Posted September 14, 2015on:
There are not many things we can call uniquely Singapore. One thing few others have is our “privilege” to pay for a Certificate of Entitlement (COE) to earn the right to buy a car.
Instead of explaining a COE conventionally, I embed this video below of a few members of the Fast and Furious cast being asked how much they thought cars in Singapore cost. Their reactions are as educational as they are entertaining.
Some context: The interview was for FF6 (the previous installment of the franchise) and COE prices were higher than they are right now. The bottomline is that cars cost a lot in tiny Singapore.
For an idea of how much Singaporeans have to cough up before we pay for a car (which is also not cheap compared to other countries), see how much COEs were from 2002 to now with this interactive site. It might help to focus on Cat A cars (smaller cars, blue line in the first graph) to gauge how much a COE was or is.
I am acutely aware of the COE prices as I just bought a new small family car. It is an updated model of our previous car. The old car was just 9-years-old, a year shy of the expiration of the COE.
When a car turns 10 here, it dies or you put it on life support. You have to decide whether to renew the COE for 5 or 10 more years and cough up some more money to keep the car you already paid for, or decide to buy another car with another COE.
This will probably boggle the mind of a foreigner as this seems like a lose-lose situation. It is actually a lose-lose-lose situation.
I will not explain the merits or demerits of renewing a COE. There are a few good local bloggers that explain what to do, how much it costs, and why one might want or not wish to do this.
If you choose not to buy a new car, you have to pay another COE to keep your old car. Yes, you have to pay to keep something you already own. This is the first possible “lose”.
After doing your sums*, arguing with your spouse*, and suffering sleepless nights*, you might come to the conclusion that it is better to just buy a new car.
*Side note 1: If you are really rich, you might not suffer one or more of the asterisked items. If you have an argument, it might be about the color and model of the BMW or Benz to add to your fleet**.
**Side note 2: Singapore has the third highest millionaires per capita in the world. Around 9-10% of households here can make that claim. Like the other 90% here, I cannot.
Whether there is any justification or not, you might choose to get rid of your car before or when it is 10-years-old, and buy a new one. You get some value of your car back if you trade-in your old car for a new one, but the COE is likely higher than when you bought it.
For example, my current COE alone was more than the cost of my old car when I bought it 9 years ago. Depending on how many banks you rob or own, your new car might be almost two or three times the cost of your old one, COE included. This is an example of the second “lose”.
I am very prudent with money and save not just for rainy days, but also for tropical monsoons and Noah’s Ark scenarios. Suffice to say that my latest purchase was a drain on my family finances.
Buying a new car is a personal or family decision. But sometimes I wonder if we are as stupid as the proverbial lemming by following what the lemming in front of us does.
If the lemming ahead buys a new car and decides to drive off a cliff (as steep as the depreciation of the car the moment you buy it), should I buy one too? How sustainable is this?
From a family financing point of view, it is not. That is how the government policy works: It dissuades average folk*** from buying cars in a bid to keep road congestion**** down.
***Side note 3: Ikea might like to claim that you do not have to be rich to be clever, but you have to really be rich to keep driving in Singapore.
****Side note 4: Whether our roads are congested or not is subjective. If you only drive on Singapore roads, you would say yes. If you have visited Manila or Jakarta, you would say no.
But back to the issue of sustainability. Is buying a new car every decade environmentally responsible? You might argue that a newer car is more energy-efficient and less polluting. However, you also need to take into account the cost of making these new cars.
This is the third “lose”; our planet loses too. We gouge her flesh for materials and we drain her blood for fuel.
I regret turning a blind eye to this aspect of owning a car. It took a bit of searching, but here is what I found about Singapore’s green ranking going down and how we have the biggest carbon footprint in the Asia-Pacific. The National University of Singapore also has a carbon footprint calculator to estimate our wastefulness.
To be fair, there are other contributing factors for our lack of greenness. Grocery store aunties generously using plastic bags for example.
So what is the educational lens to make sense of my rant?
First, I am going to use these links (and more) as ammunition for the next time we my family chants the “to car or not to car” soliloquy. If not that, I will let my bank account let out a silent scream.
Second, this sort of decision-making is not taught in school. Deciding whether or not to buy a first car or replacing an old one would be a meaningful scenario for a young adult. It might be suitable for children to learn the value of money and being responsible for our environment.
Such lessons could combine financial literacy with environmental studies, language, and mathematics. Even the fact-finding and decision-making around the issue of getting a newer, better car vs the cost of manufacturing one is a useful exercise of critical thinking and cross-disciplinary investigation.