Cut and paste.....remember there's once.....
You know, When the quota system was first introduced in 1990,
the biggest concern among car-owners then was that car distributors
could easily form a cartel to fix the COE price. Mr Mah Bow Tan
promised then that if ever the authorities discover a cartel, they
will throw the book at the culprits. Actually, there was no need
then to worry about cartels being formed. Because in a
closed-bidding system where car distributors cannot see the bids of
their competitors, there was no way for any of them to be sure that
the other parties would keep their promises. A cartel, after all,
is illegal so there's no way to put an agreement down in writing.
Then, a freak result occurred. In Jan 98, the COE for Cat 3 cars
fell to just $50. One month earlier, the same COE was $64,100. To
prevent the same thing from happening again, LTA decided to switch
to an open-bidding system where everyone can see what everyone else
is bidding. Strangely, no one was concerned about cartels anymore.
But I was. So I wrote a letter to the Straits Times. My letter
raising the concern that an open-bidding system could easily give
rise to a cartel was published in the forum pages. If memory
serves, I said in my letter that in Singapore, where a few car
distributors control more than half the vehicle market, it would be
fairly easy for the same distributors to come to an agreement to
fix the COE price. I didn't name the companies but between them,
Borneo Motors, Cycle & Carriage, Tan Chong and Kah Motors sell
about 63% of all cars. But there were no replies to my letter. I
guess the LTA then didn't think it would happen. It's still hard to
say if a cartel is responsible for the $2 COE. After all, we are
having a financial crisis so the $2 COE could really be a
reflection of market sentiment. But even if there is a cartel, it
would be something that's almost impossible to prove. In any case,
how do you define a cartel in the first place? All the car
distributors have to do is just co-operate by not bidding too
aggressively and they can fix the COE price at whatever figure they
like.
