Meeting the diverse transport needs of Singaporeans

Any discussion on certificates of entitlement (COEs) must be situated within the broader context of our land transport system, of which private cars are but one aspect.

To meet the transport needs of Singaporeans and enhance our living environment, we must address two key constraints – land and carbon emissions. Roads occupy 12 per cent of our land, compared with around 13 per cent for industry and 15 per cent for housing.

Our land transport system accounts for about 15 per cent of Singapore’s total domestic carbon emissions; we must make it much more sustainable to achieve net-zero emissions by 2050.

The best way to achieve this is through mass public transport. It allows the greatest number of people to reach their destinations with the least land take and carbon emissions. Our rail network serves around three million journeys a day and takes up less than 1 per cent of our total surface space. In contrast, roads take up 12 per cent of our land, for seven million journeys a day. These include those made by cars, motorcycles, buses and private-hire cars (PHCs).

That is why mass public transport is the core of our transport strategy, and our rail network the backbone of our transport system. Today, seven in 10 households are within a 10-minute walk of one of our 202 MRT and LRT stations. By the next decade, it will be eight in 10 households. To achieve this, we are building an additional 100km of rail, an almost 40 per cent increase from our current rail network. By 2035, we will have eight MRT lines and two LRT lines, reaching all parts of Singapore.

As we expand our public transport network, we are also ensuring that it is inclusive, affordable and sustainable. Today, all our MRT stations and bus interchanges, as well as 98 per cent of our bus stops, are barrier-free. Public transport is heavily subsidised. Our public transport fleet will fully comprise cleaner energy models by 2040.

We are also improving first-mile-last-mile connectivity for cyclists and pedestrians. By 2030, the islandwide cycling path network will

more than double to about 1,300km.

Under the Friendly Streets initiative, we will work with local communities to create more pedestrian-friendly facilities within residential neighbourhoods.

More broadly, Land Transport Authority (LTA) and fellow government agencies are integrating land transport and urban planning strategies: to enhance the liveability of our city by

bringing jobs closer to homes;

developing lifestyle and amenity hubs near transport nodes; and making public transport and active mobility convenient for the daily commute.

Given the land and carbon constraints, going “car-lite” is a key strategy. With excellent public transport connectivity and active mobility infrastructure, less road and parking spaces are needed for general vehicular traffic. This is the car-lite future that we envisage – one which

prioritises pedestrians, cyclists and public transport users,

and lessens the need for and use of private cars.

Point-to-Point Transport: Bridging the Gap

Even among cars, there is a spectrum of choices. Shared transport, which includes taxis and PHCs providing P2P passenger transport services, complements mass public transport. They provide a useful alternative to car ownership for those who need access to car-like services, whether chauffeured or self-driving. Today, the P2P sector accounts for around one million, up from 800,000 daily journeys in 2012.

With zero growth in our car population,

such shared transport, including car-sharing services, allows for a more efficient and inclusive use of our roads, serving the needs of many more Singaporeans, as compared with individually owned private cars.

The PHC population has averaged around 70,000 since 2019, with some fluctuations due to Covid-19 and the subsequent reopening of Singapore’s economy. PHCs have remained at around 10 per cent of the total car population for the past four years. The period where we saw the fastest growth in PHC numbers was between 2015 and 2017, when it increased from 30,000 to almost 70,000. There was no commensurate upward pressure on COE prices in that period. Conversely, while COE prices rose over the past several quarters, demand from PHC companies has in fact been moderating.

PHCs are a flexible way to augment the supply of P2P passenger transport, giving commuters more choices while serving a much wider segment of society than private cars. We should be careful when making calls about imposing any caps on the PHC population. We are studying this further to ascertain the effect of PHCs, if any, on the market.

On private car ownership, there are encouraging trends, especially among our youth.

According to a Straits Times survey,

the percentage of youth who aspire to own a car has fallen from around 65 per cent in 2016 to around 50 per cent in 2022. More than 75 per cent of the respondents cited ready access to public transport as the reason why they did not aspire to own a car.

Nevertheless, we recognise that there is still a desire to own a car – for some it is a necessity; for others a useful option; yet others, an aspiration. COEs are a key feature of our Vehicle Quota System (VQS), which is essential for us to achieve our zero-growth rate policy objective for cars and motorcycles. It is the principal tool to manage ownership, as recognised in the 1996 White Paper, A World Class Land Transport System.

