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LTA

LTA(Land Transport Authority) is another familiar acronym in Singapore - anyone who owns a car has to regularly pay LTA to register/pay fees; in addition, LTA regularly features in news stories relating to roads, certificates of entitlement(see below), taxi/bus services, etc.

A new policy to improve bus services has just been announced, allowing additional bus companies to be started (currently there are two, each affiliated with an operator of part of the MRT system), aimed at reducing reliance on private cars. This departs from a previous policy to permit greater ownership with lowest costs for buying cars, but higher charges for road usage, e.g., there are some sections of roads that cost a few dollars to pass them each time. However, there is no substantial relief from the increasing road congestion, hence the new thinking.

Public transport policies, including details like bus and taxi fares, are set by government units, while the actual operations are under nominally independent companies that need to make profits for their shareholders, but with controlling shareholding under government or trade union investment units that are basically parts of the government system. Transport matters, therefore, are closely linked to politics. I have included on this page several examples of this.

I have plotted the average successful bid prices for Certificates of Entitlement for the most popular category of cars under 1600cc in engine size, since the introduction of the COE system in early 1990 at 6-month intervals. Note that the category also includes certificates for taxis; before mid 1999 the category excluded cars under 1000cc; there was also a change in the way the "average" or "Prevailing Quota Premium" was calculated; and the total number of certificates available for the category has increased considerably over the years, but these details are not important for the purpose of this article, which is to look at the willingness of a typical car buyer to pay for the opportunity to own a car. Approximate as the numbers might be, and regardless of what factors affected the people's thinking, they measure the willingness well enough.

Roughly speaking, the price of a new car consists of four components: the import price of the car itself, (called OMV Open Market Value - it contains various componets too but against the details are not important here) the registration fee (ARF or Additional Registration Fee - again I omit various details including the partial refund system when the car is de-registered) which is calculated as a percentage of OMV, 140% for most of the period of the diagram but now reduced to 110%, the COE price, and the various add-ons put in by the dealer including of course its profit margin.

For the Nissan Latio I bought recently, the distribution of the $55,000 price is roughly

OMV - 15000  ARF 16500  COE - 8000  Others - 15000

In 2001 I bought a Mercedes Benz A160 for $102000 and the distribution is roughly

OMV - 25000  ARF - 35000 COE - 29000 Others - 13000

Quite clearly, the widely varying COE bid prices, peaking at 55K in 1997, around the time the Asian Economic Crisis struck, does not reflect the underlying economic value of a car, but some kind of speculative, psychological intent, and the fear that the price would be even higher next time. It was also during the period when club membership prices were very high. (See

The saga of Raffles Town Club

http://blog.360.yahoo.com/blog-XIIfDzQobqO5oCYM9UTvZzgKHH4Org--?cq=1&p=153

as well as: Singapore's Foreign Shares Bubble

http://blog.360.yahoo.com/blog-XIIfDzQobqO5oCYM9UTvZzgKHH4Org--?cq=1&p=188 )

The rapid drop in the last couple of years not only reflects the greater allocation of new certificates, but also the large number of de-registrations of cars with expensive COEs to receive the partial refund, with the cancelled COEs feeding back into the new COEs stream. The timeline causes the number to build up in certain periods lowering the prices, which then induce even more de-registrations. This cycle is due to end soon.

 

 

 


 

High Value Added

Singapore has always emphasized high value added economic activities when soliciting overseas investment and devising development programmes. I am aware of the various theoretical arguments behind it and have no quarrel with them, especially as I was myself recruited to NUS because of one such push, to promote the widespread use of IT in society and economy. But I wonder.

If a new programme is so sophisticated and advanced that very few local people are available to take part in it, and its results are more useful overseas than locally, what exactly is its benefit to the country financing it? If the programme educates local students, or has clear technology transfer components, as most programmes in NUS do, then the question is easy to answer. It is much less so with some research programmes.

Another question in my mind was: surely Singapore requires brawn as well as brain? How many of the highly qualified people recruited from overseas would send their sons into National Service? Most of them would probably be around for just a few years; others may stay longer, but send children outside Singapore for college education.

