The Straits Times Blogs - Christopher Tan

Pre-empted by the Internet

2009-09-01T08:16:00Z

Christopher Tan discusses the frayed nerves surrounding a recent news leak.

NEWS of the enhanced off-peak car (OPC) scheme is probably talk of the motoring town now.

But an unfortunate incident leading up to the announcement of the new and improved scheme – designed to persuade car owners to convert their rides to red-plates – proved to be far more exciting to the newsroom last Friday night.

It all began at a closed-door briefing for journalists held by the Land Transport Authority on Friday afternoon. It was to allow beat reporters to understand the upcoming changes to the scheme and to ask questions.

The announcement itself was to have been made public by none other than Transport Minister Raymond Lim at a ministerial visit two days later on Sunday.

But that was not to be - no thanks to a mysterious and virulent news leak, which happened despite all precautions.

Before the LTA briefing started, reporters were instructed clearly that the news was strictly embargoed until after Minister Lim had spoken. No one was supposed to call motor industry players for comments, in case they inadvertently informed them of the changes.

We were also told that we could not bring any recording devices into the briefing room. That meant no cameras either.

The briefing went reasonably well and reporters returned to give a rundown to their respective newsrooms and supervisors.

But by around 8.30pm or so that same day, the entire news release detailing all the changes appeared online.

The Straits Times was alerted to the leak by someone who spotted it on an online car forum, which had a direct link to an LTA site.

Within the hour, the entire motor trade – as well as a large part of the car forum community – had learnt of the changes. One senior motor trader even called up reporters to ask if they had heard of the new scheme.

The Straits Times newsroom was shocked, and everyone scrambled to find out what had happened and whether the news should then be run the next day (Saturday) as the leak had already spread far and wide.

The LTA was equally shocked. It could not explain how the news appeared on their website. Up until Tuesday, the authority says it was still investigating.

The authority's panic was palpable. After all, the leak had stolen the thunder from a Minister's Sunday speech.

When asked if The Straits Times could run the story on Saturday, LTA initially said no - only to lift the embargo eventually, together with the Ministry of Transport.

That meant that the media could release the news on Sunday. It also meant that Minister Lim did not have a biggish announcement to make during his Sunday ministerial visit to Bukit Panjang.

Mr Lim was gracious enough to agree to the embargo lift. Fortunately, he had another announcement up his sleeve: An update about the Circle Line.

Many of us (at least those of us in the newsroom) laugh about the fiasco now, but it caused real tension on Friday with just hours to go before deadline. The episode also underscores the impact of online information – once again.

In the past, news leaks were relatively mild – one could only rely on phones and the coffeeshop. But with the Internet, a leak takes on a life of its own. Within minutes, it is literally all over town.

Unless the LTA finds out how this one happened, it quite possible runs the risk of an encore down the road.

Shrinking maps, stretching the truth

2009-08-19T09:05:00Z

Christopher Tan says keep an eye on developers, not just their advertisements.

LAST week's stories about developers who sex up publicity materials of their new condos with supposed sites of future MRT stations go to show one thing: sweet sales pitches are to be taken with huge pinches of salt.

Those moody sunset shots featured in brochures showing good-looking people cavorting in enormous eternity pools set against an unblocked horizon?

Perhaps a Caucasian man standing over a BBQ pit in the foreground, flanked by svelte Asian women with champagne flutes in hand? And all around, lush greenery as far as the eye can see?

Well, they are all artists' impressions, and the actual development when completed may bear little resemblance to the artwork.

Most people dismiss this glowing, glossy practice as artistic licence or advertising latitude. Nothing more. As long as the impression does not include the Swiss Alps in the background, they shrug and sign on the dotted line.

But location maps in sales materials are another thing altogether. A map is weightier, as it is supposed to give the buyer a realistic sense of where the housing project is.

Not a rough approximate, but a true reflection of where's what.

So when developers resort to using location maps that are "diagrammatic interpretations", they mislead.

A developer's map showing 'planned' MRT stations.
PHOTO: MEADOWS@PEIRCE

The layman – especially if he is new to the country – cannot be expected to know that the map is not drawn to scale and that the schools and MRT stations cited in the drawing are not within reasonable walking distance, and are in fact several blocks away.

Sure, the advertisers want a neat map that is without the clutter you may see in a street directory. But that is no excuse for stretching the truth.

There may be fine print to qualify certain things. But the Consumers Association of Singapore (Case) points out that fine print has been ruled as "unfair" by the Fair Trading Act.

The scarier thing for the consumer is this. If a seller can stretch the truth in this manner, will he stretch the truth in other areas? Such as the size of the apartment. Or build quality. Or the types of finishing.

In short, how far can you trust such a developer?

With the current property boom, builders are rushing to complete projects in record time. The faster they complete a project, the faster they can collect payment.

Invariably, some units will have more than a few flaws. It is now increasingly common for home buyers to engage independent engineers to inspect their new place – so that they can have the developer rectify flaws before the one-year "warranty" is up.

Because many flaws will escape an untrained eye, only to become apparent much later. By then, it will often be too late.