The VQS fundamentally works through supply and demand forces to efficiently allocate a scarce resource – the COEs. The system also incorporates progressivity considerations by having different COE categories. In fact, when the COE system started in 1990, there were four categories for cars. It was reduced to the current two categories in 1999, to address concerns over the relatively small quota supply and resultant volatility, and limited choices of cars in some categories. Category E (Open category) was retained to allow for changing preferences and needs in vehicle types over time.

Recent Market Structure Improvements

On the COE system: On the whole, the system continues to serve our policy objective by efficiently allocating the limited COE supply. However, over the years, the Ministry of Transport (MOT) and LTA have made various refinements to the VQS scheme, to ensure its relevance and efficacy without forsaking the core policy intent.

The power rating criterion of 97kW was introduced in 2014 for the mass-market Cat A, so that car COE categories are differentiated not by engine capacity alone. Last year, as more electric car models became available locally, we increased the power output threshold for Cat A COEs to 110kW to accommodate mass-market electric cars.

Between 2018 and April this year, the median open market value (OMV) for Cat A cars for each year was just over half of the median OMV for Cat B cars in the same year. In other words, the median Cat B OMV was about 75 per cent higher than the median Cat A OMV. We will continue to monitor and review the differentiating criteria between Categories A and B as technology evolves.

COE’s Driving Forces

On the impact of foreigners: The proportion of car COEs secured by foreigners remains low and has not changed significantly over the years.

From July 2020 to December 2022, on average, less than 3 per cent of car COEs were allocated to foreigners. This number remains stable.

Another common query is about multiple-car-owning households. As at Oct 31, 2022, of the 471,000 households that own cars, 12 per cent own two cars, and less than 3 per cent own three or more cars. The percentages remain about the same today. Over the past decade, the proportion of multiple-car-owning households has been steadily declining from about 19 per cent of households in 2012 to less than 15 per cent today.

It is worth noting that multiple-car-owning households live across Housing Board flats, condominiums and landed properties, including some that own more than three cars.

So what then is the cause of

rising COE prices?

Fundamentally, the COE prices reflect demand for a limited supply of COEs. This is further exacerbated by the fact that we are now at the trough in the 10-year cycle of COE supply. Demand in all categories has remained resilient, especially as the economy recovers post-Covid-19. Incomes have also been rising over the long term.

As was observed in

Professor Raymond Ong’s article (ST, May 7),

the ratio of COE price to median monthly household income has fallen from 11 to one during the previous COE price peak in 2013, to nine to one today. In comparison to median income, the COE price is actually lower even though the absolute price is higher, because household income has risen.

As household incomes continue to rise, coupled with our policy of zero car population growth, we must expect the long-term trajectory for COE prices to be upwards.

Supply Smoothening Measure

COE supply in turn is determined primarily by car deregistrations in preceding quarters, which has been relatively low of late. Over the past few months, MOT and LTA have made several moves to reduce volatility in quota supply. Instead of just the preceding quarter, we first adopted the average of the preceding two quarters in end-2022, and now use the moving average of deregistrations in the four preceding quarters to compute COE quotas. These moves have helped to mitigate quarter-on-quarter volatility.

We also expect the COE supply to start increasing substantially in the coming months as more cars reach the 10-year mark. Notwithstanding this, MOT and LTA have studied if there is more that we can do to smoothen the supply of Cat A and B COEs, while adhering to the cap on the overall car population over the 10-year cycle.

Consequently, as a one-off exercise,

LTA will bring forward and redistribute the supply from five-year COEs

which are due to expire in the next projected supply peak. As these five-year COEs cannot be extended and must be de-registered, LTA will be able to identify the exact number with certainty. This supply will be redistributed over several quarters starting from the next bidding exercise, and will increase quota supply in the next bidding exercise by about 24 per cent in Cat A and 15 per cent in Cat B.

As we make this move, I would like to emphasise two points.

First, this will help to lessen, but it will not eliminate, volatility in supply. There will still be a degree of supply fluctuation due to historical factors and broader market conditions.

Second, the long-term upward trend of COE prices due to rising incomes and zero vehicle population growth will not abate.

Commuting Choices Determine Whether We Become a Car-Lite Society

As we seek to improve the efficiency of the COE system, we should not lose sight of our goal of becoming a car-lite society with accessible and inclusive transport for all Singaporeans.

The Government is committed to developing the necessary policies and infrastructure to build a car-lite, accessible, inclusive and sustainable transport system to meet the diverse needs of Singaporeans. Ultimately, our success in realising that vision rests in the commuting choices that every Singaporean makes every day.