The high cost of motoring in Singapore

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

Singapore's restraining policies on car ownership cannot prevail for very long. As time passes, the quota allocations will increasingly lag the pent-up demand for cars, bidding up the quota premiums to absurdly high levels, thereby pricing out all but the very rich. This will occur in a country with a per capita income about six times higher than its nearest neighbor (Malaysia), and about 20 times higher than its next nearest neighbor (Indonesia). In addition, whereas only one out of nine people owns a car in Singapore, there is one car for every three people in Bangkok, and one for every two in the United States. Clearly, given the regional comparisons, political pressures for the relaxation of controls on car ownership will be very strong.

If there is to be any change, it will probably come at the ballot box. At the last general elections in August 1991, where car prices and related usage fees were major issues, the ruling party lost 10 percent of the parliamentary seats contested. This was considered rather alarming for a government that has enjoyed nearly three decades of very popular, almost single-party rule. One government politician candidly told me, "If the trend at the polls continue, we'll remove all restraints on car ownership and usage and let the whole system go to hell."

As a commercial center and tourist attraction, Singapore clearly cannot be allowed to become another Bangkok, where two-hour one-way commutes at average speeds of six miles per hour on congested streets are not uncommon. Nevertheless, the quota system should be abolished, because it is administratively cumbersome for the government, inconvenient to the car-owning public, and a drastic curtailment of legitimate middle-class aspirations. Probably for all these reasons, no other country in the world has ever implemented or is even contemplating a quota system.

Car ownership does not cause congestion; only usage does. Ownership restraints should be relaxed to make cars more available and more affordable - at least to the middle class - and the emphasis should be shifted toward usage restraints. In this regard, the Area Licensing Scheme should be preserved, but with lowered fees.

A relaxation of both ownership and usage restraints is recommended, partly because the problem of road congestion in Singapore has been exaggerated. For instance, the government has often claimed that in Singapore the linear density of motor vehicles per mile of road is relatively high (about 320), compared with 100 in the United Kingdom, 69 in Japan, and only 44 in the United States. However, this compares Singapore, a city-state, with large countries. A fairer comparison would be with Hong Kong, which has 383 motor vehicles per mile of road. In terms of population and car densities, Singapore is probably not much different from such cities as New York, London, or Tokyo, and thus must be willing to tolerate a reasonable or even considerable amount of road congestion.

Using draconian measures to curb car ownership and restrain usage has given rise to much frustration. In particular, it has curtailed the car-owning aspirations of young Singaporeans. To justify emptying the streets of Singapore on the premise that the road congestion problem has been solved makes the cure worse than the disease. Urban traffic congestion problems should be managed and not "solved." You don't kill a fly with a telephone pole.