Motor Dealers Stockpiling Motorcycle COEs to Resell at Higher Price
Ministry of TransportSpeakers
Summary
This question concerns the alleged stockpiling of motorcycle Certificates of Entitlement (COEs) for resale, with Er Dr Lee Bee Wah suggesting shorter validity periods and higher deposits to prevent speculation. Senior Minister of State Dr Lam Pin Min responded that current data shows no irregular stockpiling, except for a brief period following the introduction of the tiered Additional Registration Fee. He clarified that shortening the six-month validity period could increase business costs by requiring larger vehicle inventories, while the current $200 deposit reflects the lower quota premiums for motorcycles. The Ministry of Transport continues to monitor Category D TCOE trends to determine if policy changes are necessary to address premium volatility. The government aims to balance market flexibility for buyers and dealers while ensuring the COE system remains robust against potential speculative activities.
Transcript
15 Er Dr Lee Bee Wah asked the Minister for Transport with regard to feedback on motor dealers stockpiling motorcycle COEs to resell at a higher premium (a) what is the progress of LTA's investigation into this issue; (b) what is the Ministry doing to address this issue; and (c) whether the Ministry will shorten the validity period of these COEs to curb their speculation.
The Senior Minister of State for Transport (Dr Lam Pin Min) (for the Minister for Transport): Mr Speaker, currently, motorcycle dealers bid for Certificates of Entitlement (COEs) under their name and hold a stock of Temporary COEs (TCOEs). This is the preferred model for the motorcycle market as it allows buyers to take delivery of their motorcycles immediately.
Our data does not reveal any irregular stockpiling of COEs, or the use of the stockpile, by the dealers, with the exception of the period shortly after the tiered Additional Registration Fee (ARF) for motorcycles was introduced. In that instance, dealers might have kept some of the TCOEs garnered before the announcement of tiered ARF to register more expensive motorcycles. The TCOEs have all been used up or expired. We will continue to monitor the situation.
Mr Speaker: Er Dr Lee Bee Wah.
Er Dr Lee Bee Wah (Nee Soon): I would like to ask the Senior Minister of State whether there is a trend on the COE for motorcycles going up. Based on the feedback from one of my residents recently, he said that they are very concerned because of this stockpiling of COEs. So, he suggested that the Ministry may wish to consider two things. The first is to increase the deposit. Because currently, deposit is only $200; that is why dealers go and stockpile and take a chance. Secondly, whether we will shorten the six-month registration period, because if it can be shortened, people will not want to stockpile.
Dr Lam Pin Min: I would like to thank Er Dr Lee Bee Wah for the supplementary questions. Since the implementation of the tiered ARF for motorcycles, the category TCOE quota premiums have increased from around $6,000 to all-time high of about $8,081 in the second bidding exercise of March 2017, before dropping to about $3,500 in August 2017. So, Members can see that the COE premium actually fluctuates, depending on factors, such as demand and supply. However, we do notice that the Category D TCOE premium was at $8,001 for the second bidding exercise of January 2018 and we will be watching the trend closely.
With regard to the Member's question on whether to shorten the validity period of the TCOE to three months instead of the current six months. The reason why we are not doing so is because if we do shorten the validity period of the Cat D TCOEs, it basically reduces the time available for the dealers or individuals to secure a vehicle before their TCOEs expires, and dealers may have to maintain a large inventory of vehicles to meet the shorter validity period. This might increase business costs.
With regard to the Member's question on the deposit, the reason why it is tagged at $200 is because the quota premium for motorcycles is much lower than that of normal cars. However, like I have mentioned, we do monitor all these very closely and, if necessary, we may look into changing the COE policies.