Has it come to this? That you pay $1.2 million for a 1,000sqft studio, and have to go through it with a fine tooth comb to see if it has been built properly and built to specifications?

Sure, caveat emptor applies to property purchases too. But you would think that in a lawful, well organised and highly regulated place, consumers will have some peace of mind when they make buy the biggest ticket item of their lives.

The two developers cited in last week's stories are not the only guilty ones. But at least they have now modified their ads (one more willingly than the other), with one taking the extra step to inform buyers that a few MRT stations in the location map are unconfirmed.

As certain as the sun rises, there will be others in the future who will try to pull a fast one. But rest assured, The Straits Times will be watching – even if no one else seems to be.

Read more: No more 'future MRT stations'

Age before looks?

2009-07-22T11:20:00Z

Christopher Tan examines people's fixation with wrinkles and looks.

THE fuss over local actress Zoe Tay having more wrinkles than rival Fann Wong is both amusing and worrying.

Amusing because in light of rising terrorism, topsy-turvy economics and a possible pandemic, we have found it fit to dwell on something as trivial as wrinkles. On a face. Of a local celebrity.

Worrying because it is yet another damning evidence of Asia’s rising preoccupation with youth.

So what if Zoe, 41, has a few more wrinkles than Fann, 38?

You will be hard put to find inanity of a similar scale anywhere else.

Does Meg Ryan, 47, have more wrinkles than Jodie Foster, 46? Who goes for Botox and who doesn’t? Who cares?

It is sad that a person’s appeal and ability hinges so much on such superficiality.

And I dare say it is more evident and widespread in Asia – where plastic surgery hub Korea resides – than other parts of the world.

Ironical, if you think about it. That the cradle of Confucianism worships youth and disses the process of aging.

I see this whenever I go on overseas assignments. The journalists from Western media tend to be of my vintage (born before 1960) or older. I see the same old Caucasian faces.

They include Britain’s Paul Horrell, 45, Germany’s Georg Kacher, 57, and South Africa’s Jake Venter, 74 (!).

But the Asian presses keep sending newer and younger writers. What happened to the veterans?

Kicked upstairs and became deskbound? Quit? Or worse, moved on?

It is quite clear the Western publishers value maturity and experience more. Perhaps the publishing world is not representative of society at large, but it is still an observation worth mulling over.

Especially when Singapore is now looking to encourage residents to work well into their sixties. Government initiative is one thing, but the mindset of employers is another.

From what we’ve seen so far, the terms and conditions facing mature workers are not all that enticing.

Admittedly, a 50-year-old may not have as much stamina as a 25-year-old. But productivity does not depend solely on stamina and speed. It depends on efficiency and completeness – two aspects which are sometimes diametrically opposed to what you can achieve with speed and stamina.

On that account, I would venture to say that Zoe is a far more accomplished actress today than when she was a fresh-faced Star Search contestant two decades ago. She has more breadth and depth, and is a lot more watchable as a result.

The same can be said for Jodie Foster, who has matured like fine wine from the time she appeared as a child prostitute in Martin Scorsese’s Taxi Driver in 1976.

Having said that, youth sometimes embodies one thing that is undervalued: enthusiasm. I say “sometimes” because the youth of today do not always appear as enthusiastic (about anything) as the youth of my generation.

Nor are they as “hungry”.

On their part, the mature segment of society needs to stay relevant, and more importantly, healthy and fit.

Inspiration can be had in folks like Borneo Motors’ managing director Koh Ching Hong, who is entering his fifties but is a marathon runner who has gone on to take part in Ironman races.

He succeeds 60-something Mark Choong at the Toyota distributor. Incidentally, Mr Choong, who retires at the end of the month, has the sharp and analytical mind of a chess master.

Another “oldie but goodie” is Joseph Ong, managing director of Nissan agent Tan Chong International. Mr Ong, well into his sixties, not only takes part in Ironman, but takes home trophies from the gruelling competition.

Me? I must admit I am nowhere as fanatical as these chaps in the fitness department. But I do exercise regularly, and am able to do as many (if not more) push-ups, chin-ups and laps around the stadium as when I was 18.

And I am still able to land as many stories as I did when I first started in this company 26 years ago.

Most importantly, I am able to spend time with friends and family.

Only thing is, I have a lot more wrinkles, and a little less hair.

All aboard for S’pore’s rail ambition

2009-05-28T10:18:00Z

Chris Tan remarks on the speed of the rail roll-out in Singapore.

PUBLIC transport commuters got onboard the first Circle Line trains today – nine years after the multi-billion-dollar project was announced by the Government.

They may only have five stations – Bartley, Serangoon, Lorong Chuan, Bishan and Marymount – out of the line’s 29 to visit, but it is a start.

By middle of next year (2010), another 11 stations along the southern stretch of the 33.3km line leading to the Marina Bay area are expected to open.

The remaining 13 that dot the north-western arc of the line will open from 2011.

If not for a 2004 tunnelling accident along Nicoll Highway that claimed the lives of four Circle Line workers, and which led to a massive review of construction methods, the line would have been ready earlier.

