FUEL/HYBRID VEHICLES

FUEL/HYBRID VEHICLES: 3.

Ms Jessica Tan Soon Neo asked the Minister for the Environment and Water Resources (a) if more can be done to drive demand for alternative fuel/hybrid vehicles as the current difference in road tax for these vehicles is not enough to differentiate the cost involved in owning hybrid vehicles; and (b) if his Ministry will consider a lower Additional Registration Fee for hybrid vehicles to make the cost of acquiring such vehicles equal to, or lesser than, the cost of acquiring petrol/diesel-powered vehicles.

The Minister for the Environment and Water Resources (Assoc. Prof. Dr Yaacob Ibrahim): Mr Speaker, Sir, the road tax for vehicles is pegged to engine capacity, thereby encouraging the use of smaller capacity vehicles. In the case of hybrid vehicles, the power rating of the electric motor is also factored into the computation of road tax.

The Green Vehicle Rebate Scheme, or GVR Scheme, was introduced in 2001 to promote the use of more environmentally-friendly vehicles through lowering the cost differential between green vehicles and conventional vehicles. With the rebate, vehicle purchasers pay a much lower Additional Registration Fee (ARF).

Since its introduction, the GVR Scheme has been reviewed on a regular basis. In January last year, my Ministry introduced enhancements to the GVR Scheme. Earlier this year, we also announced that the GVR Scheme would be extended till end of 2009.

Under the enhanced GVR Scheme, purchasers of green vehicles enjoy a

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rebate of 40% of the Open Market Value (OMV) of the vehicle. This works out to a rebate of about $10,000 for a Honda Civic hybrid and $13,000 for a Toyota Prius, and contributes towards narrowing the cost gap between such green vehicles and conventional ones.

Besides cost, the demand for green vehicles is also affected by other factors, such as consumer preference and the provision of maintenance support by dealers. Even so, I am heartened to note that more vehicle-owners are embracing green vehicle technologies. Since the enhancement of the GVR Scheme in January 2006, the number of green vehicles has gone up from about 200 to more than 1,100 as at end July 2007. In particular, the number of hybrid vehicles rose from around 80 to over 700.

Green vehicle technologies are becoming more widely accepted internationally. More models are being introduced and our motor traders are doing their part by bringing them into Singapore. With growing awareness, better technology which drives down costs, and the availability of more models in the market, I am hopeful that the take-up rate of green vehicles in Singapore will continue to rise.

My Ministry, in consultation with the Ministry of Transport and the Ministry of Finance, will monitor developments closely and continue to review and make adjustments to the GVR Scheme as necessary.

Ms Jessica Tan Soon Neo (East Coast): Sir, I thank the Minister for the answer to my question. I agree with him that the green car rebate of 40% definitely has had an impact on the numbers. If we look at it, as he said, it just narrows the gap. But what is being done because, at the end of the day, it is just narrowing the gap. But if we look at the road tax, it is actually still a double penalty because it is

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on power consumption. The hybrid car needs to be more powerful in order to be able to function. So they need to be more efficient. The road tax is either on power output or the capacity. In the hybrid car case, it is the power output. So there is a penalty on hybrid car owners, because the cost is almost double.

Mr Speaker: Ms Tan, you are making a speech. Ask your question, please.

Assoc. Prof. Dr Yaacob Ibrahim: Sir, on the contrary, based on the results I have seen and the data I have, the road tax is comparable to the conventional petrol driven car. For example, a Toyota Prius is pegged at 1.6 litre and the road tax is for 1.6 litre, based on the Corolla Altis, if I am not mistaken. I do not think there is a higher road tax that one pays just because he is driving a hybrid car. But I do agree that in the conversion of the engine capacity to a conventional one, there may be instances, depending on the type of the model. I do not think it is right to generalise across the board. But I certainly agree with Ms Tan that we should look into ways and means to try and help to lower the cost as much as possible in order to encourage more ownership of hybrid cars.

The green vehicle rebate seems to be working. As I mentioned in my reply, after we moved it up to 40%, there seems to be a jump in terms of the number of ownership. It seems adequate at this point in time. But I take her point and we will continue to review this and see where we can best lower the hurdle so that more can benefit from this particular scheme.