On November 6, 2023, Acting Minister of Transport Chee Hong Tat addressed the ongoing concerns regarding the soaring prices of Certificates of Entitlement (COEs) in Singapore. He emphasized that the demand for private-hire cars is unlikely to be the main contributor to these high COE prices, as their share in the COE market has decreased significantly. This statement comes in response to a series of questions from Members of Parliament about the underlying factors driving the current COE prices.

Chee noted that over the past three quarters, from February to October 2023, private-hire companies have accounted for a smaller percentage of COE applications. Specifically, car-leasing companies, which typically bid for vehicles to be used as private-hire cars, captured only about 21% of Category A COEs and 23% of Category B COEs, marking a decline from previous years. This decline in private-hire demand suggests that it cannot be singled out as a primary cause for the rising prices of COEs.

The minister also addressed concerns regarding foreign bidders and multiple car owners, indicating that these groups represent a minimal percentage of the overall COE demand. He pointed out that foreigners secured just 1% of Category A COEs and 4% of Category B COEs in the last three quarters, while households owning multiple vehicles account for less than 15% of all car-owning households. Given these low proportions, imposing additional taxes on these groups would likely have little impact on COE prices.

To tackle the issue of COE prices, the government will continue its “cut-and-fill” strategy. This approach involves advancing COE quotas from future peak supply years to address current supply shortages. Chee highlighted that this method has resulted in a significant increase in the COE quota for passenger cars, with a 35% rise in the quota for November 2023 to January 2024 compared to the previous quarter. This adjustment aims to stabilize the market and prevent prices from escalating further.

Additionally, Chee acknowledged the growing importance of private-hire vehicles in Singapore’s transportation landscape. As of September 2023, private-hire cars were responsible for two-thirds of point-to-point trips, an increase from three-fifths before the COVID-19 pandemic. While he recognized the need to address concerns surrounding private-hire demand, he also stressed that adjustments to COE quotas for these vehicles must be carefully managed to avoid exacerbating existing price issues.

Looking forward, the government plans to maintain a steady increase in COE supply through 2024, leading up to anticipated peak supply years in 2026 and 2027. Chee assured the public that efforts would continue to balance supply and demand in the COE market, helping to alleviate the financial burden on prospective car owners.

Lastly, in response to inquiries about the potential growth of the motorcycle population, Chee reiterated that the zero-growth policy applies to both cars and motorcycles due to their potential contributions to road congestion. He emphasized the need for a holistic approach to managing vehicle population growth, considering the various uses of motorcycles in both commercial and personal contexts.