Transport Sustainability in Singapore: Nudging Private commuters towards

Public transport

Anoj Ramasamy Sundar , Jude Agnello Alex

Department of Economics, National University of Singapore

Abstract. Transport demand in Singapore is increasing rapidly, however the land available for roads is limited.
Reducing private traffic to improve transport sustainability has become a major goal for transport policy. The objective
of the paper is to understand the car purchasing behavior of the private commuter. A short survey was conducted to
understand why he prefers to own cars in the presence of existing Quota Management systems, and the socio-economic
changes that would nudge him towards using public transport. Then policy suggestions are proposed to drive
behavioral changes that would encourage public transport usage.

Keywords: Singapore, Transport Sustainability, Traffic Reduction

1 Introduction

As of February 2011, Singapore has 947,770 road vehicles including 586,267 cars, 148,115 two-wheelers, 26,195
taxis and 16,377 buses (LTA, 2011)1. With the total road length of 3,262 km, Singapore’s road density is 291
vehicles per km, a 33% growth from the 219 in 2001. Singapore leads in this area alongside HK2 (268, 2001) and
London (187, 1998).

The public transport system is being heavily upgraded in terms of more bus and train routes. However, in the past
10 years, car usage to work (as a % of all travel modes), has remained almost flat3 (~25%) with more commuters
moving away from buses to trains. In terms of total daily tips made in Singapore, private cars still own 36% of all
travel choices4.

Like HK and London, Singapore faces an increasing demand for transport, constrained heavily by the limited land
space. These high density metropolitan cities have to balance the allocation of their land among residence,
industrial, transport and other realty demands. Thus sustainable transport has become a key policy objective in
Singapore.

In this context, Singapore has comprehensive Vehicle and Traffic Management systems in the form of quota based
COE (Certificate of Entitlement) and ERP (Road Pricing). However, even with exorbitant COE prices and more
ERP gantries, the demand for cars is far from being satisfied.

The purpose of the paper is to first analyse the car affordability in Singapore and identify the marginal commuter
for the Public Transport system, the passenger who has the propensity to afford his own vehicle and faces the
choice between public and private modes. As seen from a survey conducted with 40 professionals, discussed in
following sections, it is clear that the Income Effect is a dominant force during the car purchasing decision. A
simple car affordability model is presented later based on responses from the sample survey respondents. Rather
than focussing on the larger population, the paper looks into this marginal commuter and explores focussed
policies which would encourage him to shift from private to public transport.

1 LTA Vehicle Stats http://www.lta.gov.sg/corp_info/index_corp_facts_vquota.htm

2 Hong Kong Census and Statistics Department, 2001. www.info.gov.hk/censtat
3 Census of population 2010 - http://www.singstat.gov.sg/pubn/popn/c2010sr3/cop2010sr3.pdf
4 Key Household Income Trends , 2007; Feb 2008; Occasional Paper on Income Statistics; Department of Statistics

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2 The Marginal Commuter

In Singapore’s context, average household income in 2010 Census5 was $7214/month (Median $5,000).
Assuming consumers have a higher preference for a trip made by car, than if the same trip is made by public
transport. Since COE is a free-market bidding process and there are currently 586,267 cars for 1.15 Million
Resident households, only the top 51% (or less) of households can afford to outbid the competition. This
proportion further reduces due to the fact that a household could own more than 1 car, and due to increasing influx
of expat executives and foreigners with the means to afford the high COE.

The latest March (2011) COE bidding price for a category-A license was $42,600, with 532 issued licenses out of
875 bids. Since the latest Income distribution figures for Singapore are not available, the following distribution
curve is quoted from Key Household Income Trends, Department of Statistics (2008), where 51% of population
has monthly household income above $5000.

From the Car Affordability Study done by us (Section 3.4), based on the current COE prices and car travel spend
behaviour, the ideal Mean Monthly household income for a car owner > 9,600/month. Our study assumes that
private transport owners spend ~15% of their income on travel based on the Household Expense Survey conducted
in 2007/2008.

