On traffic congestion and car ownership

Car owners in Singapore do not have it easy.

First, it is costly to own and drive a car. Apart from the purchase price of the car itself, an owner has to contend with various fees and taxes (costing tens of thousands of dollars) imposed by the Singapore government, such as:

• Registration fee: Currently $140.


• Additional registration fee: Currently equivalent to the open market value of the car in question. This is costly. For example, the open market value of a Toyota Corolla Altis 1.6 Auto is $17,850.


• Certificate of Entitlement (“COE”): To own a car, a person must first successfully bid for one of a limited number of such certificates released monthly by the Land Transport Authority (“LTA”). The certificate can be quite costly, typically costing thousands of dollars. For example, the recent 21 October 2009 open category COE cost $19,901.


• Excise duty: Currently equivalent to 20% of the open market value of the car.


• Road tax: Based on a formula that is pegged to a car’s engine capacity. For example, the current annual road tax for a 1,600 cc car is $744.


• Electronic Road Pricing (“ERP”) tolls: This toll (currently costing between $0.50 and $4) is imposed each time a driver uses certain roads or highways during peak hours.

Second, traffic congestion, especially during peak hours, is a frequent occurrence in Singapore. Based on the figures provided by the LTA, as of the year end 2008, there are a total of 894,682 vehicles in Singapore. The average daily volume of traffic entering the city alone is 278,300 vehicles. And the average speed in the CBD during peak hours? A paltry 26.7 km/h.

The LTA is the governmental agency in charge of all road matters, and the main measures it has adopted to deal with traffic congestion in Singapore are:

• COE: Through the issuance of the COE, only a limited quota of new cars are allowed each month. The high cost of the certificate itself also serves as a deterrence to would-be car buyers.


• ERP: High toll charges are imposed along certain main roads and highways during peak hours in the anticipation that these will deter drivers and hence provide for smooth traffic.


• Off-peak car scheme: Car owners under this scheme may drive their cars only during off-peak hours. In return for this compromise, they pay discounted rates for the COE and other vehicle related taxes.

Do these measures work? Well, to some extent, they do. Still, many Singaporean drivers will readily attest that these measures are not nearly enough to curb traffic congestion.

The problem is that Singapore is not only a small country, but also a densely populated one. Nonetheless, if you want to have smooth traffic flow, the solution is simple: either (a) build more roads or (b) reduce the number of vehicles.

So, can an already built-up Singapore build more roads? Yes. In fact, Singapore’s road density, i.e. road length per land area (approx. 4.75 km/sq km), is significantly lower than other metropolitan cities such as London (2 times denser at approx. 9.5 km/sq km), New York (2.5 times denser at approx. 12 km/sq km) and Tokyo (4 times denser at approx. 19 km/sq km). So how do we achieve a higher road density? By building multi-level roads and expressways, as Tokyo did. Presently, our roads and expressways are only single level for the most part. Just doubling the road level will ease traffic flow by half. Is there a downside to this? Well, some people may argue that multi-level roads and expressways are unsightly. However, this may be mitigated to some extent if properly planned, and besides, adding another level to an already existing expressway would not likely make it much worse.

The incumbent government, however, is unlikely to implement this approach for a simple reason – because building roads involves expending a large sum of money. In contrast, sticking to the status quo scheme of COEs and ERPs allows the government to collect a great deal of revenue – even though it does little to address the problem of over-congested roads.

Nevertheless, it may be worthwhile for the government to consider channelling the substantial funds amassed over the years from road related revenue (i.e. COEs, ERPs, road taxes etc.) towards building additional roads to ease traffic congestion and benefit the country. The use of road related funds for this purpose will ensure that there is no prejudice against taxpayers who do not drive.

The second way to deal with traffic congestion, is to reduce the number of cars. As highlighted above, the government attempts to do this by way of the COE quota system among others, with mixed success.

So how else can we reduce the number of cars? Well, we can make it expensive to own a car. Like, really expensive. Forget the COEs, the ERPs. Simply increase road tax to $10k a year just for the privilege of owning a car. Or an even higher sum, if necessary. The prohibitive cost alone will be certain to deter many from driving.

But lest this be thought an easy solution, there is one fundamental challenge associated with trying to reduce the number of cars. That is, the public transport infrastructure must be able to provide effectively for both present commuters and additional commuters who will no longer have access to private means of transport. Can the public transport infrastructure do this? Unfortunately, it appears that at present, the public transport system is already stretched beyond its limit, but that’s a whole story in itself for another day.

