COE prices are soaring because the economy is doing well and not because the Government is further slowing the growth in the vehicle population to 0.5 per cent, as that kicks in only in August, Transport Minister Lui Tuck Yew said on Sunday.
He was responding to a steady stream of complaints about certificate of entitlement (COE) prices - now at their highest in more than a decade - from residents during a walkabout in Cheng San.
Mr Lui said high COE prices are due to strong demand - with wages still on the rise, dealers introducing new car models and more people bidding now in expectation that premiums may rise further.
Come August, the annual allowable vehicle population growth rate goes down to 0.5 per cent, from 1.5 per cent today and 3 per cent before 2009.
During a dialogue with the minister, retiree Ronnie Lim, 67, argued that taxi firms, which are allowed to bid for the same category of COEs as buyers of cars up to 1,600cc, are driving up prices.
The COE premium in that category is now at a 15-year high of $58,501. He wants cab operators to be exempted from bidding if they are replacing their fleet, and instead pay the prevailing premium at the time of registration.
One woman was unhappy that those bidding for a second or third car were pushing up premiums.
Door installer Koh Soo Mown, 52, said he was worried that replacing his eight-year-old van will now cost more, with the commercial vehicle COE premium at $53,989.
On taxi firms, Mr Lui noted not all of their 190 bids were successful in the latest bidding exercise. Excluding them would not have made a big difference, he added. The category for taxis and cars up to 1,600cc had 637 available COEs.
The option of creating a separate COE category for taxis has been explored but it is hard to fix the number of cabs for the seven competing firms, Mr Lui said.
The policy to let them bid in the category for cars up to 1,600cc is a concession to try to make sure they do not raise taxi fares unduly.
During the dialogue, Mr Lui was also asked about Professor Lim Chong Yah's proposal to raise wages at the bottom by 50 per cent over three years and cap wages at the top.
He said he personally would not rush to dismiss Prof Lim's ideas as he is a very learned man who chaired the National Wages Council for many years.
But he would not rush to embrace Prof Lim's proposal either, without considering its consequences. These are that many workers may end up retrenched while Singaporean and foreign talent leave for companies abroad.
The second Cabinet minister to comment on the wage hike plan, Mr Lui said the Government's approach is to close the income gap gradually through various measures.
'The fear is that you do too much, too suddenly, you have a situation like in the mid-80s when we had a major recession,' he added.