This adjusted to 2007 prices6, corresponds to ~$8623/month. Based on the above curve, that is roughly top 23% of
the population. However, this does not exclude households outside this range to aspire and purchase a car. The
Household Expense Survey also found that 38% of households owned cars in 2007. Even though COE has
increased from $11,704 (Category A) in 2007 January to $42,600 in 2011 March, this 15% difference (between
38% and 23%) can be considered the Marginal commuters. These are households and individuals who constantly
face the decision to balance travel spend vs. Household expenditures and investments.

Interestingly, we also believe that if COE continues to rise and say doubles, we should either expect the
affordability % to reduce from 23% to just top 9.3% of households; Or, more realistically, households changing
their spend behaviour and increasing average travel expense from 15% to 20% of their household income.

5 Census of population 2010 - http://www.singstat.gov.sg/pubn/popn/c2010sr3/cop2010sr3.pdf

6 Singapore Department of Statistics, Time Series on CPI and Inflation - http://www.singstat.gov.sg/stats/themes/economy/hist/cpi.html

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 Of course, the above analysis excludes standard deviation and error estimates due to unavailability of distribution
data of the various cost estimators –Income, COE prices, Avg Car Prices, Fuel Prices etc. More research is needed
in this area; however, increasing COE would not only have Negative Income effect, discouraging car ownership
but also a substitution effect, with households reallocating spend from aggregate household consumption goods
towards travel.

Also, we don’t expect that the top 23% would give up their car ownership or reduce the usage. Also, the bottom
49% cannot afford to own a car (due to capped car supply). Thus this paper focuses on the 23-38% of the
population, defined by us as the Marginal Commuter, within the income bracket of ($5000, $8623) in 2007
prices.

3 The Survey

In the previous sections we discussed why with the current COE prices, only the top 23% of the population is
expected to own a car. A survey7 was conducted with 40 participants, which included 21 car owners. The purpose
of the survey was to gain basic intuition around car purchasing decisions. Except 3 final year undergraduate
students, 37 respondents were working professionals from FMCG, IT and Banking sector. The students were
included in the mix just to gauge their aspiration, to own a car. Below are some of the interesting observations.

3.1 Why do people prefer cars?

Based on the responses we can conclude that for the sample population segment, main reasons for owning a car
(or a private transport) is convenience –Personal and Family. Almost all respondents with kids viewed cars as
indispensable modes of commute.

Since the majority of respondents were working sedentary professionals, nature of work wasn’t influential.
However, Client and Sales centric respondents chose cars due to the nature of their work.

Other factors such as Status symbol, Safety and Passion weren’t significant in this sample.

COE Arbitrage refers to using COE as a tradable investment instrument and is relatively a new concept which is
expected to become more influential in the purchasing decision in future years. Currently, COE is non-
transferrable and can only be passed along with the car in the 2nd hand market.

7 Transport Survey by Anoj Sundar, Agnello Alex- http://goo.gl/5jJHs

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 To determine demand elasticity of existing car owners, the respondents were also asked to rank factors that would
make them reconsider their decision. Except the high fixed cost of COE, variable (or usage based) costs of ERP
and Fuel prices did not seem to influence their purchasing decision. Usage costs generally affect lower income
households more than high income ones. However, ERP has shown to influence the travel behaviour (LTA)8 in
terms of avoiding congested routes and rescheduling trips.

3.2 What are the hurdles to car ownership?

The 19 respondents, who did not intend to buy a car in the next 2 years, were asked reasons for this decision. COE
and price of the car stood out as key influencing factors, which is consistent with the Income Effect and their
budget constraints. Parking options also emerged as an important factor in influencing their purchase decision.
If COE continues to rise, financing options could be another tool to regulate car ownership.

3.3 How can public transport usage be increased?

Majority of the respondents wanted an increase in frequency and connectivity of trains and buses. As expected, the
existing car owners were indifferent to Fare Reduction, Service Quality Improvements or subsidised passes.

8 LTA Master Plan Report- http://www.lta.gov.sg/ltmp/LTMP.html

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3.4 Car Affordability Study and Cost Benefit Analysis

Based on the survey, a simple Car Expense model was constructed to understand the various fixed and variable
costs incurred by a car owner. Based on this, an average car owner in Singapore spends ~$1400/month which
includes his EMI (Mortgage payment), Insurance etc. and Usage expense –Petrol, Parking etc.
ERP was excluded since it is route and time specific. The last Household Expense Survey (2007/2008) found that
car owners spend 14% of their monthly expense on transport. From here, we can deduce that an average car
household earns ~$9,705/month.

