Friday, February 13, 2015

Current COE system to stay: Josephine Teo

By Kenneth Lim

12 Feb 2015

ChannelNews Asia

SINGAPORE: The Land Transport Authority (LTA) had considered possible ways to ease COE prices. These included restricting car dealers from COE bidding and adopting a "pay as you bid" model for applicants.

However, the LTA has decided to retain the current system after an extensive consultation yielded mixed views. This is according to Senior Minister of State for Transport Josephine Teo, who spoke in Parliament on Thursday (Feb 12).

Mrs Teo was responding to a question by Member of Parliament Gan Thiam Poh on revamping the current bidding system. She said the current system gives vehicle buyers flexibility.

[And the govt, about $6b in revenue. COE premiums (or Vehicle Quota Premiums) are the 4th largest revenue stream for the govt. It is not in the interest of the govt to roast the goose that lays the 4th golden egg.]

Some of those involved in the consultation also said banning dealers from bidding might not lead to lower COE prices. Such a ban could also be easily circumvented. Applicants might also spend more time and money adjusting their bids under a "pay as you bid" system.

Mrs Teo said: "80 to 90 per cent of the successful COE bids are typically clustered within the 5 to 10 per cent range of the final COE price. This suggests that the current bidding model is fairly robust, with not many extreme bids.

"In fact, experts in auction theory agree that the current system, which prices all COEs within a category uniformly, incentivised bidders to bid their true valuation."

- CNA/ms

[So everything they found out about Sunk Cost Fallacy, Behaviour Economics, nudging people to do the desirable, all out the window?

So the current COE scheme does not require improvements?]

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