But what has happened has happened, and hopefully, Singapore has learnt from the tragedy.

Looking ahead, it will be merely another 10 years or so before three all-new MRT lines are up. They are the 40km Downtown Line, 27km Thomson Line and 21km Eastern Region Line.

Together with extension projects that will stretch the East-west Line to Tuas (14km) and the North-south Line to Marina South (1km), we are talking about 103km of rail projects – more than thrice the length of the Circle Line – within a decade.

The mind boggles at the rate of expansion. No other country has embarked on this scale of mass transit works, and at such speed.

When everything is completed by 2020, most of the residential and commercial centres on the island will be connected by rail.

This is nothing short of awesome. The fast-forward charge to connect Singapore, all announced by Transport Minister Raymond Lim, more than makes up for the heavy hesitance that clouded new rail projects in the past.

Readers will recall the protracted debate that preceded the construction of the 20km North-east Line, and the public relations fiasco that followed the decision not to open its Buangkok station.

Minister Lim reassured Singaporeans that in future, the decision to build new rail lines will not hinge on the commercial viability of the line in question. Instead, the Government could give the go-ahead to build as long as the entire network remains viable.

This certainly takes some angst out of the equation. And it certainly gives hope to those who long for a train station that is within walking distance of their homes or workplace.

In the meantime, as $40 billion worth of rail projects get underway, the builders should try new ways to minimise the dust, the disruption and the soil movements.

But even more importantly, they should never forget the Nicoll Highway accident, and the old saying that haste makes waste.

More buck for the bang

2009-04-20T09:59:00Z

Christopher Tan says drivers are partly to blame for rising insurance premiums.

FACT No 1: In a rear-ender accident, the vehicle behind is almost always at fault.

Fact No 2: Minor injuries such as whiplash and sprains are almost impossible to prove.

Orthopaedic surgen Dr Tan Jee Lim observes that even MRI (magnetic resonance imaging) can only pick up soft tissue injuries in the early stages.

“In cases older than three weeks, MRI is not very effective,” he says. “However, a negative MRI cannot rule out a whiplash injury.”

Fact No 3: Armed with Fact 1 and 2, unscrupulous motorists are making money from insurance claims, working knowingly or unknowlingly with parties that may or may not include workshops, lawyers and doctors.

Fact No 3 is of course difficult to prove. It requires lots of time and effort on the part of an insurance company and the aggrieved policyholder to pursue a suspected case of abuse to the end.

Most parties will simply settle the claim, after a bit of bargaining. At the end of the day, policyholders will collectively shoulder the cost of such claims.

On the other side of the coin, some insurers tend to drag their feet when dealing with claims – whether they are genuine or not. This only encourages claimants to seek legal action to expedite the process. And when legal action is involved, the claim amount rises.

This unfortunately is the sorry state of affairs – not only in Singapore, but in almost every developed nation where people are more aware of their “rights”.

But before laying the blame squarely on litigious individuals, crooked workshops, ambulance-chasing lawyers, incompetent insurance claims managers and doctors who prefer to err on the side of caution, motorists at large should do some soul-searching.

One of the first questions they should ask is: How do I drive?

By and large, the blunt, honest answer to that may be: Badly.

Yes, people in Singapore drive like they own the road. I have driven in many countries and I say this with shame that Singapore’s standard of driving does not rank high among countries in the developed world.

We do not signal, we road-hog, we overtake on the left, we do not give way, we do not keep a safe distance, we change lanes incessantly just so we can arrive half a second earlier, we speed mindlessly.

And that’s on a good day.

How many times have you witnessed drivers holding a phone to their ear while on the expressway? Worse still, texting? There are still those who refuse to belt up, or worse, refuse to buckle up their children.

To add to the Molotov mix, we have cabbies desperate for fares (no thanks to surge in taxi population), more foreigners at the wheel (many from countries with, gasp, worse driving habits than Singapore), and an inability by the authorities to fit effective speed-limiters that are tamper-proof on heavy commercial vehicles (little hope then, on other commercial vehicles).

Our road safety statistics say it all. Last year, 222 people died from road accidents, and 10,964 were injured. That compared with 214 and 10,566 respectively in 2007.

Between 2003 and 2007, more than 44,000 people were injured on the roads. The annual figure crossed the 10,000-mark in 2007 to hit 10,250 – 30 per cent more than in 2003 and outpacing the 16.5 per cent growth in vehicle population in that timeframe.

Of course the authorities will point out that Singapore’s human and vehicle population had risen in tandem; and that the accident-population ratio is still within the norms of the developed world.

That may well be true. But for a country that has outlawed littering, chewing gum and smoking in practically all public spaces, you’d expect a better-than-average road safety record.

Again, it would be wrong to point the finger solely at the authorities (for one, there just aren’t enough traffic cops here). Improving the standard of driving here starts with the individual – that is, you and me.

If that doesn’t happen, there will continue to be ample opportunity for dishonest folks to make a buck from a bang-up.

Only fools rush in

2009-03-27T07:57:00Z

Christopher Tan says fans should wait to buy their F1 tickets.

