people, Singapore is the second-most densely populated country
in the world, second only to Monaco. If every single person in the United States lived as close
to one another as people did in Singapore, the whole United States would be confined
to just the state of Maryland and Delaware. With so little land in the small city-state
of Singapore, the supply of roads and parking lots are severely limited. If the number of
cars on the road are allowed to be determined by market forces, the rate of vehicle ownership will
spiral out of control. Having a high rate of car ownership in a country this small
would most certainly result in an out of control countrywide traffic congestion and gridlocks.
In order to provide sustainable urban quality life, the Singapore government came up with
various management strategies to discourage car ownership. This resulted in cars being extremely
expensive, making Singapore the most expensive place to buy, own, and run a car. A typical twenty
thousand US dollars Toyota Corolla would cost over a hundred thousand US dollars in Singapore.
Car prices in Singapore start with its Open Market Value or OMV. Simply put,
this is the cost incurred for the dealer to import a car into Singapore. Open Market Value prices
are similar to what some people in other countries pay for the same car.
The reason why cars are so expensive in Singapore is the additional fees required to buy a car.
The first is ARF, short for Additional Registration Fee. In Singapore, all new
cars are subjected to ARF, which is a form of tax imposed on cars during registration.
Calculations of ARF is based on the car’s Open Market Value. It starts from 100%
to as high as 180%. This means car prices will, at the very least, double after ARF. Apart from ARF,
cars in Singapore are further subjected to a 20% excise duty and a 7% Goods and Service Tax.
Next comes the Certificate of Entitlement, or COE. Owning a car in Singapore does not
give you the legal right to use it. In order to use the car, a car buyer
has to obtain a certificate of Entitlement through an open bid uniform price auction.
A COE grants the holder the right to use a vehicle in Singapore for a period of 10 years. The number
of COEs available to the public is regulated, and it is mainly determined by the allowable growth
in vehicle population and the number of vehicles deregistered and taken off the road. As of October
2020, high demands and limited supplies have pushed COE prices to around 40,000 US Dollars.
Lastly, there’s the dealer’s margin, which can range anywhere from 15 to 50%.
This is the margin that car dealers add to cover costs and make a profit. So, this is how a
twenty-thousand-dollar car can balloon to over one hundred thousand dollars in Singapore, making car
ownership extremely expensive and unaffordable. The majority of people in Singapore utilize the
country’s public transport system to get around the city. They mainly use the Mass Rapid Transit,
busses, cabs, and ride-sharing services. Singapore has one of the most highly ranked public transport
systems in the world, on par with cities such as Hong Kong, Seoul, Bejing, and Paris. It,
therefore, comes as no surprise that commuter satisfaction is also very high in Singapore.
It is estimated that there are slightly over one billion cars worldwide. With a world population of
over 7.5 billion people, car ownership is definitely a privilege most people do not
enjoy. So, the next time you are stuck in traffic, remember that you are amongst the fortunate few
who can afford the convenience of a car and have the ability to drive around.
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the world around you. As always, thanks for watching, and I’ll see you in the next video.