In Megatrends, John Naisbitt observes that when people become affluent the first thing they do is to buy back
some time. According to LTA statistics the average time spent by a passenger using public transport is 1.7 times of
that by car as of today. For an existing car owner to give up his private transport, Opportunity cost of driving has
to be higher than the public transport, to incentivize the switch.

Assuming, the time value (Income Opportunity Cost) of the commuter is SGD25 per hour. For travelling from
Changi to NUS during an off-peak period,

Cost Incurred by public transport = Travel fare + Time/ hours * Salary/hour

= 2 + 1 hour *25 = 27SGD

Incremental Cost incurred by Private Cars = Time/ hours * Sal/hour + Variable Cost/km + Flat charges
= (1/1.7) * 25 + 40km * $0.31/km + 0 = 27SGD

After adding the higher utility from convenience, privacy, status, safety etc., derived from private transport, it is
clear why private cars are preferred to public transport. We can also infer the below

• Private Transportation costs less at high speeds (lower time)

• Car transport is cheaper when passenger size is increased (since travel fare remains constant)
• Flat charges like ERP will discourage short commuters to take public transport
• By increasing efficiency, comfort and connectivity of public transport, people who are thinking to buy
cars can be reduced (Utility effect)

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4 Policy Recommendation

Based on our earlier inferences, policy recommendations are suggested to improve the commuter’s perception of
public transport and to influence the travel behaviour of existing private commuters.

4.1 Improving Public Transport Connectivity

1. Increase the capacity and Expand MRT lines

Large number of private car users are discouraged by public transport because of congestion and lack of
personal freedom9,10.To reduce congestion more train carriages can be added during the peak hours.
As per the LTA’s master plan of doubling the rail network by 2020, TUAS extension line, Thomson line and
Eastern region line11 are being introduced. Since, the major private vehicle users reside in Tanglin, Bukit
Timah, Mandai and Newton12 , new hubs for buses can be developed in these areas.

2. Reduce Travel Time with Express services

The second most important reason people use cars instead of public transport is to save time.2 Increasing the
speed of public transport is not a viable solution because of traffic safety. An alternate solution is to introduce
more point-to-point express buses and MRTs as in New York

3. Include public transport in Urban planning

Dependence of private transport can be greatly reduced when facilities like school, industrial estate, library,
place of worship, shopping malls are located nearer to interchanges and bus stops.

4. Integrate the public transport system

Integrate all the modes of public transport system under one roof, so that planning can be made efficiently and
full usage of the roads can be managed and used effectively. Agencies like Housing and Development Board,
Urban Redevelopment Authority, Jurong Town Corporation and Land Transport Authority can work closely
while planning new developments.

5. Increase the frequency of feeder buses

Currently the average frequency of feeder buses during peak hours is 12 minutes. Frequency has to be increased
further to 8-10 minutes, these measures will reduce waiting time and in turn the travel time.

4.2 Enhancing Travel Experience

1. Increase premium buses to industrial estate

Currently premium buses are operated to central business district13; this can be further increased to industrial
estates especially Jurong Island, Tuas and Business parks were more people go to work.

2. Make travel more fun and connected

Improving the facilities in the bus interchanges and mrt stations by providing air conditioning, WIFI, internet
kiosks and uninterrupted mobile access for the passengers. We can make the public transport fun by creating
designed shelters, artistic buses, and attractive lightning works in mrt. Moscow metro is well known for its
Baroque architecture and craftsmanship.

