Parliament: No 'market manipulation' of motorcycle COEs


Ms Lee Bee Wah (Nee Soon GRC) had asked about the increase in motorcycle COE premiums, and whether there was any "market manipulation" involved in keeping prices up.
Ms Lee Bee Wah (Nee Soon GRC) had asked about the increase in motorcycle COE premiums, and whether there was any "market manipulation" involved in keeping prices up.ST PHOTO: LIM YAOHUI

SINGAPORE - The authorities have not observed any "irregular bidding activity or market manipulation" for motorcycle certificates of entitlement (COE), said Senior Minister of State for Transport Lam Pin Min in Parliament on Monday (Sept 10).

He was replying to Ms Lee Bee Wah (Nee Soon GRC), who had asked whether the Transport Ministry was concerned about the increase in motorcycle COE premiums, and whether there was any "market manipulation" involved in keeping these prices up.

Ms Lee had also asked for the identity of the bidder of 400 bids that came in just before the latest tender closed on Aug 8, 2018.

Dr Lam told the House that making last-minute bids is a common practice, which causes a spike just before bidding closes.

"For the COE bidding session ending on Aug 8, 2018, 305 bids were received for Category D for motorcycles in the last two minutes. These were submitted by 25 different bidders and the bid numbers were generally small," he said.

Only one bidder submitted two block bids of 25 each. The bids also came in at different price points, which does not suggest price collusion," he added.

Ms Lee had also asked whether the Transport Ministry would consider increasing the bid deposit, as well as shortening the validity period for temporary motorcycle COEs.

Neither suggestion was "cost-free" to the motorcycle buyers, Dr Lam said.

"While raising the bid deposit may encourage dealers to be more prudent in submitting the bids, it will raise costs for dealers," he added.

 
 

He also said that a shorter validity period may require dealers to maintain a larger inventory of motorcycles to meet demand.

"This will increase business costs. High business costs will mean higher prices for the buyers," he said, adding that a shorter validity period could also make it more difficult for buyers to obtain motorcycles immediately.

Dr Lam also noted that motorcycle COE prices had, in fact, fallen since the beginning of the year, from $8,001 in January to $4,390 in the last round of bidding last Wednesday (Sept 5).

"While we have not observed any irregular bidding activity or market manipulation, LTA will continue to monitor the situation closely," he said.

"We are mindful of the needs of motorcycle owners and businesses, and are prepared to review the COE regulations if and when warranted," he added.

In a written reply to Mr Sitoh Yih Pin (Potong Pasir), who had asked whether the consistently high number of expired temporary motorcycle COEs was a result of market speculation, Transport Minister Khaw Boon Wan reiterated there was “no evidence of market speculation at play”.

Mr Khaw noted that motorcycle dealers typically bid for and hold a stock of temporary COEs, which allows buyers to get their bikes immediately upon purchase. 

As such, dealers bear the risk that not all the temporary COEs will be taken up at the end of the six-month validity period. 

However, only about 3 per cent of such temporary motorcycle COEs expired at the end of the six-month validity period over the past three years, noted Mr Khaw. 

In April last year, four unnamed motorcycle dealers were called up by the authorities regarding spikes in motorcycle COE prices, although no evidence of speculation was found.