Vehicle Quota System Case Study

881 Words4 Pages
Since the late 1960s, the government has imposed policies designed to restrain car ownership and usage in Singapore, beginning by introducing the Addition Registration Fee (ARF) in 1968. The ARF was originally set at 15 percent of a vehicle’s open market price but increased in rapid succession till it reached 175 percent in 1983. Despite the high ownership costs of cars in Singapore, the growth of vehicle population continued to increase as people's response to the high ARF was to buy smaller cars with cheaper ARFs. Following the lack of success in the ARF and possible political ramifications of raising taxes on cars, the government introduced a Vehicle Quota System (VQS) in May 1990 aimed at controlling car ownership by capping the number…show more content…
Each month, the number of COEs to be issued was fixed by the government and the price of the COEs determined by the price of the "last" permit of the month. I assert that the VQS policy should be abolished as the inability to factor in many external influences for an accurate quota projection renders it ineffective. Following this, I shall investigate whether the VQS system has not been successful at curbing car ownership is due its own failings. Finally, I intend to propose a solution in place of the VQS in hopes of rectifying the prevalent problem of road congestion today. The VQS should be abolished because it is unable to properly factor in many influences such as economics, social behaviour and politics to achieve its aim of reducing congestion and pollution. Firstly, it defies economic theory by aiming to control car ownership instead of usage. Vehicle usage directly affects congestion and pollution; imposing usage charges like Electronic Road Pricing is more effective than merely taxing car ownership as it tackles the root cause of the problem. Secondly, social behaviours which account for the price and number of COEs issued each month are difficult to…show more content…
All these factors which culminate in unstable vehicle growth rates are shown when they increased from -0.6 to 3.1 percent in 1998 to 2004, to 3.8 to 6.5 percent from 2005 onwards till the present. Therefore, the VQS policy has shown to be ineffective in taking into account many external influences to reduce congestion and pollution, a sign that its abolishment should be effected. Despite evidence showing the ineffectiveness of the policy, it has been argued that the policy itself is working well, and the only reason why it does not appear to solve the problem of too many vehicles on the road contributing to congestion is due to certain exogenuous factors which lie outside its controllable scope of consideration. The Deputy Director of Media Relations from Land Transport Agency stated that "the roads are crowded not because the COE system is not functioning as intended, but because at 3 percent p.a., vehicle growth significantly outstrips road growth at 0.5 percent
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