ONE of the most incredulous stories this week – and perhaps this whole month – was that tickets to the Singapore GP will be pricier this year.

At a time when the mother of all recessions is forcing hotels to cut rates, restaurants to come up with imaginative buffets, tour operators to offer hard-times good-time packages, the organisers of the Formula One SingTel Singapore Grand Prix deem it fit to raise prices.

In a news report carried in the Prime section of The Straits Times, the organisers were quoted as saying that rates will go up by 7 to 29 per cent in eight categories.

But – wait for this – early birds will get a discount of between 7 and 26 per cent.

This, to me, smacks of nothing more than a cheap attempt at whipping up interest in the race and appealing to the "kiasu" (afraid to lose) psyche of Singaporeans.

My advice is, don't fall for it.

Otherwise, you will end up like the dozens who booked suites in hotels around the circuit last year – only to find rates plummeting nearer to race day.

If you recall, many hotels were nowhere near the occupany levels they expected. And that was last year, before the financial crisis took hold.

With the world well into its worst recession in memory, do you think demand for tickets will be high?

For an inkling, look at the latest tourist arrival figures. The Singapore Tourism Board reported that the February number – 689,000 – was the lowest in four years.

Organisers of the Malaysian Grand Prix are already expecting a 20 per cent drop in ticket sales – driven by a sizeable shortfall in foreign visitors.

So, if you're an F1 fan, don't go into overdrive with panic. Like all goods and services in this economic climate, it's a buyer's market. And it will be a buyer's market for some time to come.

There are 72,000 tickets available for the Sept 25-27 race. It will just be a matter of time before a "clearance sale" arrives.

Like Elvis said; only fools rush in.

No 'quick fix' on the horizon

2009-03-23T12:15:00Z

Christopher Tan disagrees with bailing out businesses that caused the crisis.

AN OLD joke about former American president George W Bush goes like this:

During a golf game, an aide had rushed over to Mr Bush and reported: "Sir, we've just had our first Brazilian casualty in our war against terror."

To which, Mr Bush, looking suitably mortified, let out an "oh no!". Then, pulling the aide aside quickly, he whispered: "How many is a brazilian?"

It was only a joke of course (I hope), and it's funny because of Mr Bush's seeming predisposition for gaffes.

The current world economic situation on the other hand is real and is no laughing matter. But how many of us really know how many is a "trillion"? (It's a number with 12 zeroes behind it. In other words, 1,000 billion.)

This is the amount the US Congress has approved to rescue its ailing financial institutions (US$700 billion). Separately, governments the world over are dishing out billions upon billions in taxpayers' money to do likewise.

The question is: Why?

Why are we rescuing institutions most responsible for the mess that we are in? Why do these ailing institutions take up the lion's share of bailout packages - in the case of the US, close to three quarters?

Why should this be so, when they account for far fewer jobs than the manufacturing or agri sectors?

Does the world need more investment bankers, derivative traders, insurance agents or gamblers in disguise?

Going by the rescue plans and their chief beneficiaries, it would seem so.

This is going to turn out badly.

AIG's now infamous bonus saga is just the first sign that throwing good money after bad is not going to solve anything, much less teach the fumbling financial sector the follies of its ways.

Taxpayers' money would have been much better spent on the real world, where real people work in real jobs making real things.

Not spiffy dudes in Savoy Row suits and $100 haircuts making margin calls, packaging predatory loans to unsuspecting individuals, and devising devilish instruments that no one understands - as events have proven - not even themselves.

Think of the High Notes 5 and Minibond notes that relieved many a retiree of their life savings recently.

Then, think of the easy loans banks plied when the bulls were charging - given inane names like Easi Money or Eazi Cash. They were practically forcing cash on consumers. And at the first sign of trouble - round about third-quarter 2008 they ran for the hills.

Now, when businesses are in actual need of financing to stay in operation, the very same financiers become all reluctant, citing judicious policies when none existed before.

It is sad how this sector has been allowed to flourish, to the detriment of others.

The strastospheric remuneration of the financial sector has lured a whole generation of bright and promising young men and women into the dark side. These people could have been brilliant doctors, engineers, inventors, researchers, and last but not least, teachers.

Instead, they now sit behind multi-screen desks making money from nothing. And the world is no richer for that. Except for the suited minority, no one is.

Yet, we are bending over backwards to ensure they still have their Mercedes-Benzes, designer studios and yes, fat year-end bonuses.

The late Akio Morita, founder of Japan's Sony, once said that real successful economies are those that make things. It may appear too simplistic a view – and perhaps a tad biased – but there is undeniable wisdom in it.

The US could have devoted more money to help crank up its auto industry or to irrigate its parched farming sector. Or it could have invested in areas which have perenially needed attention: the education system, inner-city housing, medical welfare.

Or even alternative energy.

The hundreds of billions would then have helped so many people with real needs.

But like most world governments, the Obama Administration seems to have succumbed to the temptation of a quick fix, by granting so much money to so few.

And unfortunately, a quick fix ain't on the horizon. Not when the very institutions which triggered the world financial meltdown are propped up and nursed back to health.

