The budget was announced yesterday but it would seem the interest in the budget was totally overwritten by the tough MAS rule on vehicle ownership.
People are suddenly finding it IMPOSSIBLE to own a car anymore.
I got something to say about the situation.
Vehicle ownership before 2000
Many have forgotten or were too young to remember the state of car ownership prior to 2000. Then, prices of car is not as expensive as current situation, but it wasn’t cheap either as the income level was not like current situation.
But the significant similarity with the new rules is that financing was not lax.
Only those that can truly afford a car (read the rich) can feel proud to drive it and it became a status symbol.
There was a lot of noise made that it is uniquely Singapore to not focus on personal transport.
The abundant COEs in the 2000
In the 2000s, the government relented by distributing a large number of COE. But another significant move is that car financing can reach 7 years to 10 years and you can purchase a car with near ZERO down payment.
Suddenly, every one can own a car easily. My friends who got out of university, within one year they can own a car.
At one point I look across at my company of 25 odd engineers, I was the minority who doesn’t own a car.
The company have such a hard time entertaining request to increase the number of parking lots because so much engineers own cars.
This is a move back to a rational way of living
So why is this policy to make car ownership difficult bad?
It makes you save until you can afford it.
It makes you think thoroughly what to do with this amount of money. Do you use it to invest? Save for your children’s future university? Or favor a much comfortable transportation?
It reduces the total interest you will have to pay to bank to get a car
It actually restricts the majority of the population from owning something that will make them financially poorer.
Deeper problem: Singaporeans ability to save and lavish lifestyle
Here is something I don’t get. If you need a car why can’t you go out and get it now?
It is likely car prices will moderate somewhat down, or you can go get a second hand car.
But if you are not able to save for a car, chances are you are not ready to own one!
Perhaps you need to come up with 30k eventually to pay for the 50% down payment. You can save it for 3 years, and if there are 2 person that will come up to 400 per month each.
If you are middle income in a good job, that should not be difficult.
I have acquaintances saving 50-60% of their disposable income for a sum of 30k in one year.
I have fellow colleagues saving that amount in 1 year to add to their investment portfolio. ( And I don’t belong in a company that is known to be an above average paymaster)
The thing is: If you want it, you can reach for it.
I am a single, that will make it more difficult
If this is the case, than chances are, someone needs this more than you,
As I outline before, you can be like my colleague, forgo investing or postpone that and buy a car.
Hell, you may need to forgo more things than that.
It happens that in this world, you have unlimited wants but limited amount of money.
It is about what you value most in life. If you value your transportation over your hobbies, extravagant food, future retirement, having a high maintenance girlfriend, by all means reach for the car.
I have a family, I need a car!
Now this is something interesting. I have many friends and colleagues that complain to me about this.
My question is: how come many of our parents can bring us up last time without a car and yet it becomes the most necessary thing now?
I don’t think my parents gave me a lousier childhood because they don’t have a car. I don’t think I missed much gathering with the grandparents who lived in the opposite end of Singapore.
I think the demand for a more comfortable life is distorting the reality that a good to have has become a must have.
The public transportation is a problem
Still, we are at a different level from how we were in the 1990s.
For one, we have more people. Much much more.
And here in lies the problem.
We have a denser bus and rail network and I think it has improved somewhat.
But the quality of service is such that it is not reaching the level where the people can truly believe upon to bring them anywhere at anytime.
The mad release of COE in the 2000s have result in a situation where the number of cars grew 3% per annum.
But the road infrastructure grew 0.3% per annum.
Now I am no expert, but that does seem to be a real problem.
If the public transport system is at a level where they can truly sustain the population, the impact of such a move would more or less be lessen.
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