Managing Increases in Rental and Transport Costs for Private-hire Drivers Given Higher COE Premiums
Ministry of TransportSpeakers
Summary
This question concerns measures to mitigate rising rental and transport costs for private-hire car drivers and commuters amid record-high Certificate of Entitlement (COE) premiums. Mr Yip Hon Weng inquired about potential government intervention and reviews of the COE bidding system to curb speculative bidding and manage ownership costs. Minister S Iswaran responded that private-hire fares and rentals are determined by market forces and noted that rental costs have not increased recently. He explained that existing COE rules, such as non-transferability and a $10,000 deposit, already discourage speculation, meaning a review of the bidding system is not planned. The Land Transport Authority will continue to monitor the situation while allowing market supply and demand to efficiently match services based on prevailing conditions.
Transcript
39 Mr Yip Hon Weng asked the Minister for Transport in view of COE premiums reaching near record high (a) what is the Government doing to mitigate the increase in rental and transport costs for those who drive or travel by private-hire cars; (b) under what circumstances will Government intervention be warranted; (c) what intervention measures are being planned; and (d) whether the Ministry plans to review the COE bidding system to reduce speculative bidding.
Mr S Iswaran: Private hire car (PHC) rental costs have not increased despite higher Certificate of Entitlement (COE) premiums as the ownership costs of cars already in service remain unchanged.
The Government does not regulate PHC fares or rental costs, which are determined by dynamic market forces. This allows demand and supply for PHC services and rentals to be matched efficiently based on prevailing market conditions, while spurring service improvements and price competitiveness. Similarly, the COE is market-based, where premiums are determined by market forces of supply and demand.
LTA has no plans to review the COE rules which, in general, discourage speculative bidding. For example, Category A and B COEs for cars are non-transferable. Only the successful bidder can use the temporary COE (TCOE) to register a vehicle. Further, a deposit of $10,000 will need to be placed when bidding. This bid deposit is forfeited if the temporary COE (TCOE) is not used for registration within the validity period. LTA will continue to monitor the situation on the ground closely.