An old way of thinking

2009-03-06T22:10:00Z

Christopher Tan says "premium fares" are a dizzying prospect.

THE Government calls it "premium fares". The term describes the higher charges that are levied on riders of the North-east MRT Line (NEL).

The five to 25-cent "premium" is to offset the higher cost of operating a fully-underground driverless train system. So says the official line.

"Premium fares" are likely to apply to the new Circle Line (CCL), which starts operating on May 30. It too is fully underground and driverless.

The CCL is operated by SMRT Corp and the NEL by SBS Transit.

I recall chatting with SMRT executives about "premium fares" when the NEL opened in 2003. They were flabbergasted, and said that their north-south and east-west lines also incurred costs such as air-conditioning, screen doors, ventilation and lighting – expenses cited for the NEL's "premium fares".

Not only that, SMRT had to hire drivers for their trains. But now, it looks like SMRT too will get to enjoy premium charges.

Commuters will have no choice but to pay up. Even if the CCL's completion is years behind schedule. Even if the section of the line that opens on May 30 consists merely of five stops.

The Public Transport Council, a transport watchdog set up by the Government, is unlikely to object to the CCL's "premium fares". After all, precedence has already been set by the NEL.

The council will be making a huge misstep if it takes this path of least resistance.

For one, it will undo the goodwill it built last month when it effected a two-cent reduction in bus and train fares to help commuters weather the worsening downturn.

The paltry reduction, which takes effect April 1, will be hollower to commuters who have to stomach "premium fares".

The council should take this opportunity to undo this most unpalatable notion. To the commuter, there is nothing "premium" about the NEL or CCL if they discount the million-dollar art installations gracing their stations.

Fully underground MRT lines free up land, a scarce commodity in Singapore. The Government makes billions when it sells land above these lines. Often, the land sales pay for the cost of the entire line.

So, if an operator does indeed incur higher costs in running a fully-underground line, perhaps the extra expenditure – if it can be substantiated – should be subsidised by grants.

Transport Minister Raymond Lim made a landmark announcement in January 2008 that may have some relevance to the issue of "premium fares". He said that the decision to build a new rail line will no longer hinge on whether it can be commercially viable on its own.

Instead, the Government will go ahead with new lines as long as the entire network remains viable.

"Premium fares" however flies in the face of this newfound principle. By allowing "premium fares", we are reverting to the old thinking of allowing each line to be a stand-alone profit centre.

And it just makes my blood boil. The same way that certain taxis are allowed to charge higher flagdown fares.

These higher flagdowns date back to the 1990s, when the first Mercedes-Benz cabs started plying. Premium fares for a ride in a Merc – that's fair enough. But today, Korean cabs, Czech cabs and certain run-of-the-mill Japanese cabs are allowed to levy higher flagdowns.

The reasons range from these vehicles having automatic transmissions to them being "greener". Incidentally, the "greener" cabs already had a sizeable "green" rebate from the Government when they were registered.

Some of them also run on cheaper fuel, such as natural gas. So why are they still charging higher fares?

There was a time when such a practice would come under the scrutiny of the PTC. But no more.

The taxi industry has long been deregulated. Taxi commuters probably have a choice – they can bypass a Korean cab and wait for a Toyota Crown if they do not wish to pay more.

But there is no such luxury for the CCL or NEL commuter.

Off-peak luxe cars a matter of face

2009-02-18T08:14:00Z

Christopher Tan on why well-heeled folks will not want to be seen in an OPC.

TRANSPORT Minister Raymond Lim’s plan to make off-peak cars (OPCs) more attractive sounds like a good one.

Essentially, it is three-pronged. He is looking to see if folks who convert their normal cars to OPCs could be granted cash rebates. Currently, those who convert can realise their tax savings only at the end of the car’s lifespan.

Secondly, he is looking to replace the cumbersome paper coupon day licence with an electronic payment system. This will make it more hassle-free for OPC owners as and when they need to use the car outside prescribed hours.

Finally, Mr Lim is considering extending the hours of free use, possibly on Saturdays.

With these initiatives, the Government hopes that more people will switch to OPCs, thus putting less pressure on road space during peak periods.

But will there be many more converts?

A street poll conducted by The Straits Times revealed that few are willing to make the switch. Out of 50 car owners surveyed, only three said they would go for it.

The most common reasons: I need my car at all hours of the day; and the usage hours of OPCs are too restrictive.

A common refrain from OPC owners which the poll did not unearth has to do with the flat $20 day coupon that red-plated car owners need to buy should they use the car outside the 7am-7pm timeframe on weekdays. On Saturdays, OPCs can be used free of charge only after 3pm.

Why can’t it be a variable charge, instead of a flat charge, they ask.

It is a valid question. If the OPC scheme is to be made more successful, perhaps it should be considered too.

But there is a limit as to what the Government can do to make OPCs more attractive. Especially to more well-off individuals who see their car as a status symbol first, and a mode of transport second.

Which explains why premium cars make up only a small percentage of OPCs here – even though their numbers have grown in the last two years.

