Proposal for Shorter COE Renewal Durations As A More Affordable Option
Ministry of TransportSpeakers
Summary
This question concerns the proposal by Ms Poh Li San to implement Certificate of Entitlement (COE) renewals for shorter durations, such as annually, to make vehicle ownership extension more affordable. Acting Minister for Transport Mr Jeffrey Siow stated that the government will not adopt this move because shorter renewals would amplify cycle fluctuations and reduce the supply of COEs for new buyers. He noted that the current five-year renewal is already a concession and that commercial vehicles can already be renewed until their statutory life ends. The Minister emphasized the need to balance the interests of existing owners with those of new buyers who require access to vehicles. He maintained that the current system ensures fair competition for COEs and prevents further volatility in the market.
Transcript
18 Ms Poh Li San asked the Acting Minister for Transport in view of the high Certificate of Entitlement (COE) prices, whether the Minister will reconsider implementing COE renewal for shorter durations such as annually or two-yearly, so that existing car owners can have more affordable options to extend their cars ownership beyond 10 years.
The Acting Minister for Transport (Mr Jeffrey Siow): Mr Speaker, I want to thank Ms Poh for her Parliamentary Question. We understand the concerns of existing car owners who wish to renew their Certificates of Entitlement (COEs). However, we need to balance their interest with those who wish to buy a new car. Today, we already allow existing car owners to renew COEs for five years as a concession. If we allow for shorter renewals, this is likely to amplify the peak and the trough of the COE cycles further. It would mean that more car owners could renew their COEs when prices are high and this would reduce the supply of new COEs for prospective car owners. So, we will not make this move.
Mr Speaker: Ms Poh.
Ms Poh Li San (Sembawang West): Thank you, Speaker and Minister. Many of our small businesses, hawkers, for example, they need their vehicles for their businesses, and because of the high quantum of the COE, it is difficult for them to sustain their business because of a very huge, lumpy sum that is needed to pay for the COE. Hence, the suggestion to consider shorter tenures or shorter terms for the COE.
Will there be any possibilities to consider only for the commercial vehicles, for example, in this case, to have a shorter term for renewals, just to help these smaller businesses tide through?
Mr Jeffrey Siow: Thank you, Mr Speaker. I fully understand the concerns of small business owners who need to continue to have their vehicles to operate, especially in the environment of high COE prices. We already similarly allow commercial vehicle owners to renew their COEs for five years. And in fact, they can do it until the statutory life of their vehicles. It is something that I think is fair, because you also want to allow for new businesses who wish to have access to vehicles to be able to compete for COEs. I think the better approach is for them to be able to bid in the same market and therefore, for the COE to be priced accordingly.