Good morning, ladies and gentlemen.

Just two years ago, I was invited to witness the foundation laying for the Automobile Megamart. Today, the new building is ready and waiting to serve its users. Such is the pace of development in Singapore.

In the early years, the Government’s mandate was to help people meet their basic needs. But the challenge today is different. We have made good progress over the years and people are now more concerned with the quality of life.

In Singapore, the car is one of the most sought after commodities. Existing car owners aspire to upgrade to bigger and better cars, while those who do not own cars aspire to do so one day. Given our land constraints, it is a big challenge for the Land Transport Authority to fulfil this aspiration.

As things stand today, some 12 per cent of our land have been used for roads, this is a very large amount of our precious resource as land for housing occupies approximately the same area. We cannot continue building roads indefinitely to cater to the increasing car population. To maintain a sustainable balance between the road network and vehicle population, LTA has to moderate the annual growth rate of the vehicle population, currently pegged at 3 per cent per year. It does this by introducing ownership restraint measures like the Vehicle Quota System, where new vehicle buyers bid for a specified number of Certificates of Entitlement.

LTA is reviewing the overall traffic flow outside and around the Restricted Zone to examine whether additional ERP gantries are needed to reduce congestion in the city. If the traffic situation warrants it, Phase 2B gantries will be progressively installed to complete the second cordon outside the present cordon of the Central Business District.

If the right balance between ownership and usage restraint measures can be achieved, we will be able to sustain the vehicle population growth at the present rate and fulfil more Singaporeans’ aspiration to own cars.

For many Singaporeans, a second-hand car is an attractive option to car ownership. Today’s opening of the Automobile Megamart is an important milestone for the Singapore Second-hand Motor Vehicle Dealers’ Association, and provides an important service for interested car buyers.

In the past, buyers of used cars had to make multiple trips to several locations to find the car of his choice. The Automobile Megamart provides greater convenience for second-hand car buyers, by providing a ‘one-stop’ service to its users. Buyers can now select from a wide variety of makes and models at the Megamart. Financing services are also available within the premises.

Apart from benefiting potential car buyers, the establishment of the Automobile Megamart reinforces the importance of the role played by second-hand motor dealers in the automobile industry. Second-hand motor dealers have facilitated the development of the used car trade by serving as a middle person between the car buyer and its seller. In an increasingly fast-paced environment, second-hand motor dealers serve as the bridge where potential used car sellers and buyers meet.

LTA recognises the contributions of second-hand motor dealers and has introduced various schemes to facilitate their trade. Since 1 February 1999, licensed second-hand car dealers need only pay a nominal fee of $10 to effect the temporary transfer of car ownership from the seller to the dealer instead of paying the regular two per cent of the car’s price for the Additional Transfer Fee. In addition, the vehicle ownership count is not increased under such a transfer, thereby preserving the resale value of the vehicle. The Additional Transfer Fee will be applicable and the vehicle ownership count will be increased by one accordingly only when the dealer is unable to effect the transfer of ownership to a buyer within six months.

An Electronic Transfer (E-Transfer) system was also implemented on the same day to facilitate the temporary transfer of ownership from the seller to the dealer.

I am happy to learn that second-hand motor dealers have welcomed these moves by LTA. It gives them greater flexibility and time to find car buyers. More importantly, the scheme has relieved car sellers from any liabilities incurred by the dealer after the vehicle has been sold and released to the dealer.

Let me now turn briefly to the subject of open bidding for COEs. You will recall that the Government Parliamentary Committee for Communications recommended last year that the Government try out an on-line open bidding system for COE allocation. The GPC felt that an open bidding system would provide a greater degree of transparency and also better access to real-time information for the individual car buyers as well as motor dealers when the bidding exercise is in progress, as compared to the existing closed bidding system. This will enable bidders to make better and more informed decisions, thus facilitating individual bidders to make their own bids.

As you know, the Government accepted the GPC’s recommendation. The Ministry and LTA have been working out the details for the trial. The Government has decided that the open bidding trial will be implemented for all COE categories and the trial period is scheduled for at least 6 months. During the trial, both open and closed systems will be operating so that a comparison between the two systems can be made. We will have fortnightly tender exercises; alternating between the current closed bidding system and the open bidding system, with the monthly quota equally divided between the two exercises. The trial will enable us to assess the efficiency and public acceptance of the open bidding system before deciding whether we should adopt it fully.

The system will be designed such that it is simple to use and easy to understand. Bidders will be able to use the system to submit and revise their bids, to check and monitor the progress of prevailing successful bids. The public will be able to submit and revise their bids through the usual banking facilities such as the Automatic Teller Machines (ATMs), internet banking and phone banking, with the bid deposit deducted directly from the bidders’ bank account. The Processing Agent of the system will collate and process bids on a real-time basis and provide information on the prevailing Lowest Strike Price (LSP) through the various dissemination channels, which include InTV, interactive voice response phone services and the Internet.

In the current closed bidding system, bidders submit one bid each and the Lowest Strike Price is determined by the lowest successful bid. While the Lowest Strike Price method will be retained in the open bidding system, the bidding process will be structured more like a real-life auction. All bidders will submit their reserve price (or maximum bid amount that he is prepared to pay) to the system. As the Lowest Strike Price moves upwards, the system will automatically revise upwards an individual’s bid at an increment of $1 to stay in the bid subject to the limit of his reserve price. As in a real-life auction, the reserve price submitted by a bidder will remain confidential and will not be revealed to other bidders. A bidder will be allowed to revise his reserve bid price upwards anytime during the bidding exercise. To avoid long delays, bidding will close promptly at a pre-appointed time. All successful bidders will pay the Lowest Strike Price (LSP) at the time bidding comes to a close. Having a reserve price feature will make it convenient for all bidders since they will not have to constantly monitor the auction. It will also reduce the need to rush in the last few minutes.

To facilitate the revision of bids, the bid deposit will be changed to a fixed lump sum amount for the open bidding system. This is different from the closed bidding system where a bid deposit of 50% of the bid amount has to be placed by the bidder. The quantum of the deposit is still being worked out, but it will be not so low as to encourage frivolous bids nor so high as to deter individuals from bidding on their own.

To increase transparency, the prevailing Lowest Strike Price, the COE quota and the number of bids received will be displayed on the various bidding or enquiry channels. The information on the number of bids will serve as a close proxy of the prevailing COE demand level.

Ladies and gentlemen, the establishment of Automobile Megamart will also help car buyers make more informed decisions. Here at the Megamart, the buyer can compare the different products and services available, before purchasing a vehicle that best meets their needs.

I’m sure Automobile Megamart’s "under-one-roof" services would be a boon to its customers and on this note, I wish its commendable venture every success.

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