One owner of an off-peak Lexus had this to say: "There is a stigma attached to luxury OPCs. Once, some teenagers made a not-so-nice comment while walking by my red-plated car. And on the road, we get extra stares."

It is a genuine "concern." Perhaps, this is why Mercedes-Benz dealer Cycle & Carriage seems reluctant to talk about its OPC customers.

"We sell very few off-peak cars," a manager once said defensively.

But of course. No self-respecting towkay would want to be caught "red-plated", would he?

When it comes to something as emotive as cars, logic often does not rule. Even though it makes perfect sense to have an off-peak Porsche for the weekend, and commute by train on weekdays.

So, there will continue to be well-heeled folks who are quite happy to park their fancy rides for 10 hours a day in the city. They will also incur ERP charges which they will then gripe about at cocktalils, curse whenever they are caught in a traffic jam, and turn their noses up whenever they pass an OPC.

Under-declaring parallel imports

2009-01-20T07:26:00Z

Christopher Tan asks if car buyers should be liable for tax-evading imports.

PARALLEL importers have helped to increase competition in the motor trade, and consequently, helped to bring down car prices.

Unlike authorised agents, these importers do not get their cars directly from vehicle manufacturers. Instead, they source their products from overseas dealers.

Factor in the profit margins that these overseas dealers make and parallel imported cars would typically have a higher “landed cost” here – that is, cost plus freight and insurance.

And yet, parallel importers have generally been able to sell cars at noticeably lower prices than similar models sold by authorised agents.

Many are able to do this because they have far lower overheads than manufacturer-appointed dealerships. No fancy showrooms, no factory-trained personnel, no comprehensive spare parts inventory, no huge advertising and marketing budgets, no dedicated after-sales facilities.

This was the business proposition when parallel importers first appeared in the early-1990s.

But as more appeared on the scene, the competition heated up quickly. To be competitive, some resorted to less honest means.

The most common method is to underdeclare the cost price of the car. By doing so, the car’s open market value (OMV) – upon which registration taxes are based – becomes lower. Because car taxes amount to about 120 per cent of its OMV, a lower value can give the seller a substantial cost advantage.

Singapore Customs cracks down on these cheats regularly, because under-declaring a car’s value is tantamount to tax evasion. Its latest swoop yielded seven parallel importers suspected of evading $3.4 million in excise duty and GST on about 3,000 cars.

If convicted, they could be made to pay up to 20 times the amount evaded. If they can’t pay, they will be thrown behind bars. The OMVs of the affected vehicles will be adjusted.

That’s not the end of it. After a conviction, the Land Transport Authority will act to recover unpaid registration taxes arising from the adjusted OMVs.

And motorists who happen to have bought such vehicles will then get a letter from the LTA notifying them of the new OMV, and consequently, the car’s higher scrap value.

So it would seem that consumers are in a win-win situation. If tax-evading parallel importers get away with it, they can continue to buy cheap cars from them. If the crooked importers are caught, the cars’ scrap values are raised.

The question is: Should consumers continue to get away scot-free? If it is against the law to receive stolen goods, should buying a car with an unrealistically low OMV be unlawful too?

The argument against this would be that it is unfair to expect consumers to know about the subtleties of OMV.

But is it, really?

Car buyers are a savvy bunch these days. The Straits Times and Consumers Association of Singapore often receive OMV-related complaints from the public.

The most common gripe? The car they just bought had a lower OMV than what the salesman promised. And they know well that a lower OMV translates to a lower resale or scrap value.

No one has received a complaint yet about an OMV that is too high.

While we leave the argument with lawmakers, let us be clear that parallel importers are not the only ones who under-declare. Big, established authorised agents have been taken to task too.

The next group that may find itself in a sticky situation are those who import re-conditioned cars. Since the barriers to importing used cars were lifted two years ago in 2007, mint-condition used high-end imports have appeared regularly.

The OMVs of such cars are typically much lower than new cars – on the basis that the vehicles are second-hand. But are they all in fact pre-owned?

It makes you wonder, especially when you see hotly sought-after models like the Nissan GT-R appearing as “used” – just one month after the official model's launch in Japan. At the time, such a "used" car could fetch a higher price than a brand new GT-R because of the long wait list.

Now, the man in the street has no way of knowing that, has he?

Buyers and sellers will benefit but...

2009-01-19T06:17:00Z

Christopher Tan thinks cash rebates for scrapped cars won't free up roads.

EARLIER this month, The Straits Times reported that the Government had handed out $410 million in cash refunds to motorists who scrapped their vehicles.

If you’re a foreigner reading this, you might wonder what the significance is. Is Singapore paying its residents to give up their cars? Well, not exactly.

Car taxes here are made up largely of two parts: ARF and COE.

The ARF is an additional "registration fee", which is 100 per cent of a car's cost price. The COE is a certificate of entitlement, which is a publicly auctioned licence to own a vehicle in Singapore. The cost of this limited supply piece of paper is currently around $6,000, although it has in the past gone as high as $110,000.

To encourage a youngish vehicle population that is deemed cleaner and more roadworthy, the Singapore Government gives back part of these taxes if the car is taken off the road before its tenth year.