On PSLE math and the child

The Primary School Leaving Examination (“PSLE”) is a major examination taken by all schoolchildren (aged about 12 years) at the end of their sixth year in primary school. It is widely regarded as an important examination because a child’s PSLE grades determine whether he or she would qualify to enter a desired secondary school of choice.

The PSLE comprises 4 subjects (English, mother tongue, math and science), and this year, many schoolchildren experienced difficulty with the math paper. In particular with this question:

“Jim bought some chocolates and gave half of it to Ken. Ken bought some sweets and gave half of it to Jim. Jim ate 12 sweets and Ken ate 18 chocolates. The ratio of Jim's sweets to chocolates became 1:7 and the ratio of Ken's sweets to chocolates became 1:4. How many sweets did Ken buy?”

Now, any good paper should contain at least one or two difficult questions so that we may distinguish the more able candidates. But difficult questions should be fair, and the issue is: is this a fair question that schoolchildren can reasonably solve within their ability? Put in another way, are the schoolchildren sitting for the paper equipped with the skills to solve this math question?

It is this author’s understanding that primary school teachers teach their students to solve such math questions using a model diagram and units method. However, a number of teachers privately admit that the model diagram and units method is difficult to comprehend and cumbersome to utilise, and that most schoolchildren are unable to master it.

Is this the only method to solve the math question? No. The math question is easily, commonly and elegantly solved using algebra and simultaneous equations. These are taught when a child enters secondary school education. They are not taught at the primary school level because algebra is perceived to be of a higher level math and most primary schoolchildren are not ready for it.

But it appears that the schools will generally only allow students to solve such math questions using the model diagram and units method. Any other solution (including algebraic solutions) will be penalised or discouraged.

Nonetheless, a good education system should be flexible, and a good educator should allow students to use any valid method to solve a question, not just one method. Schools ought not insist on a particular method to solve a question (especially if the method is cumbersome, will (in this author’s opinion) have little real world application, and confuses schoolchildren).

The crux is this: if primary schoolchildren are largely confused by the model diagram and units method and hence unable to cope with such math questions, they are evidently not equipped with the necessary skills to solve such questions and it would not be fair to expect them to do so. Why not focus instead on establishing a solid grounding in other more appropriate math topics within their level, and only test them on such math questions at a later stage when they are ready to handle them?

By the way, the answer to the math question (as worked out by this author using algebra and simultaneous equations), is 68. Did you get it right?

On EPL and fair competitive practices

Earlier this month, SingTel snatched from StarHub the exclusive right to broadcast the English Premier League (“EPL”) matches in Singapore for the next three years. It did this by significantly outbidding the incumbent StarHub for the right.

EPL fans in Singapore quickly raised concerns as to whether the costs of watching EPL match telecasts would increase (such as, whether there will be additional costs in subscribing to a new provider, whether there will be additional costs in obtaining a new set-top box, and whether the pay-tv costs of subscribing for an EPL channel would go up in order for SingTel to recoup its bid cost). Several opinions were ventured on whether the government should step in to control pay-tv prices in this respect, and not a few expressed scepticism regarding SingTel’s assurances that the prices would not go higher than what subscribers are currently paying for EPL match telecasts via StarHub.

Objectively, EPL match telecasts are considered a luxury good rather than an essential need. Matters concerning the supply of such non-essential goods should generally be left to a free market to determine, and the government should not be unnecessarily concerned.

However, where an issue of unfair competition or abuse of monopoly power arises, the government should intervene to protect consumer interests (even for non-essential goods) as a matter of public policy. In this regard, the Competition Commission of Singapore (“CSS”) has been charged to ensure fair competitive practices in the Singapore markets and to safeguard consumer interests, in accordance with the Competition Act.

In the present EPL case, some competition issues which may merit consideration are:

• If there are no meaningful substitute products for EPL matches, is it fair to allow multiple companies to bid for a single, exclusive distribution right to broadcast EPL matches?


• If a person places an extraordinary bid to win exclusive EPL broadcast rights, and then subsequently uses its monopoly position to increase subscription prices in order to recoup its high bid cost and make profits, would such conduct amount to anti-competitive practices and an abuse of its monopoly power?

