Friday, February 09, 2007

On Fire-Crackers and the Automobile Industry

So like we have computer controlled fire-crackers la
The idea of computer-controlled fire-crackers snapped me out of my thoughts.
The man behind the wheel was chirpy as usual, but I was lost in a slurry of deadlines.

What do you mean computer-controlled fire-crackers?

Haa, Singapore Government ban fire-crackers-aa. No real fire-crackers in Singaporre. Considered as ammunition.

In India, I was watching the entire night-sky fill-up with multi-coloured flower pots. The crescendo of uncontrolled burst of fire-crackers during the temple festivals deafening my ears.

Even one piece of fire-cracker in your pocket, you get 6 years of jail and 4 strokes

4 strokes?

Yeah, the scars stay on you for life. The skin is pealed off from your body with each whip. Once that wound heals the next stroke is made.

Is one lashed in public?

No. No. Inside the jail. But the scar stays with you forever-ah
It didn’t look so beautiful anymore, the pictures of Singapore financial district and bay-area night-sky filled with fire-crackers.

So I guess the only way you can celebrate Chinese New Year is to go to Malaysia?

No, even in Malaysia fire-crackers ban. You might find in some villages, but still illegal. If caught, you get punished. For that matter even China banned fire-crackers. Few years back one whole factory catch fire and burst- one whole factory – around 200 people die.

I come from India. We still have fire-crackers there. It is a very big industry there.

Oh. It is still not banned there eh?

So are you a Singaporean


Since when are you driving this taxi?

Oh taxi part-time. I have a factory in China.


Yeah. Taxi my brother-in-law’s. I helping him because he is not well. I’m here for a few months. I did not want to sit at home with my wife and I like driving and talking, so here I’m’
‘What do you do then otherwise?

I run factory in China, go to Sri Lanka and Cambodia

This conversation was getting interesting by the minute.

I take scrap cars from junk-yards here and since they are mostly in excellent condition, sell them for good value in SriLanka or Cambodia. Singapore roads very good, so vehicles usually in good condition.

What followed was a lecture on how the Government regulated the Automobile Industry. This is the gist,

In Singapore the Government on an year-to-year basis, decide on the number of private cars that can be sold in the market. Each new car comes out with a Certificate of Entitlement (COE), or lets say a kind of lease for the car. Now, since supply does not meet demand, these COEs are auctioned, and obviously the richest of the buyer end up with the cars. Hence, any car buyer, in addition to paying the mark-up price of the car also has to pay a price for the COE.
Two immediate questions arise. The first being, why is the government trying to regulate the free market forces when the Per Capita income of Singapore is one of the highest in the world, and you can see every car manufacturer from the BMWs to the Nissan’s here. The answer is to avoid congestion.

The second question then would be, doesn’t that lead to an excellent second-hand car market and over the years with the lack of increase in land size of Singapore won’t we face the problem of congestion anyway. The answer is not that fast. The rule says that anyone wishing to sell his car also has to sell his COE. This means two things, one he/she has to pay a higher price for the new car as well as the new COE thereby deterring him from buying and two, since the COE prices increase every year, the COE prices of the second hand cars are also not depreciated prices of the COEs. Hence second hand cars are also not that cheap. Also, the government is promoting scraping of cars (yeah sending them to the junk-yard) by providing a rebate for such an act. (Does the government bear the rebate? How does that work? I still need clarity on this). Hence there are lots of people sending cars to the junk-yard. Our man here went to the junk-yards and took all those cars that were in ship-shop-shape and sent them to neighboring countries.

Having reached this far I asked him,

So you must be a rich man! Doing all this.

Not really, there are lots of us doing this here. There are lot of us ‘traders’, we call ourselves, around here.

Oh yeah, I forgot to factor in competition!

Thursday, February 01, 2007