The earlier it is scrapped, the bigger the amount returned.

The cash rebate made news because before last September, refunds were given out as tax credits for a new vehicle.

If an individual does not wish to get another car, he had to sell the credits to a middleman – often to a used car dealer, and usually at a sizeable discount.

Despite numerous calls for the refund to be made in cash, the Government – or more specifically the Finance Ministry – has said "no". The reason given back then? It’s a rebate scheme, not a refund.

But Mr Raymond Lim changed that, two years into the job as Transport Minister. Mr Lim said the about-turn was because he wanted to "leave no stone unturned" in his quest to get people in Singapore to drive less and take public transport more.

"So this is one more stone that I'm turning up to have a look at, to see if it can be done," he told reporters in May.

In July, the Government announced that cash refunds will be granted from September. Four months into the new scheme, $410 million were disbursed – or about $100 million per month.

By now, it would have paid about half a billion dollars.

The question now must be: How effective will this be in encouraging drivers to give up their cars for buses and trains?

There is currently no evidence. But even if 1,000 people who had taken the cash refund did not go out and buy another car, it does not mean Singapore’s car population will shrink by 1,000.

This is because supply of COEs – the absolute control on vehicle population – is determined largely by the number of vehicles that are taken off the road.

So, even if 1,000 people gave up driving, the COE supply does not shrink by 1,000. In fact, every single one of the 1,000 scrapped car will be resurrected as a new car, thanks to COEs.

In that case, what good is the cash rebate scheme? Well, for one, it gives people choice. And choice is always good.

If someone had $20,000 worth of rebates in cash, he could go straight to a car showroom and place a downpayment for the latest model.

Or he could put the money away for a rainy day, especially at a time like this.

If the number of people who choose to do the latter is sizeable, it might pull down COE prices, even though it is quite likely that there will be fresh buyers who will take up every available piece of COE. That’s because overall demand will be lower.

Lower COE prices usually means lower car prices. And that’s also often a good thing.

One unintended positive spinoff from the cash refund scheme is that there will be less opportunity for scams to arise. The motor industry has in the past decade or so been hit by multi-million-dollar fraud cases involving tax credits from scrapped cars. These cases usually involved "credits" which were either non-existent or were from vehicles that were in fact not scrapped.

The fraudsters would also take out sizeable bank loans with these "credits", dragging financial institutions into the mess.

Since rebates for scrapped cars are now given in cash, the foggy paper trade that thrived on scrapped car tax credits has all but disappeared. And with it, the scams.

Let's bring in left-hand-drive cars

2008-11-17T10:31:00Z

Christopher Tan argues why the S'pore market is ready for such cars.

IF there is a silver lining in the prevailing gloom and doom, it would have to be that it forces us to rethink certain policies.

From big picture ponderings like just how free should a free-market economy be, to scrutinising the ways financial institutions sell investment-linked products.

Here's one more to the list: Should Singapore motorists be allowed to buy left-hand-drive cars?

It is not as inconsequential a question as it appears.

More than two-thirds of the world drive cars with the steering wheel afixed on the left side. The remainder, largely former British colonies (like Singapore), does the opposite.

Singapore, as you might be aware, does a roaring trade in vehicle re-exporting. It is estimated that we re-export 50,000 to 80,000 vehicles a year, ringing the tills to the tune of $500 million or more.

Our customers are mainly right-hand-drive markets like Malaysia, Thailand, New Zealand, United Kingdom and certain African states.

The re-export trade is currently pretty weak. Many consumers are holding back on big-ticket purchases, and the car is the first on the axe list.

Now if our vehicles could be sold to the whole world instead of just one-third of the world, we will be able to fetch better prices in good times and move our vehicles faster in a weak market.

Allowing left-hand-drive here is not as chaotic as it sounds. Already, there are dozens of left-hand-drive vehicles here, driven mainly by foreign diplomats who find it too much of a bother to switch.

And in places like Japan, United Kingdom, Thailand and even Malaysia, both left-hand and right-hand vehicles are allowed. So there is precedence.

The main inconvenience of driving a left-hand-drive car is when you approach one of the older carparks which still dispense tickets. Or require you to insert a Cashcard.

But with more and more carparks adopting the ERP technology, it should not be a major pain for much longer.

There are more fundamental reasons why left-hand-drive cars may not fit in, or so say the regulators. The road system here is right-hand-drive biased. For instance, when turning at junctions, visibility of oncoming traffic may be impeded if you are seated on the 'wrong' side.

In the Highway Code, we are supposed to give way to traffic approaching from your right. That's because if you don't, you are liable to get hurt - if you’re seated on the right.

But going by real-life experiences, not many drivers here adhere to what they learnt in driving school. Many pretty do as they please.

The one other consideration is how car headlamps are tilted to one side to avoid blinding oncoming traffic. Again, in brightly-lit Singapore, that is not a huge issue.

When I was test-driving a left-hand-drive Smart here a few weeks ago, I did not encounter any problem. Granted the Smart is a tiny car and it matters little which side you are seated. And I did not happen to come across any carpark which required me to retrieve a ticket or insert a Cashcard.