Recently Local Transport Authority announced that it wishes to promote higher usage of public transport in the next phase of transport development (previously there was the idea of letting more people become car owners by reducing the tax on buying cars, but increasing charges like electronic road pricing for using them); now a simple way to get more people to take MRT is to provide free or very low cost shuttle minibus (similar to those in HK) between HDB neighbourhoods and MRT stations. It would also generate employment for local people, more brawn inclined than brain inclined. Are ideas like this too low level, too welfare oriented, too... to make sense? Whatever the objections, the idea is not unaffordable, and its cost would be negligible relative to the total budge. It depends on the meaning of sense, does it not?

 

I first heard of Electronic Road Pricing System 25 years ago while I was still in Hongkong, when Mr Scott, the then Financial Secretary suggested this as the way to reduce traffic in the most congested areas. In those days AIDS was not yet known as the health menace it was to become, and herpes was the incurable, sex related disease people were worried about, so it was immediately joked that Scott was in favour of ERPS. Hongkong, however, did not take on the idea (maybe because of the acronym) and it soon faded from everyone's memory, but some time during the mid 90s Singapore took up the idea, to replace the manual Restricted Zone system that required vehicles entering the central city district during certain hours to display a ticket that could be purchased from a roadside booth before entring. The ERP system went into operation a few years later in 1998, and has since been extended also to some arterial highways outside the city centre, so as to encourage motorists to choose other routes/times and avoid the electronically priced roads.

The system is based on a set of successive gantries that a vehicle passes under when entering the city centre or passing the pricing point of a highway. The first gantry has a camera focused on a black-white stripe line on the road under it; when a vehicle passing through blocks the line, the camera sensor activates a transmitter on the second gantry that signals an In Vehicle Unit that is situated on the right of the vehicle dashboard, requesting it to deduct a certain amount from the cashcard that is supposed to be in the IVU. If the unit returns a signal that the required deduction was successfully made, the amount is added to the toll collection account (which will later be credited with the total collected amount from the company that holds the money received from cashcard purchases/top-ups). If no such signal is received, the sensor activates a camera on the third gantry to record the vehicle's license plate number, and a payment notice for the amount, plus a $10 administrative fee (in effect, a fine), is sent to the vehicle's registered owner.

Before the system went operation, I was skeptical about the reliability. I was proved wrong. There have been virtually no reports of motorists complaining about having their cashcards incorrectly overdeducted. Obviously, if the system undercharges vehicles the owners would probably keep quiet, but there have been no reports of Land Transport Authority making fixes to the system for undercharging, and we could assume it has not noticed any problem.

In fact, the system has been successful enough to become widely adopted by carparking companies: at both the entry and exit points of the carpark, sensors detect the approach of a particular IVU, and the carpark computer uses the time difference between the two moments to decide the parking charge, which the exit sensor unit asks the IVU to deduct from the cashcard. Only after receiving a success signal would the exit sensor cause the exit barrier to be raised for the vehicle to leave. For comparison, other commonly used carpark charging systems are

1. Manual: a ticket is issued upon entry, and at exit a human looks at the entry time shown on the ticket and collects the charge from the driver before raising the exit barrier.

2. Semi manual: a magnetic strip ticket is issued upon entry, and the driver goes to a payment machine located somewhere in the building, inserts the ticket for the entry time to be compared with the current time, pays the machine the require amount, retrieves the ticket, and inserts it into the exit barrier machine to cause the barrier to open.

3. Cashcard automated: the driver inserts his cashcard into the entrance machine, which records the identification number of the card and the entry time; when the same card is inserted into the exit machine, the charge is computed from the time difference and deducted from the cashcard.

After the ERP and cashcard automated methods become widely used, I had to do something I resisted for a long time: getting myself an ATM card, because currently the only practical way to add money to cashcards is to transfer from a bank account that has online withdrawal capability.

A second electronic cash system is in use: the EZLinkCard system used by MRT and bus companies, using touch-sensitive machines at entrance and exit to work out the fare due and deduct it from the card. A small number of food outlets now use the system for payment. The integration of the two electronic cash systems is still being worked on.

