Most of the Indian cities are increasingly confronted with not only traffic congestion, but also face serious problems of increase in vehicle ownership that result in severe parking problems due to inadequate space.
Singapore is not an exception to this situation. It faced challenges with respect to limited land supply and increase in vehicle ownership till 1975, when it first adopted Area Licensing Scheme in central area. In 1990, Vehicle Quota System (VQS) was implemented to limit the growth of vehicle population.
The growth of vehicles showed a remarkable decline from 3% pa in 2009 to 0.25% pa in 2018 due to VQS that adopts uniform-price auctions to allocate Certificates of Entitlement (COE), or registration rights, in five categories of vehicles.
Small and big cars, commercial vehicles and motorcycles fall under four categories, while the fifth category is unrestricted as it permits successful bidders to register a vehicle in any restricted category of their choice.
It is nothing but a quota licence received from a successful winning bid in an open bid uniform price auction. This grants legal right of the holder to register, own and use a vehicle in Singapore for a period of 10 years. When demand for registration of new vehicles is high, the cost of a COE can exceed the value of the car itself. The COE allocation is made through an open bidding process conducted twice a month, while the quota is calculated and set every three months.
The calculation of vehicle quota is based on certain steps, namely — i) actual number of vehicles taken off the roads (i.e. number of vehicles de-registered), ii) allowable growth in vehicle population, and iii) adjustments to account for changes in taxi population, replacements under Early Turnover Scheme, past over-projections and expired or cancelled temporary COEs, etc.
It is mandatory for all motor vehicles to be registered with the Land Transport Authority in Singapore. In case of a new/imported vehicle, it must be de-registered within 14 days in the foreign country for export, and will be available to in Singapore within three months of its de-registration. Only used cars that are less than three years old can be imported and registered for use with a payable surcharge of 10,000 Singapore Dollar.
Besides the vehicle cost, other charges to be levied along with COE includes Registration Fee, Additional Registration Fee (ARF), Excise Duty, etc. It is noteworthy to mention that cars with low carbon dioxide emissions qualify for rebates, which are offset against the car’s ARF payable. When a car is de-registered before 10 years, a Preferential Additional Registration Fee (PARF) rebate may be granted.
There is also an incentive to vehicle owners via another policy for deregistering their vehicle before the 10-year limit expires, instead of revalidating that result in deregistration of the old vehicle and make them eligible to obtain a new COE.
Presently, 10% of the COEs from each restricted category is transformed to the unrestricted category. The sharp decline in motorcycle COEs since 2014 has led to a surge in auction premiums at about twice the price of an entry-level motorcycle. The auction process before 2014 has shown to be exemplary, with the COE premium driven by its inertia with a number of external factors.
In fact, Singapore has effectively tackled severe traffic congestion and parking problem through the implementation of Vehicle Quota System and Electronic Road Pricing (ERP) coupled with
promotion of public transport system.
Vehicle Quota with ERP appears to be one of the best practices to be appreciated in view of the growing vehicle ownership and parking problems. India could learn from Singapore to explore all possibilities for adopting the quota system along with ERP in near future.
Prof PK Sarkar
Director, Transportation, Asian Institute of Transport Development, New Delhi