But you know, I would gladly suffer the little inconveniences if it means my car gets a better resale value. And that's what it means if Singapore's re-exported cars can appeal to buyers in more countries.

Not only that, car enthusiasts here can look forward to products which are available only in left-hand-drive. These include the enigmatic BMW Z8, the gorgeous Porsche Carerra GT, the fantastic McLaren SLR, the outrageous Lamborghini Reventon and the monstrous Bugatti Veyron.

It will also mean car buyers can get to acquire new models as soon as other major markets. Many manufacturers tend to produce left-hand-drives first (and understandably so), followed by right-hand-drives months later.

Finally, car collectors will be able to consider a rare vintage that happens to have its steering wheel on the other side.

With the two integrated resorts opening their doors in one or two years' time, the demand for exotic cars will surge. If we allow left-hand-drives, the pickings will be so much the richer.

It is surely something to ponder.

Still a good time to buy a car

2008-11-11T09:32:00Z

Christopher Tan on why potential buyers have little to worry about.

FOLKS who aspire to own a set of wheels need not lose sleep over the Government’s planned cut in COE supply going forward.

From next year, the allowable annual growth rate in the vehicle population will be 1.5 per cent, instead of 3 per cent that has been in place since 1990.

Based on an expected car population of 550,000 at end-2008, a 1.5 per cent growth rate will yield 8,250 fresh COEs for cars. This would be more than what the 7,440 which the 3 per cent cap yielded in 1990.

Granted the competition for cars will be greater, since the population has grown considerably.

But replacement demand should slow down dramatically too. Replacement demand refers to demand generated by current car owners changing cars.

Because the car population is fairly young – with 80 per cent of all cars being less than four years of age as of last year, versus 30 per cent back in 1998 – replacement demand will not be all that hot in coming years.

Besides, many current owners are saddled with huge loans. Owners cannot redeem these loans without being sizeably out of pocket.

In the bigger picture, global demand for cars is expected to drop in the next two to three years, fuelled by the credit crunch and the devastating financial crisis that is sweeping the world today.

Already, car companies from Toyota to General Motors to Ford to Bentley have openly declared that they are cutting back on production, possibly for the next couple of years.

According to PriceWaterhouseCoopers analysts, recovery in the world automotive sector is unlikely to happen until 2010.

It said the economic downturn has affected the mature markets more than anticipated and its effect has now reached the emerging markets.

Vehicle sales in America have fallen to their lowest level in 15 years and are unlikely to return in the near future due to economic recession.

These factors can only be good news for prospective car buyers, as prices are likely to be soft in an environment of low demand.

The only element that some quarters reckon may hit buyers is the strong Japanese yen. The currency has gained some 15 per cent in the past two months against the Singapore dollar.

This, some motor traders point out, has raised the cost price of cars by between $3,500 and $5,000.

But whether sellers will pass the higher costs to consumers is quite another story.

Six years ago, a Monetary Authority of Singapore study concluded that car prices do not necessarily move in tandem with currency rates.

In its January 2002 Macroeconomic Review, the MAS Economics Department noted that the cost price of Japanese cars – which account for more than 60 per cent of cars sold here – was affected by yen movements.

But the impact stops there, largely because of the COE system, which it said "appears to have driven a wedge between import prices and the eventual consumer price in our market".

It cites the example of the Asian crisis period (1997-1999). Import prices surged with the weakening of the Singapore dollar against the yen, but COE rates, and consequently retail car prices, "fell sharply as consumer sentiments were poor".

The tenuous link between the state of the yen and the final selling prices of Japanese cars here has been pointed out by motor traders and industry watchers.

If the yen softens, a significant portion of the extra profit margin arising tends to go towards more aggressive bidding for COEs. If the yen firms, the tendency is for importers here to absorb the rise, at least initially, so as to maintain sales and protect market share.

But if a strong yen coincides with relatively weak European currencies over several months, the market share of the Japanese dips. For instance, in first-half 2000, their slice of the pie fell below 60 per cent. There is evidence to suggest that this had to do more with their distributors’ weakened COE bidding power than it had with uncompetitive retail prices.

Will the Singapore car market collapse because of the financial meltdown? Going by past recessions, unlikely. Again, thanks to the COE system.

Singapore Vehicle Traders Association president Neo Nam Heng said: "We have the COE system, where old cars need to be replaced. So the market will not collapse. We have a special system, a machine that keeps the industry moving."

Indeed, during the 18 years that the COE system has been in place, car ownership rate has risen from one in 11 residents in 1990 to one in seven today.

Cars have also become more affordable. Between 2005 and 2007, car prices fell to their lowest levels since 1990. The average monthly household income meanwhile had more than doubled to $6,830 between 1990 and 2007. While inflation had pushed up prices of practically all goods and services, some cars were as "cheap" as they were in the 1980s.

And Singapore’s car market is nearly five times the size of Hong Kong’s, despite the latter having nearly twice as many residents.

So, if you are in the market for a car, you have little to worry about. Except for rising running costs, that is.