No major impact on COE prices seen with zero vehicle growth

Industry observers had said the impact on COE prices in the long run should be minimal because the current 0.25 per cent growth rate accounts for fewer than 100 COEs a month for each of the categories.
Industry observers had said the impact on COE prices in the long run should be minimal because the current 0.25 per cent growth rate accounts for fewer than 100 COEs a month for each of the categories.ST PHOTO: LIM YAOHUI
Industry observers had said the impact on COE prices in the long run should be minimal because the current 0.25 per cent growth rate accounts for fewer than 100 COEs a month for each of the categories.
SYSTEM WORKS: "While our current vehicle quota system is not a perfect solution, it is still the most appropriate at this point in time to allocate a limited and non-basic resource like vehicle ownership." - SENIOR MINISTER OF STATE FOR TRANSPORT LAM PIN MIN

Growth rate accounts for small quota portion, with deregistrations making up bulk of supply

The plan to cut the growth rate of car and motorcycle populations to zero from next February is not expected to have a significant impact on the supply of certificates of entitlement (COEs) and their prices, Senior Minister of State for Transport Lam Pin Min said yesterday.

This is because vehicle growth rate accounts for only a small portion of the COE quota, which is revised every three months.

Also, the calculation of its supply is determined largely by the number of vehicles deregistered. When fewer are scrapped, the COE supply goes down, and vice-versa.

Dr Lam also said the Government has made heavy investments to beef up bus and train services, and will continue to do so.

For instance, 80 new bus routes and 1,000 new buses will be added on the roads by the end of this year under the 2012 Bus Service Enhancement Programme and the Bus Contracting Model that took effect last year.

"There will be less need to own a car," he said, confident that the public transport system can handle the bigger passenger load.

He was replying to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), who asked about the impact of the zero growth policy on COE prices, and whether public transport is ready to take on more passengers.

The reduction of the growth rate from 0.25 per cent per annum to zero was announced last month and will apply to three COE categories: A and B, which are used to buy small and large cars, respectively, and D, for motorcycles.

Industry observers had said the impact on COE prices in the long run should be minimal, because the current 0.25 per cent growth rate accounts for fewer than 100 COEs a month for each of the categories.

For instance, for the current quarter between November and January, there are 3,360 COEs available for bidding every month for Category A.

But experts reckoned the impact of the zero growth policy will be felt more keenly when COE supply dries up towards 2020, as fewer cars are expected to be scrapped.

Mr Saktiandi asked if subsidies or rebates could be given to car buyers with families, or those with disabilities, should COE prices go up.

Dr Lam replied that it was "very difficult for the Government to consider alternative methods of prioritising COEs to favour a certain selected group".

"While our current vehicle quota system is not a perfect solution, it is still the most appropriate at this point in time to allocate a limited and non-basic resource like vehicle ownership," he said.

He also stressed that as land is scarce in Singapore, it is not possible to let everyone own a car.

Mr Desmond Choo (Tampines GRC) wanted to know how the Government will ensure the new vehicle population growth rates do not hurt e-commerce businesses.

Dr Lam pointed out that there is no change in the existing 0.25 per cent growth rate for commercial vehicles, and it will remain so until the first quarter of 2021.

"This is to provide businesses with more time to improve the efficiency of their operations," he said.

Dr Lam said the Government will "constantly review the vehicle growth rate".

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A version of this article appeared in the print edition of The Straits Times on November 07, 2017, with the headline 'No major impact on COE prices seen with zero vehicle growth'. Print Edition | Subscribe