SINGAPORE – Some 450 certificates of entitlement (COEs) for motorcycles that were secured earlier but not used within three months will be added to the COE quota for May to July, increasing the projected supply for that period by 15 per cent.

Transport Minister S. Iswaran gave this update on Friday in response to questions about motorcycle COEs from Leader of the Opposition Pritam Singh (Aljunied GRC) and Mr Saktiandi Supaat (Bishan-Toa Payoh GRC).

Several Members of Parliament have raised the issue of soaring motorcycle COE premiums over the past year.

At the most recent tender exercise in February, the motorcycle COE was priced at $12,189, compared with $7,667 in February 2018.

Mr Iswaran noted that the Land Transport Authority (LTA) had introduced two changes to curb speculative bidding for motorcycle COEs: It raised the bid deposit from $200 to $800 and cut the validity period of temporary COEs (TCOEs) from six months to three.

This makes it more expensive for bidders to chase up the price with no intention of using the COEs, while the shorter validity period allows the unused COEs to be returned for bidding sooner.

He said in the months following the changes in March 2022, nearly all COEs secured have been used – reflecting the “strong underlying demand”.

Based on LTA data on the COE supply for the February-April period, just one motorcycle COE expired unused between October and December 2022.

In the last two months, about 450 secured COEs were forfeited along with the deposits, Mr Iswaran said.

“However, the market subsequently corrected itself, with prices easing and utilisation rates going up,” he added.

“This indicates that the system is functioning as intended, with corrections where the market cannot support the levels of prices.” 

The forfeited COEs were secured in the four tender exercises held between October and November 2022.

The COE price was higher than in January and February, which is why dealers are allowing these more expensive COEs to just lapse.

For example, a motorcycle COE from November’s first tender was priced at $13,189.

Such a COE would have to be used by February, when the price of a fresh COE was $11,602.

This means that a dealer who is holding on to such a COE from November would be better off forfeiting the $800 bid deposit than using it to register a motorcycle as he has to pay the full price of the COE only when it is used.

Said Mr Iswaran: “We will monitor the market closely and will make further moves if warranted, including a further reduction in the TCOE validity period, or a further increase in the bid deposit.”

Mr Singh asked if the Ministry of Transport would consider increasing the supply of motorcycle COEs to make up for the number of COEs transferred to the Open category in the past.

Until May 2017, a tenth of the motorcycle COE supply was taken out to be part of the quota for Open category COEs.

The other vehicle categories still make this contribution under the current formula.

Mr Iswaran replied that because of Singapore’s current policy to have zero population growth for vehicles, any reallocation of COE supply would be a “zero-sum exercise” as it means taking out from other COE categories.

Referencing to similar appeals for more COEs to be allocated to other categories, he said any change made to the COE system must be approached holistically and consider the implications to the rest of the overall system.