Note that electronic cash system is completely different from the debit card or electronic fund transfer system - but I wont explain, other than that when you top up a cashcard/EZLinkcard using an ATM card, you are moving money from one system to the other.

 


added on 3/6/08

a lot of cases of malfunction of the vehicle ERP mechanism have been reported - when cars passed under the ERP gantry, the system failed to deduct the requirement payment from the cashcard in the vehicle erp unit, even though the card had the necesary funds; LTA says it is a cashcard fault, because this happens mostly with a particular batch of cashcards, whereas the issuer of the cards, NETS (which runs the electronic fund transfer network including debt card shopping) says the vehicle erp units provided by LTA are faulty, because the cashcards work in other situations like automated carparks, shopping payment, etc

actually, there is simply a mismatch between the two sides; cashcard deduction is different from debit card deduction: the merchant machines (including LTA gantries) send command to deduct $X from the card, using a secreit code; they record all such commands issued successfully, add them up, and ask NETS to transfer the totals to the merchants' bank accounts; how does NETS know the total is correct? (e.g., the merchant did not just make up a fictitious total; it did not add a transaction to the total but forgot to deduct the card) by checking the correctness of the secret code, because only NETS software understands the secret, and merchange wont know how to fake the correct commands

it appears, however, that the command sending and receiving is so secret and complex that some bug has creeped in, occuring only with particular cards in particular situations

The north-east line of the Singapore Mass Rapid Transit system first started operation in April 2003. It provides an interesting illustration of the unique political process of Singapore. 

The first two lines of the MRT system, East West line and North-South line, went into operation over a three year period, 1988-90, after which the residents living in a corridor from the city towards the north east, clamoured to be provided with rail services. (There was no similar outcry in the north-west direction because a loop in the North-South line curves towards the south west till it meets the East-West line covering most of the residential areas in the north west.) The transport planners provided traffic estimates based on population projections showing that a new line covering the districts would be uneconomical for some years, but many residents were convinced that the government was merely unwilling to provide services to opposition party held districts - there are only two such electorates, and both happen to the in that direction. It is argued that because such areas tend to miss out on opportunities for new estate development and old estate upgrading, they tend to have less rapid population growth than other electorates, so that future population and traffic estimates would continue to put them at a planning disadvantage.

After such arguments had gone back and forth for some years, the government eventually decided to proceed with MRT construction, despite pessimism about the economics. However, other controversies then ensured. First, a decision was made to use a more advanced train system than the existing part of the MRT system, so that the new trains require no drivers. Teething troubles with the new system delayed the line opening for several months. Second, to save cost, two of the stations on the line, though fully built and ready to operate, were not opened because of low traffic projections.

There was little doubt that the planners were correct - actual usage of the North-East line was indeed considerably lower than the North-South and East West-Lines, and for some time the line's operator, which also operates the lion's share of the public bus system, ran the line at a loss. Further, their argument also made sense that opening the unused stations would not necessarily make things more convenient for the residents in the area, since after the stations open the direct bus services into the city they previously had would not be continued, and they would have to use local bus services and change to the MRT system instead. Only when the population is larger and local bus services more frequent would things become more convenient.

For humans, however, it is of course one thing to be proved wrong; another to be convinced, and a resentful undercurrent continued to seethe. In August 2005 when a cabinet minister made a visit to the district containing the still-closed Buangkok Station, he was greeted by the sight of a number of cardboard white elephants on the lawn around the station. While he was merely amused by the sarcastic message of protest, someone else was not - police soon announced that in response to a complaint from  "a member of the public", they had launched an investigation to determine whether the display of the elephants constituted a crime, -perhaps leaving the objects in a public place amounted to littering, or an unlicensed public performance/art display. Subsequently, it was accounced that the culpril, rumoured to be a local "grassroots activist" -  whatever that might mean - was identified, confessed to having committed the act, and was given a warning. There was no further information on who made the original complaint to police and why he/she was so offended, and no further information on the culprit either. It would seem that everything was deliberately opaque, ultimately leaving just a vague message "smart alecs beware".

However, the Buangkok station was opened for use a few months afterwards. The public's demand got through after all.