COE at $2

[timebomb]

Hi, folks,

If you have not heard, the COE for small cars in the latest tender is just $2.

I'm shocked!! This isn't suppose to happen, not with an open bidding system where everyone can see each other's bids.

In the old days when it was a closed bidding system, a freak result in the COE tender happened twice. The first time was when the COE for Cat 3 (1600 cc to 2000 cc) cars fell to just $50 from the previous month's $65,000. I remember that clearly because I was one of the lucky ones who got the $50 COE.

The government revamped the bidding system from a closed to an open one; the main purpose was to prevent a freak result from happening but apparently, it's not working.

Loh K L

[heeroyu16]

And I just my Vios.... and the darnest thing happens

[timebomb]

You know,

When the quota system was first introduced in 1990, the biggest concern among car-owners then was that car distributors could easily form a cartel to fix the COE price. Mr Mah Bow Tan promised then that if ever the authorities discover a cartel, they will throw the book at the culprits.

Actually, there was no need then to worry about cartels being formed. Because in a closed-bidding system where car distributors cannot see the bids of their competitors, there was no way for any of them to be sure that the other parties would keep their promises. A cartel, after all, is illegal so there's no way to put an agreement down in writing.

Then, a freak result occurred. In Jan 98, the COE for Cat 3 cars fell to just $50. One month earlier, the same COE was $64,100.

To prevent the same thing from happening again, LTA decided to switch to an open-bidding system where everyone can see what everyone else is bidding. Strangely, no one was concerned about cartels anymore. But I was. So I wrote a letter to the Straits Times. My letter raising the concern that an open-bidding system could easily give rise to a cartel was published in the forum pages. If memory serves, I said in my letter that in Singapore, where a few car distributors control more than half the vehicle market, it would be fairly easy for the same distributors to come to an agreement to fix the COE price. I didn't name the companies but between them, Borneo Motors, Cycle & Carriage, Tan Chong and Kah Motors sell about 63% of all cars. But there were no replies to my letter. I guess the LTA then didn't think it would happen.

It's still hard to say if a cartel is responsible for the $2 COE. After all, we are having a financial crisis so the $2 COE could really be a reflection of market sentiment. But even if there is a cartel, it would be something that's almost impossible to prove. In any case, how do you define a cartel in the first place? All the car distributors have to do is just co-operate by not bidding too aggressively and they can fix the COE price at whatever figure they like.

Loh K L

[Interestor]

going to see more dot garment vehicle on the roads soon.



CHeers..