SINGAPORE - Measures will be taken when needed to reduce frictions and deter speculation in the certificate of entitlement (COE) market so that supply better matches demand, said Transport Minister S. Iswaran.

But he ruled out changes such as subdividing COE categories, and said the correction in motorcycle COE premiums in the most recent bidding exercise shows that the market is functioning as it should be.

Ultimately, COE prices are a function of demand and supply, he added, and the Ministry of Transport will continue to monitor the situation and make adjustments when needed.

Mr Iswaran was speaking to the media on the sidelines of the launch of a minimart and integrated community service centre for low-income families on Sunday.

His remarks on COE come amid rising premiums, which has seen some categories hit record highs in recent tender exercises. COE premiums for smaller cars breached the $100,000 mark for the first time in April, while motorcycle premiums also went above $13,000 in the past year.

But rules were put in place to curb speculation for motorcycle COEs, and in the last tender exercise held last Thursday, premiums for such COEs fell sharply by more than half to $5,002.

Referring to how motorcycle COE premiums have corrected, Mr Iswaran said this shows that the market is working as intended.

The Land Transport Authority had raised the bid deposit for motorcycle COEs from $800 to $1,500, and also cut the validity period for temporary motorcycle COEs from three months to one month. Some 450 motorcycle COEs that were secured in the bidding in end-2022, but not used within the validity period and forfeited, were also added to the COE quota for May to July. 

Mr Iswaran said: “What it tells us is the market is working in the sense that when the price is correct, there’s a response to that from the dealers.

“But it also tells us that we can do more to improve the functioning of the market and to deter any speculative activities, and that’s why we made a few further moves.”

But he warned that it was premature to predict any trend in COE premiums and said prices may still fluctuate.

He noted that COE premiums are also dependent on demand, and underlying demand for motorcycles remains strong as they are used for economic activities such as delivery work.

“We should also be cautious about expectations going forward because there are many factors at play and we should allow these to work themselves through the system. Our system design is really to make sure that supply and demand adjust to each other. And what we have done in this latest set of measures is really to improve the overall functioning of the market,” he added.

Asked by the media about whether the Government would consider subdividing COE categories to separate higher-end motorcycles from the rest, Mr Iswaran said a smaller supply for each category would mean more volatile prices, as a small increase in demand would drive prices up significantly.

As to whether the measures to bring down motorcycle COE premiums may also work on car COEs, he said there are differences in how dealers bid for car COEs. For car COEs, there is already a buyer when dealers put in a bid, whereas dealers typically bid for motorcycle COEs first, then sell to buyers later on.

“I think there are some fundamental differences in the way the different categories function,” he said.

“Having said that, we are studying this and... we’ve always been ready to make refinements and adjustments in response to material developments in the market.”

Mr Iswaran on Sunday also launched Jampacked@West Coast, a minimart that will be open to 161 vulnerable families in the area to purchase food items with credits of $50 per month.

Previously, they had to travel to MacPherson every two months to collect food rations from a food bank, and had no choice in selecting the items they want. The minimart is open from 10am to 8pm on weekdays and 9.30am to 1pm on Saturdays.

He said the joint project between Jamiyah Singapore and the West Coast grassroots organisations complements government measures in easing the financial burden on families.

The centre will also conduct counselling and medical and legal aid referral services, as well as provide academic support, character building, and social and emotional learning. It also offers a comfortable space for youth to study.

One of the beneficiaries, Ms May Ong, said she prefers having her choice of food items to being given a basket of items.

While the 51-year-old usually goes for essentials such as noodles, milk and biscuits, the minimart allows her to pick up frozen nuggets and fries which her kids like.

Ms Ong, who works part-time in the food and beverage sector, has been raising her kids alone since her husband died in an accident in 2022. Her two children are in Primary 6 and Secondary 3.

“It’s good that there are more options to help them with their studies,” she said.