Microeconomic Analysis Report:

Motorised Personal Mobility Devices (PMDs) demand in

Singapore

Introduction
The economic issue chosen for this report is the declining demand for motorised personal
mobility devices (PMDs) in Singapore. This is attributed to the ban imposed by the Land
Transport Authority of Singapore (LTA) on footpath mobility devices and non-compliant
motorised PMDs. For example, motorised PMDs’ max. weight, max. width, max. motorised
speed and fire safety standards. This has led to price fluctuations for various and new
compliant mobile devices. In addition, motorised PMDs are also considered as controlled
goods from 28 June 2021 in Singapore. Importers and people are required to obtain LTA
approval before importing these devices into Singapore. Therefore, the purpose of this report
is to discuss the price changes of these motorised PMDs following the Singapore Land
Transport Authority's ban and regime.

Fluctuation of motorised PMDs in Singapore

Before the ban on non-compliant motorised PMDs and the import control regime, there was a
huge increase in demand for motorised PMDs in Singapore as the public preferred to take
these devices to work rather than opting to take public or private transport. In particular, food
delivery workers and delivery men rely heavily on such devices. Furthermore, the
government does not require importers to apply for an import permit and pay a permit fee.
With the stable growth over the past few years, motorised PMDs are still in demand as
today's technology has a large recipient in Singapore.

From the year 2019, the LTA starts the ban of e-scooters then extended to other motorised
PMDs such as electric unicycles, electric skateboards, etc a year later. This year, they
implement an import control regime.
 Figure 1: Motorised PMDs in Singapore

In Figure 1, the leftward shift in demand, which is from demand 1 to demand 2 indicates a
decrease in consumer demand, as equipment from previous owners of motorised PMDs
became non-compliant and potential consumers became disinterested in purchasing these
motorised PMDs due to various strict government regulations. From the first quarter to the
second quarter, motorised PMDs' prices fell from P1 to P2 as fewer devices were sold and
usage declined, offsetting the decrease in volume. As a result of the motorised PMDs ban,
domestic sellers which are included in independent sellers and shops offered huge discounts
to consumers without earning marginal profits, which changed the equilibrium (Qe) of
motorised PMDs in Singapore.
 Figure 2: Motorised PMDs in Singapore-Q1, Q2, Q3

Importers of motorised PMDs are affected by the import control regime, which requires them
to apply for import permits and pays import fees, increasing in the cost of motorised PMDs.
In Figure 2, the increase in cost and the decrease in supply lead to a shift to the left. Importers
of motorised PMDs import less because of a decrease in demand resulting in a price decrease
from P1 to P2. Due to the high import costs, the prices of P3 and P1 remained unchanged, but
the quantity shifted from Q2 to Q3. The original price remained unchanged, demand fell, and
importers’ profits fell, causing motorised PMDs importers not to import motorised PMDs
into Singapore.
The gains, losses, and subsidies from the Motorised PMDs ban
Owners of Singapore motorised PMDs who have not obtained the "UL-2272" equipment
certification are burdened with their vehicles (electric scooters) because they cannot be used
in public. Therefore, when the ban was implemented, the government issued an early disposal
incentive plan. As part of the government subsidy for motorised PMDs owners, it is used to
trade their current vehicles with LTA-approved compliant vehicles and dispose of their
previous vehicles. $100 will be refunded to those who join the program since approved
government motorised PMDs. In addition, ALBA E-Waste Smart Recycling will be
launching collection vehicles for motorised PMDs owners to dispose of their vehicles for free
from August 2021. Owners who download their app can earn points for redeeming rewards
when recycling their vehicles.

The other affected market is food delivery companies and their employees because their
motorised PMDs are their main means of transport to customers. After the ban, the
government set aside a budget of 7 million dollars for this plan. Provide free discounts for
food delivery employees and switch to certified and approved compliant equipment. For
employees who just want to trade in a new vehicle, the maximum reimbursement is $1,000.

Through the help of the government's subsidies to both parties, both the business owners and
consumers of the new motorised PMDs benefit, because the seller's income is higher, and the
buyer's price of the new motorised PMDs is cheaper. A part is created between the sellers’
price received by the sellers and the buyers’ price, so due to government subsidies, the profits
of both the buyers and the sellers will increase.
 Figure 3: Government intervention-subsidies for Motorised PMD

Figure 3 shows that the government has implemented subsidies for the motorised PMDs
vehicles, causing new motorised PMDs owners to pay below-market prices (P1). This applies
to motorised PMDs business owners in Singapore, who have higher income compared to
standard market prices, which leads to an increase in volume (Q0 to Q1). Manufacturers are
encouraged to produce more vehicles that comply with Singapore's motorised PMDs
guidelines, and the supply has increased from supply 0 to supply 1 as shown in the figure
above.

