http://groups.yahoo.com/group/Sg_Review/message/1745?unwrap=1
By: Mellanie Hewlitt
Singapore Review
15 Jan 2005
COE, Parf, ARF - confused? Characteristics of The Great COE Scam
It is glaring that although Singapore has the world's most expensive
cars, the vast majority of car owners remain confounded by the
complicated pricing and ownership system. (See artcile from the New
Paper 14 Jan 2005 "COE, Parf, ARF - confused?")
http://newpaper.asia1.com.sg/top/story/0,4136,81225,00.html?
In all developed countries, buying a car is a simple and transparent
affair that is concluded between buyer and seller. The only other
third-parties involved are the insurance company and the finance
company. In Singapore a series of bureaucratic shields and paperwork
complicate the process.
The system is massively complicated, designed to confuse the average
car buyer. The objective is to disguise the underlying scam which
involves siphoning funds from the car owner into the bloated coffers
of the government.
The latest tender saw car COE premiums ending at $18,400 (up to
1,600cc) and $14,002 (above 1,600cc) - the lowest in over a decade.
The government is set to release between 100,000 to 120,000 COEs this
year. At an average COE "price" of approx SGD16,201 per COE this
amounts to a whopping SGD1,944,120,000/- in COE revenue for the
government.
Although the supposed objective of the COE system was to regulate
traffic flow and reduce traffic congestion, a number of
characteristic reveal the actual COE scam which has the hidden
purpose of siphoning funds from car owners.
The scam is Revealed via the following formulae:
COE Revenue = COE Price X Number of COE issued.
Regardless of the price of the COE, the total COE revenue collected
remains generally stable at approx SGD1.994 billion. This is because
any fall in price is compensated by issuance of more COEs hence
keeping the COE revenue relatively stable.
Below are some of the characteristics of the COE scam:
1) The illusion created by the Scam is that the price of the COE
flustuates as a result of demand and supply. In reality Car Owners
are actually providing a buffer for the government and ensuring a
steady COE income stream.
2) The scam also effectively encourages Car Owners to scrap perfectly
good vehicles early. 3-4 year old cars in mint condition and
purchased at very high COE prices are scrapped early when COE prices
fall. With a greater number of vehicles "retired prematurely" the
government can then issue more COEs at lower prices creating the
illusion of a COE market that is driven by demand and supply.
In the above scenario, the constant that is maintained is the COE
revenue. In a market that is truly driven by Demand and Supply, a
fall in demand will eventually lead to a fall in supply which will
translate into reduced sales reveunes.
3) It is Impossible to actually own a car in Singapore.
To ensure continuity of the COE income stream, the PAP government has
effectively made freehold car ownership in Singapore impossible. Car
Owners never actually "own" the car per say, even after spending so
much money on a piece of paper, all they actually hold is a lease
giving them a conditional revocable right to drive a car for 10 years.
At the expiration of this lease, the COE certificate is either
renewed via payment of additional fees by current owner, or (in event
the old owner chooses not to renew the lease) it is "purchased" by a
new bidder. Either ways the PAP government is assured of a never
ending income stream.
4) The scam is also revealed when a car owner attempts to scrap
prematurely. The system does not allow the car owner a cash rebate on
the balance COE. Instead, the car owner has to purchase another car
(and another COE) and deduct his COE rebates from the final purchase
price. This ruse ensures that COE money remains with the government
even when a COE is scrapped prematurely, thus assuring them of a
steady income stream, albeit at the expense of car owners.
5) This ruse has been used successfully for over a decade in
conjunction with a series of other hidden "taxes" (like the ERP, CPF,
GST etc) all designed to provide a cheap and ready source of revenue
for undisclosed government activities.
6) The scam is given a veil of legitimacy with the support of laws
and regulations. The local government owned media regularly report
that the COE system "is tightly regulated and very competitive".
7) A plethora of technical terms are used also add layers to the scam
and hide the underlying ruse. Terms like "COE", "PARF", "ARF", "OMV"
etc.
The COE scam also works in conjunction with other scams and is part
of a more elaborate process. On top of the COE, car owners also have
to pay Road Tax (which is reasonable) and also ERP (Electronic Road
Pricing) which imposes a further cost for road usage.
So Car owners are penalized not just for leasing a car but also for
the road usage.
Other countries like Hong Kong also successfully control traffic
and the COE concept is conspicuously absent from these countries. In
fact in Hong Kong although there is a high cost to owning a car, this
is contained in the parking fees and charges which are paid to
landlords. The main difference here is that the parking fees are
collected by land lords and channeled back into the private sector.
In Singapore the COE revenues totaling SGD2 billion are channeled
directly into government coffers. No one knows what happens to this
massive amount of money.
9) How does the government justify the existence of such a system in
the first place? After years of implementation, the original
objective of the system (which was to control traffic congestion) has
long since been lost. Traffic jams are a common occurence all over
the island especially during peak hours and even the implementation
of additional penalties like the ERP have failed to address this
problem.
So what exactly are Singaporeans paying for when there is no concrete
proof for justification of the system? Such an obvious scam would
have risen many questioning eyebrows in other developed nations. But
here in Singapore part of the reason for the success in the deceit
lies in the social political circumstances which are unique only to
Singapore.
There is basically no accountability in government administration and
the political system effectively discourages any calls for
clarifications. Law suites are used as a convenient tool to silence
political opposition members and the international press.
After decades of indoctrination, local citizens have adopted a spirit
of apathy and unquestioning obedience to any enforced regulations and
policies. Indeed the government scammers are sound very legitimate.
They are usually polite, friendly, personable, sincere, convincing,
and controlling; formidable foes for more trusting average Car Owner.
10) Social and Psychological Indoctrination are important tools in
the scammers arsenal. In Singapore, a car has been portrayed by the
government as a "luxury item" in order to justify its high price.
On the other hand, government policies place immense pressure on
families to reproduce and more than one child. This, coupled with
uncertain employment (and high unemployment rates of 4.50% p.a.) have
necessitated dual income families with both spouses working long 12
hour work days. The hectic lifestyle and multiple roles of both
spouses (as wage earner, parents and care-takers of their own
parents) have rendered a car a very necessary asset.
11) Whilst the average con artist and scammer can be reported to the
authorities, how does one seek recourse when the local authorities
themselves are part of the elaborate hoax? The picture remains bleak
for Singaporeans as there seems no way out for them from this system.
12) According to a BBC article, not all scams are illegal by
definition. In fact some software scams are perfectly
legal. "Unscrupulous software suppliers have been taking advantage of
software license agreements to trick customers out of anything from
£10,000 to £100,000 plus. There is nothing illegal about it - some
of the world's largest software companies have been doing it to some
of the biggest companies in the world."
http://news.bbc.co.uk/1/hi/business/the_economy/365065.stm
The COE scam falls within this special category.