This article will discuss how Singapore has managed traffic congestion by restricting vehicle ownership through its unique Vehicle Quota System (VQS). The VQS is an innovative road transport policy that contributes to Singapore’s world- class transportation system (Phang, Wong, & Chia, 1996). Singapore was the first country in the world to introduce the VQS in May 1990, marking a new chapter in Singapore’s innovative approach to solving its land transport problems (Lam & Toan, 2006).
Road transport imposes negative externalities on society. These externalities include environmental and road damage, accidents, congestion and oil dependence (Santos, Behrendt, Maconi, Shirvani, & Teytelboymb, 2010). Today, governments face a common problem of worsening traffic congestion in urban areas. Congestion has created a social cost, as delays in traffic are not only inconvenient to road users, but also trigger a chain reaction on various factors, from pollution to lost man-hours (Goh, 2002). Recognizing the need to tackle worsening traffic congestion, governments realize the need to steel their nerves and force motorists to pay for road space (Goh, 2002).
Singapore is a small, densely-populated city-state with a total population of four million people. The main island has a land area of 648 square kilometres (Ibrahim, 2003). The Land Transport Authority (LTA), a statutory board under Singapore’s Ministry of Transport, spearheads all land transport developments with the goal of achieving a world-class land transportation system for Singapore by addressing such negative externalities of road transport (Ibrahim, 2003).
Constrained by limited space, the LTA put in place a comprehensive set of land transport policies to balance the growth in transport demand and the effectiveness and efficiency of the land transport system (Lam & Toan, 2006). It recognized that, unless the cost of car ownership is raised periodically, the demand for car ownership would remain high as Singaporeans’ personal incomes increase. In a bold move to control the number of vehicles on the roads and ease traffic congestion, the LTA introduced a vehicle quota system on May 1, 1990 (Ang, 1990). The VQS is still in place today (Santos et al., 2010).
Under the VQS, prospective vehicle owners are required to purchase a Certificate of Entitlement (COE), which is a licence that lasts for ten years. The government sets a quota on COEs for different vehicle categories a year in advance. The allocation of COEs is done through open auction. When a person submits a bid, the current successful price is known and the person can adjust his bid. As the number of bids usually exceeds the set quota, there are usually unsuccessful bidders. There are two COE open bidding exercises every month (Santos et al., 2010). The quota for a particular year depends on the net allowed increase of 3% and the number of vehicles to be de-registered in that year (Lam & Toan, 2006).
Under the VQS, the growth of the vehicle population is controlled by the number of licences put up for tender (Ang, 1990). In other words, the growth rate of motor vehicles each year is solely decided by the government. The VQS has successfully achieved the LTA’s intention of achieving absolute certainty in the number of cars registered in Singapore (Phang et al., 1996).
The major impact of the VQS is the high car prices as a direct consequence of adding the cost of COE to the prices of cars (Lam & Toan, 2006). For example, the financial cost of a brand new compact car costs about $110,000 (Lam & Toan, 2006) which is equivalent to about CAD$87,000. This has adversely affected affordability and curtailed the aspiration for car ownership. Consequently, the VQS has transformed car ownership into a luxury activity (Ibrahim, 2003).
Before the VQS was implemented in May 1990, car ownership in Singapore took the form of a multitude of fiscal restraints. Taxes on cars included an import tax, lump sum registration fees, an additional registration fee and annual road taxes (Phang et al., 1996). Despite such exorbitant car taxes, car ownership continued to increase from 164,500 in 1980 to 271,200 in 1989 (Phang et al., 1996). After the VQS was implemented, 41,000 fewer vehicles were registered between 1990 and 1993 (Goh, 2002).
Overall, the VQS was successful in reducing peak hour congestion and growth in car ownership (Ibrahim, 2003). The traffic congestion in Singapore was contained because of the finite demand for travel on roads (Lam & Toan, 2006). As a result of the VQS and other transport measures, Singapore has been extremely successful in maintaining a relatively free flow of traffic in its roadways (Ang, 1990).
It cannot be disputed that the successful implementation of the VQS lies heavily on the government’s effective imposition of the policy and its acceptability to the public. Verily, restricting car ownership has been unpopular among Singaporeans. Thus, its implementation has entailed a consistently strong will on the part of the LTA. There has also been close consultation between the LTA and the public so that the public has fully understood the overall costs and benefits of the policy to the society as a whole (Ang, 1990). For example, the public has perceived the VQS as equitable because it does not involve payments, which tend to hit harder on the poor (Santos et al., 2010).
On a national scale, the VQS was seen as an effective policy in avoiding the levels of congestion and pollution characteristic of other cities in the Asian region. These avoided consequences were deemed to be important for the good of the island's population (Willoughby, 2001). On a global scale, these avoided consequences also became a significant potential draw for the foreign investors to do business in Singapore. Its relative lack of congestion has been one important reason for international businesses to continue to choose Singapore for locating regional headquarters for their Asian operations (Willoughby, 2001).
In conclusion, Singapore has successfully managed its traffic congestion problems through the effective implementation of the VQS for the past twenty-one years. In a land-scarce island like Singapore, the government knew it had to be bold enough to take the lead with innovative and novel approaches to achieve a comprehensive land transport network strategy (Lam & Toan, 2006). The continued effective implementation of such comprehensive strategy, which simultaneously meets the people’s needs as well as supports the state’s economic and environmental goals, has been and continues to be extremely crucial to Singapore’s sustainable development as one of the best places in the world to live and do business (Lam & Toan, 2006).
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