Surpluses for manufacturers, sellers, and buyers because all parties benefit. Although, this
measure of government subsidies may lead to overproduction, which will exceed the average
quantity of motorised PMDs produced for the market, and the price will be lower than the
market price. This leads to a deadweight loss-the triangle highlighted in yellow. Deadweight
loss is the social cost caused by the inefficiency of the market to the economy.
The market failure of motorised PMDs in Singapore
There have been market failures in Singapore's motorised PMDs market. It is believed that
these failures are due to the inefficient allocation of resources that has led to the failure to
maximize surplus. Motorised PMDs consumers and their vehicles can sometimes be
irrational. In case, they did not provide information or awareness campaigns to high-speed
vehicles to avoid accidents due to speeding before the ban.

This can lead to multiple accidents, including pedestrians, neighbours, and civilians in daily
life, despite the threats of these motorised PMDs. A 65-year-old cyclist collided with a high-
speed motorised PMDs rider and killed her in an accident. This led to government
intervention to prohibit motorised PMDs drivers from driving on the footpath. According to a
report, in the year 2018, there were 228 accidents involving motorised PMDs riders on public
roads alone. Another government intervention was to set a speed limit of 25 km/h for riders.

Another market failure is information failure. In this case, it affects all parties which are
manufactures, sellers, and buyers. Motorised PMDs manufacturers who have more
information compared to buyers. The choice of PMD products, especially batteries that catch
fire due to overcharging, causing the device to overheat. Buyers have not been informed or
made aware of the details, contributing to potentially dangerous situations. The number of
fires caused by motorised PMDs has increased in the past few years, with more than 90 fire
incidents involving PMDs since the year 2016. Manufacturers are blamed for rushing the
production of PMDs, putting buyers and other people at risk on footpaths, hallways, etc.
Therefore, this led to a government intervention what is the LTA ban on motorised PMDs
that do not comply with "UL-2272" guidelines.
Conclusion
In a nutshell, demand for Motorised PMDs in Singapore fell due to the implementation of
government regulations, import control regime and a drop in the price of non-compliant
vehicles. However, prices have returned to market prices with the reduction in supply.
Government subsidies did help to bring buyers back so that they could afford motorised
PMDs while maintaining the income of sellers. If production increases but prices do not,
economic inefficiencies (deadweight losses) may occur. Furthermore, the ultimate cause of
the failure of the market for Motorised PMDs is the failure of information and seller
disclosure of the potential hazards of batteries. This was because it could not allocate
resources efficiently to consumers then lead to the ban in Singapore.

Word Count:1366words.
References

References
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Abdullah, Z., 2019, Ban On
Personal Mobility Devices?
‘The Battle Is Always Against
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Use’, CNA, 11 October 2019,
Viewed 11 March 2021,
<https://
www.channelnewsasia.com/
news/singapore/ban-on-
personal-mobility-devices-
the-battle-is-always-against-
11988724>.
Abdullah, Z., In Focus: The
PMD Footpath Ban A Year On
– What Has Changed?, CNA,
31
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<https://
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news/singapore/in-focus-
singapore-pmds-ebikes-
footpath-ban-13402918>
Asokan, A., Fires Involving
PMDs Hit Record High; 73
From January To September
This Year,
CNA, 16 December 2019,
Viewed 11 March 2021,
<https://
www.channelnewsasia.com/
news/singapore/pmd-fires-e-
scooter-january-
september-2019-scdf-
12185764>
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Personal Mobility Devices?
‘The Battle Is Always Against
Errant
Use’, CNA, 11 October 2019,
Viewed 11 March 2021,
<https://
www.channelnewsasia.com/
news/singapore/ban-on-
personal-mobility-devices-
the-battle-is-always-against-
11988724>.
Abdullah, Z., In Focus: The
PMD Footpath Ban A Year On
– What Has Changed?, CNA,
31
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footpath-ban-13402918>
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news/singapore/pmd-fires-e-
scooter-january-
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12185764>
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Personal Mobility Devices?
‘The Battle Is Always Against
Errant
Use’, CNA, 11 October 2019,
Viewed 11 March 2021,
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news/singapore/ban-on-
personal-mobility-devices-
the-battle-is-always-against-
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