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SM Lee defends market approach for COE while Jamus Lim urges more empathy and social fairness

SINGAPORE: On 15 July 2025, Senior Minister Lee Hsien Loong staunchly defended Singapore's Certificate of Entitlement (COE) system during a dialogue at the 69th Annual Dinner of the Economic Society of Singapore (ESS). Responding to public concerns over affordability and fairness, Lee reiterated that the COE system remains a vital mechanism to allocate Singapore's scarce road space through market pricing. During the event, moderator and ESS President Euston Quah raised the question of whether COEs should be made more affordable for those who may have greater need for a car. Lee replied that while he understood the desire to tailor COE prices to individual circumstances, but any attempt to engineer it too finely to meet individual needs would fail. 'There's really no easy way to make something which is valuable be distributed fairly, and at the same time, very cheap,' Lee explained, adding that trying to factor in individual needs such as family size or disability would make the system contradictory and unmanageable. Lee reiterated the purpose of the COE system: to use market forces to manage limited road space and control car ownership. He noted that the Government had already brought forward future quotas to increase COE supply and ease upward price pressure, but cautioned that managing demand remained the core challenge. Lee rejected alternatives like Beijing's licence plate lottery, arguing it would not be suited to Singapore's context. Pressed again by Quah on whether special groups should receive concessions, Lee maintained that while Singaporeans are entitled to reliable, affordable public transport, car ownership was not a guaranteed right. 'I can guarantee every Singaporean affordable, convenient transportation. I cannot guarantee every Singaporean an affordable car,' Lee stated. 'It is different from HDB houses. Every Singaporean household can get one. But cars, no.' Lee suggested that instead of adjusting the COE system, the Government could provide direct financial assistance to those in need. 'For example, if you have a child, it is better that I give you a bigger baby bonus rather than a cheaper COE,' he said, arguing that such an approach is more transparent and less prone to loopholes. Jamus Lim calls for deeper social values in policymaking In a Facebook post on 16 July 2025, Workers' Party Member of Parliament Associate Professor Jamus Lim acknowledged Lee's 'masterclass' in economic reasoning but expressed concern about over-reliance on market mechanisms. The Sengkang MP stressed that values such as compassion, equity, and loyalty cannot be captured by prices alone. 'What's sorely missing… is how those with genuine needs may not have the purchasing power to meet those needs, even if their needs may have more merit,' Lim wrote. Lim contended that when Lee defaults to an auction-based mechanism, he is not merely saying, 'I don't have the wisdom to decide. Let the market choose.' Rather, he is conceding the fulfilment of needs to those who are better positioned financially — those with more money. While acknowledging that Lee had rightly underscored the importance of access to public transport, Lim argued that not every facet of life should be governed by market logic. 'Society has values—about compassion, equity, respect, and loyalty—that's are poorly valued by impersonal markets,' Lim wrote, drawing parallels to family and civic life where altruism prevails over transaction. Lim called on Singaporeans to view existing policies not as immutable structures, but as systems open to reform. 'We are not mindless slaves to the prevailing structures… If we want to head toward a more empathetic and just society, then it is on us to seize that vision and make it real,' he stated. SM Lee responds to Lim's post publicly in rare gesture In a rare gesture, Lee's official Facebook account commented directly on Lim's post, reiterating key points from his dialogue remarks. Lee clarified that the Government's approach was to (1) ensure access to efficient public transport, and (2) directly assist groups in need, such as by increasing financial grants to families with young children. Rather than complicate the COE system, these targeted interventions better address social needs, Lee maintained. 'Therefore where we disagree is not over who cares more for our fellow Singaporeans, but what is the best way to meet people's needs and take care of them,' added Lee. Lim calls for more targeted measures In response, Lim thanked Lee for elaborating on his position, acknowledging the clarity on the two points raised. He agreed with the focus on accessible public transport and recognised the rationale behind financial grants, but argued for a more direct mechanism to signal support for specific social groups. 'I, however, favour a more targeted mechanism, ' Lim explained. 'It would not only better channel behavior toward a specific social objective, but also signal more directly as to how the government is helping certain groups out (while also blunting the transactional nature of the system).' Lim concluded by emphasising that the disagreement was not about who cares more for Singaporeans, but about different philosophies on how best to help them. ' And that, in turn, hinges on our differing beliefs about the behavior of people, and the efficacy of markets,' Lim wrote. Calls grow for needs-based tweaks to COE system amid fairness concerns A Netizen commented on Jamus Lim's post agreed that while the COE system is efficient, it can be unfair to those with genuine needs who cannot outbid wealthier buyers. The comment suggested ideas like reserving a portion of COEs for people with special needs, offering targeted subsidies, or creating separate COE categories for essential use vehicles. Others proposed measures such as instalment payments or capped bids to protect vulnerable groups from price spikes. Some pointed to international examples like Beijing's licence lottery, arguing it shows how non-market allocation can reduce inequality and traffic. Others noted that Singapore's own public housing and education subsidies prove needs-based systems can work. A comment criticised past governance for being overly profit-driven and for letting market forces dominate basic social goods like housing. Assoc Prof Lim himself replied that modern economics offers practical tools—like better auction designs and exemptions—that could balance efficiency with fairness if society chooses to act.