Incredibly, the government has prohibited the CCS from reviewing competition issues in the media sector, and hence the CCS cannot investigate any potential anti-competitive practices or monopoly abuses involving SingTel’s bid for the EPL match telecasts.

Why is there such a blanket prohibition, and is it justified? It may be conjectured that the original purpose behind the prohibition was to allow telcos, which are entrusted with the operation of services of general economic interest (i.e. services which are different from ordinary services in that public authorities consider they should be provided in all cases, whether or not there is sufficient economic incentive for the private sector to do so), to perform the task entrusted to them in economically unacceptable conditions.

However, can pay-tv (a luxury good) genuinely be considered as a service of general economic interest? Moreover, do pay-tv service providers indeed operate in economically unacceptable conditions in Singapore? The answers to these questions are likely, no. Given that the telcos in Singapore have long since been successfully privatised and ceased to be statutory boards, there does not seem to be any good reason as to why the CCS should not be given jurisdiction over the telcos (just as with any other company in Singapore) to prevent unfair competition and the abuse of dominant power. Conversely, it would likely be for the greater good of Singapore if the government were to rectify the laws to allow the CCS to look into competition issues in the media sector.

On making HDB housing affordable

Singapore is a small country and the third most densely populated state in the world after Macau and Monaco. With a population of 5 million and barely 710 square kilometres of land area, the scarcity of land is acute and land planning is vital in order to maintain a decent quality of life for the people of Singapore.

The Housing and Development Board (“HDB”) is the official government body tasked to take on the issues of public housing in Singapore. Given the shortage of land, the HDB’s responsibility is no small one, and the HDB provides housing by building flats and leasing them out (in 99-year leases) to Singaporeans. More than 80 percent of Singaporeans currently live in these HDB flats. In recent times, however, many Singaporeans have expressed disgruntlement and dismay at how difficult it is to obtain a HDB flat, and how expensive it is.

Some relevant observations:

• Flat prices have risen far more quickly over the years compared to salary increases (one commentator has estimated that flat prices have increased by more than 30 times since the 1970s, compared to a mere 2.7 times increase in the median salary of a graduate since the 1970s).


• Many households today need to take long term (20 to 30 years) loans in order to afford their flat leases.


• In recent years, fewer flats are being built. Yet the population has increased more rapidly than before.


• New HDB flats are invariably many times oversubscribed, indicating that demand far exceeds supply.

These observations reveal that, from the face of it, there is a genuine concern that public housing today is not very affordable and not very available.

Two policies adopted by the HDB appear to aggravate the problem of public housing affordability and availability instead of alleviating it:

• The HDB deliberately restricts the supply of flats below the demand level, thus reducing the number of available housing.


• Since mid-1990s, the HDB prices new flats at the market rate instead of at the building cost, thus increasing flat prices and profiting from them.

It is indisputable that housing is an essential human need. If housing is unavailable or unaffordable to the people in Singapore, the HDB (as the government provider of public housing) should endeavour to build more flats and lower their prices (by reverting to the original and more reasonable cost-based pricing instead of a market-based pricing).

Can the HDB do this? Well, one fundamental concern is that if HDB flat prices revert to a cost-based approach, the tenants who had previously leased them at market rates and who are still living in the flats would be unfairly prejudiced and burdened with negative value assets. How can we address this concern?

What if (and let us think out of the box here and envisage a government who is serious in tackling the housing problem and who is open and willing to consider all options) what if the HDB were to refund its excess profits made from market-based leases back to the tenants who are still living in the flats? i.e., refund the difference between the market price and the cost price at the time of lease? The refunds may be made partly in CPF and partly in cash, depending on the actual proportions used to lease the respective flats at the time. Then there would be no prejudice to these tenants. The refunds will only apply to tenants who are still living in their flats. Previous tenants who have already sold off their HDB flat leases would have done so at market rates, and no refunds need to be provided to them since no negative equity losses will be suffered by them.

The mistake (dare we call it that?) of pegging HDB flat prices to the market rate could be corrected, and going forward, Singaporeans will be able to lease public housing at far more affordable cost prices.

Ideologically, the HDB, which is a statutory board entrusted with public housing, should not make a profit from Singapore citizens. After all, having a place to live is an essential need, and in land scarce Singapore where housing options are severely limited, Singaporeans should be entitled to public housing at affordable prices as a basic right.