The high cost of motoring in Singapore

Business Horizons, March-April, 1994 by Rex S. Toh

A SOCIAL/POLITICAL ISSUE

We have seen that to buy a new car, a Singaporean must first decide where (inside or outside the restricted zone) and when normal hours or evenings and weekends) to drive it, what size it will be (engine capacity), and what type of registration (private or company) it will require. The buyer must then tender a bid for a COE in the appropriate category and wait. if successful, the motorist can be expected to pay approximately $63,000 for a subcompact. Then, before ten years have passed, he or she will probably have to go through the whole process all over again.

The 1990 Report of the Select Committee on Land Transportation Policy cautioned, "[T]he situation acquires social and political dimensions as increasing numbers of Singaporeans view the ownership of cars as an integral part of middle class aspirations." It continued to warn that the problem will worsen as incomes rise to levels comparable to Japan and the advanced Western countries. The Economist Intelligence Unit (EIU) has already forecast that in 1993, Singapore's per capita gross domestic product ($18,143) would exceed that of the U.K. ($17,300).

The problem of affordable cars is already acute. Because 95 percent of the population in land-scarce Singapore lives in homogeneous high-rise, high-density housing, the car has become the ultimate status symbol. Yet many young (and older) Singaporeans cannot afford to buy cars, and the recently implemented quota system has added to their frustrations. In recent years, some graduates with medical, engineering, science, and business degrees have migrated to Canada, Australia, and other British Commonwealth countries. For a trading nation with no natural resources (Singapore even has to import drinking water) that, like Switzerland, relies and thrives on the wits of its people, such a brain drain is a very serious potential problem. The authorities have responded by bonding medical graduates to government service. Those graduating abroad and sponsored by the Singapore government are also bonded to return home after the completion of their studies.

A worrisome question arises: Can a country that has to bond its best and brightest have a long-term future? In a very insightful statement in its report, the Parliamentary Select Committee (1990) warmed that "land transportation has become a sufficiently pressing and priority issue, particularly for the young. . . . The mood and aspirations of the population in this regard need to be viewed in the national context rather than from the individual standpoint of the government agencies responsible for road transport." The report recognized that in the overall scheme of things, traffic congestion is only one of the problems facing Singapore. A more pressing issue is how to keep an increasingly mobile young generation with internationally marketable skills happy in a very small country.

In a survey of 27 honors students at the National University of Singapore conducted by the author, 22 considered car ownership as at least quite important, nine indicated frustration over the high cost of a new car (although 12 would be willing to pay the price), 15 felt a loss of self worth, and seven said they would consider migrating, though principally for other reasons. Two sociologists from the National University of Singapore found in a survey of 706 Singaporeans that emigration propensity is highest among the young, those in higher-income classes, and those highly educated in English. These are precisely the people that high-tech Singapore cannot afford to lose.