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Jan 13, 2011
No go for changes to COE system
By Goh Chin Lian
THE Transport Ministry has rejected suggestions by the Motor Traders Association (MTA) to make changes in the COE system.
The association had asked for taxi companies, which had financial muscle, to be excluded from vying for certificates of entitlement (COEs) in the category they are currently eligible for - for cars of up to 1,600cc.
It had also asked for a scrapping of the open-category COE, which can be used to register any vehicle, citing the possibility of speculation as one reason.
The Transport Ministry, in its statement yesterday, said such changes would cause greater price fluctuations and make the market more rigid.
The MTA, which had written to Transport Minister Raymond Lim on Dec 30, made the suggestions public yesterday, together with an appeal for the public to give feedback to [email protected].
The COE system, which started in 1990, is used to control the growth of the vehicle population and road congestion. Last month, premiums soared to the highest levels in more than a decade as distributors raced to meet sales targets and over fears of a possible big cut in the number of COEs for the new year.
But some relief came on Monday when a less drastic slash was announced after the Transport Minister accepted a proposal by the MTA to spread out a one-off adjustment in COEs for an over-projection of deregistered vehicles.
The supply of COEs is largely tied to the number of vehicles deregistered. There will be 22,368 COEs from next month to July, 695 fewer than the current quota.
However, the MTA still feared the worst, saying cuts in the past year and high COE prices had hit the industry, dampening demand from would-be car buyers.
In its letter, the MTA argued that taxi companies were in a better financial position to compete with private car buyers for COEs. It noted that there was no cap on the growth of the taxi fleet since the market was opened up in 2003.
Asked for its take on the issue, the Automobile Association of Singapore (AAS) told The Straits Times that it was also worried that small-car buyers were being outbid by taxi operators.
Another fear raised by the MTA: Higher COE premiums would translate to higher costs which could be passed on to commuters by taxi companies.
It suggested that taxis, like public buses, be excluded from the quota system. The Government could regulate the numbers by issuing COEs specifically for cabs.
A ministry spokesman, however, said taxi firms made up a small 7 per cent of successful bids in the COE category for cars up to 1,600cc, from July to December last year.
A COE category just for taxis would have a small quota. 'This is undesirable as a small quota in any category is likely to lead to anomalies and fluctuations in COE prices,' it said.
The MTA also argued in its letter that doing away with open COEs would spread the number allotted to this category across other vehicle categories and prevent speculation.
Of the COEs from the vehicles taken off the road, 25 per cent go to open COEs and 75 per cent to other categories, it noted.
With open COEs usually used to register cars of above 1,600cc, buyers of smaller-capacity cars are left only with COEs meant for such cars.
The MTA added that, being transferable, open COEs were also open to speculation which jacked up premiums unnecessarily.
The ministry, however, noted that open COEs gave flexibility for changes in demand for commercial vehicles, cars and motorcycles, a view shared by the AAS.
The ministry spokesman said removing open COEs would make the vehicle quota system unduly rigid as most COEs are non-transferable.
'We will continue to monitor the situation,' the spokesman added.
No go for changes to COE system
By Goh Chin Lian
THE Transport Ministry has rejected suggestions by the Motor Traders Association (MTA) to make changes in the COE system.
The association had asked for taxi companies, which had financial muscle, to be excluded from vying for certificates of entitlement (COEs) in the category they are currently eligible for - for cars of up to 1,600cc.
It had also asked for a scrapping of the open-category COE, which can be used to register any vehicle, citing the possibility of speculation as one reason.
The Transport Ministry, in its statement yesterday, said such changes would cause greater price fluctuations and make the market more rigid.
The MTA, which had written to Transport Minister Raymond Lim on Dec 30, made the suggestions public yesterday, together with an appeal for the public to give feedback to [email protected].
The COE system, which started in 1990, is used to control the growth of the vehicle population and road congestion. Last month, premiums soared to the highest levels in more than a decade as distributors raced to meet sales targets and over fears of a possible big cut in the number of COEs for the new year.
But some relief came on Monday when a less drastic slash was announced after the Transport Minister accepted a proposal by the MTA to spread out a one-off adjustment in COEs for an over-projection of deregistered vehicles.
The supply of COEs is largely tied to the number of vehicles deregistered. There will be 22,368 COEs from next month to July, 695 fewer than the current quota.
However, the MTA still feared the worst, saying cuts in the past year and high COE prices had hit the industry, dampening demand from would-be car buyers.
In its letter, the MTA argued that taxi companies were in a better financial position to compete with private car buyers for COEs. It noted that there was no cap on the growth of the taxi fleet since the market was opened up in 2003.
Asked for its take on the issue, the Automobile Association of Singapore (AAS) told The Straits Times that it was also worried that small-car buyers were being outbid by taxi operators.
Another fear raised by the MTA: Higher COE premiums would translate to higher costs which could be passed on to commuters by taxi companies.
It suggested that taxis, like public buses, be excluded from the quota system. The Government could regulate the numbers by issuing COEs specifically for cabs.
A ministry spokesman, however, said taxi firms made up a small 7 per cent of successful bids in the COE category for cars up to 1,600cc, from July to December last year.
A COE category just for taxis would have a small quota. 'This is undesirable as a small quota in any category is likely to lead to anomalies and fluctuations in COE prices,' it said.
The MTA also argued in its letter that doing away with open COEs would spread the number allotted to this category across other vehicle categories and prevent speculation.
Of the COEs from the vehicles taken off the road, 25 per cent go to open COEs and 75 per cent to other categories, it noted.
With open COEs usually used to register cars of above 1,600cc, buyers of smaller-capacity cars are left only with COEs meant for such cars.
The MTA added that, being transferable, open COEs were also open to speculation which jacked up premiums unnecessarily.
The ministry, however, noted that open COEs gave flexibility for changes in demand for commercial vehicles, cars and motorcycles, a view shared by the AAS.
The ministry spokesman said removing open COEs would make the vehicle quota system unduly rigid as most COEs are non-transferable.
'We will continue to monitor the situation,' the spokesman added.