3. Disseminate service information through Technology

Better monitoring and Advisory systems can be developed which can help in providing real time traffic and bus
arrival information. Electronic maps to indicate the best possible public transport services to use to reach the

9 Survey Results
10 Sharon Cullinane and Kevin Cullinane(2003), Car dependence in a public transport dominated city, Page 132
11 Land Transport Master Plan, Page 34-36
12 Census population 2010 report, Page 6, Page 82-83
13 Source: http://www.publictransport.sg/publish/ptp/en/premium_bus_service/premium_bus_service.html

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 destinations can be installed in interchanges and mrt stations. These electronic maps can also be made available
as mobile services

4.3 Adding More Hurdles to car ownership and private commute

1. Control the vehicle growth via VQS

Once a passenger buys a car/motor vehicle, people become dependent on it virtually for all needs14. Thus to
reduce the private transport usage the best is to control the car ownership by reducing the COE licenses issued
for each year. Currently the quota for vehicle population growth is 1.5% which has to be decreased further to
1.0% .As of Feb 2011, there are approximately 580,000 cars in Singapore when we reduce the COE licenses
issued per year by 0.5% we are reducing the number of cars by 2900.

2. Regulate maximum number of cars depending on household size

Introducing policies to curb the limit of maximum COE licenses issued per house hold and also increasing the
COE price for new car for a household by a constant percentage which increases with every new car. Funds
collected by these efforts can be used for public maintenance and welfare.

3. Congestion based ERP charging

Installing more intelligent ERP system which will calculate the ERP charges on a road depending on the
existing traffic and the maximum capacity it can accommodate. Along with a lower flat entry charge, ERP
charges15 will increase as the traffic on the road increases and vice-versa. This ERP charge can be indicated on
the ERP gantries, received via sms services and also on the traffic information boards which will make
passengers avoid more congested roads.

4.4 Taking the next step forward

1. Increase ridership by involving local businesses

Trial is an important instrument to incentivize product switch. After improving the public transport experience,
private commuters should be encouraged to try out the improvements. Salary/Bonus packages can be modified
to provide $100 tax- free ridership vouchers.

2. Show and keep showing the benefits

Campaign clearly the benefits of using public transport to all the passengers and encourage them to use public
transport more. Messages could be both individualistic (cheaper, faster, connected etc.) and Societal
(congestion, pollution etc.)

3. Promote Work from Home (AWS) schemes

Alternate Work Schedules (AWS) has been successfully implemented in all major MNCs and government
organizations in the world. The strategy involves allowing employees to work from home, thus reducing travel
effort and encouraging work-life balance. This would not only reduce peak hour travel but also complement
Singapore’s pro-Family policies.

Controlling the vehicle growth through VQS and improving the Public transport connectivity by increasing the
capacity and express services are the key strategies which can induce Singapore residents to use more public
transport rather than private transport.

14 Sharon Cullinane and Kevin Cullinane(2003), Car dependence in a public transport dominated city, Page 131-137
15 Daniel Albalate and Germa Bel, Shaping urban traffic patterns through congestion charging(2008)

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5 Conclusion

Reducing private traffic to improve transport sustainability has become a major goal for transport policy. In this
paper we explored the key reasons why private transport is preferred and laid out policy strategies to drive
behaviour changes and incentivize the switch. The existing Vehicle Quota System is a strong policy instrument for
the government to control the cars on the road. However, we also believe that an effective and sustainable policy is
a “nudge” rather than “force’, which can be engineered through infrastructural improvements, better connectivity
and perception changes. These structural changes will ensure share of public transport increases.

6 References

1. Hong Kong Census and Statistics Department, 2001. http://www.info.gov.hk/censtat

2. Hong Kong Transport Department, 2010. http://www.td.gov.hk/

3. LTA Vehicle Stats http://www.lta.gov.sg/corp_info/index_corp_facts_vquota.htm

4. Key Household Income Trends , 2007; Feb 2008; Occasional Paper on Income

5. Statistics; Department of Statistics

6. Car dependence in a public transport dominated city

http://www.sciencedirect.com/science/journal/13619209

7. Shaping urban traffic patterns through congestion charging: What factors drive success or failure?
http://ideas.repec.org/p/ira/wpaper/200801.html

8. Census of population 2010 - http://www.singstat.gov.sg/pubn/popn/c2010sr3/cop2010sr3.pdf

9. LTA Master Plan Report- http://www.lta.gov.sg/ltmp/LTMP.html

10. Transport Survey by Anoj Sundar, Agnello Alex- http://goo.gl/5jJHs