Tuesday, March 15, 2011

Learning about Singapore

Aside from class lessons, having an international faculty can be interesting if the professors are willing to share about their lives before or after class.  I have a professor this quarter that has done that and it's been so interesting to learn about Singapore where he worked before coming to Saudi Arabia.  Most of what he's talked about has been cars and taxes, but since it's so different from back home, I thought it was interesting enough to share.

It has been fascinating and frustrating to learn about Singapore because it has definitely made me realize that not everyone has the same values as me.  I wish they did!  But they don't, and learning to handle that realization is kind of defeating.

He's told us about the Certificate of Entitlement (COE) that Singaporeans have to buy from the government before they can get a car.  When you buy the COE, it isn't a fixed price; the price is determined by a blind auction, and the number of people who get the COE is determined by the government each month.

So, if Singapore decides to issue 10 COEs one month and 15 people bid ranging from 100,000 - 500 then the 10th highest bid sets the price of the COE for everyone.  Thus the 9 highest bidders pay less than expected, 1 bidder pays as expected, and 5 people get their money back and don't get to buy a car.  If you were one of the unlucky 5 people who didn't get the COE, you would have to wait until the next month to try again.

If you did get to buy the COE, then you can now buy a car, but the COE is only valid with that specific car and only for 10 years.  After that, you go through the process again.  Since there is a big incentive to scrap or export your used car, very few people in Singapore own cars that are more than 10 years old, and Singapore is apparently the second largest exporter of used cars.

This system seems like it would work well if you're very well off, and apparently if you are you're more likely to have more than one COE (and thus more than one car), but the lower classes of society have to pony up for the licenses which have higher prices as a result of the limited supply.  At least Singapore does have the option for public transportation, but my professor never mentioned much about that.

This business of the COE is intended to allow the government to control the number of cars on the road as with only 275 square miles of space, Singapore is tiny compared to its almost 5.1 million population.  The certificate does exactly what it says; it entitles those with money the right to buy a car.  To me this almost feels like too much government control, and while I understand the need to limit cars, I think the decision to buy a car shouldn't necessarily be based on your ability to buy a piece of paper.

Every so often, the price of the COE drops significantly, which does allow more moderately well off citizens to buy cars.

He also talked briefly about some of the other taxes they have such as the monthly tax on the number of toilets in each house!

I also got the impression that car loans were quite common along with high interest rates and great discouragement to pay off loans early or get a shorter loan.  He then mentioned his Lexus and the one he bought for his son.  While I appreciate that he is in a completely different phase of his life, it still seems ridiculous to talk about the price of a Lexus in Singapore when all of the students in the room make at most 1/3 the cost of that car in one year.  Lifestyle inflation to some extent is inevitable, very few people want to live like they're in college forever, but having it pushed on you can be both offensive and off putting, and that's exactly what this was.  I don't want or need a fancy car, but having someone act as if I obviously did was irritating.

All of this talk about cars and taxes segued into talking about the Saudi taxes, which are non-existent.  There are no sales, income, or even sin taxes here.  The price you see on the shelf (if there is one) is the price you pay (rounded of course).

One of the nicest aspects of no taxes means no gas tax.  Back home gas taxes vary by state but can easily be up to 50 cents per gallon.  I'm pretty sure it's even higher in Europe and Singapore.  My professor mentioned that in Singapore it would be up to $110 Singapore dollars ($85 USD) to fill up.  Since gas is only a mere $0.46 per gallon here, he said that everyone should go out and by V12 cars and trucks!

Perhaps I'm being overly sensitive, but it seems utterly irresponsible to go burn through resources simply because it happens to cost less.  Why can't people continue to use at the same level and just be grateful for some cost savings?

I don't think I'm cut out for life in Singapore!

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