THE planned injection of up to 20,000 additional Certificates of Entitlement (COE) from February is not linked to any potential implementation of distance-based road pricing, Transport Minister Chee Hong Tat said in Parliament on Tuesday (Nov 12).
“We have not made a decision on whether to implement distance-based charging, though ERP 2.0 gives us the option to do so,” Chee said.
There is a need to study this further, including with the data from Electronic Road Pricing (ERP) 2.0, as there may be trade-offs, he added.
But if distance-based charging is eventually implemented, there might then be scope for a further increase in the COE quota, he said. This is as the mechanism would give the Land Transport Authority (LTA) an additional tool to manage congestion.
Chee was responding to parliamentary questions on COE quotas and ERP 2.0, as well as their impact on road traffic.
Asked how the injection of COEs aligns with Singapore’s “car-lite” vision, Chee said the government remains committed to the vision, and “having a car-lite vision does not mean that our total car population cannot increase”.
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“The key is to avoid road congestion through the use of both ownership controls and usage-based pricing, which is what we have been doing over the last few decades,” he told the House.
Given changing travel patterns post-Covid, LTA had assessed it could inject up to 20,000 additional COEs across vehicle categories over the next few years without the worry of causing traffic gridlock, said the minister.
However, while flexible work resulted in lower car usage post-pandemic, more companies are now mandating a return to the office, noted Melvin Yong, Member of Parliament for Radin Mas, in a supplementary question. He asked if this would affect LTA’s planning assumption.
Chee replied: “If indeed there is a change, whether it is due to removal of flexi-work arrangements or other reasons, then we will have to respond accordingly using this tool that we have, which is usage-based pricing and ERP 2.0 gives us additional capabilities to do so in a more responsive and quicker manner.”
Sources of COE demand
In his earlier response, the minister reiterated previously-announced plans to raise the COE quota for Categories A, B and C every quarter, before reaching the projected peak supply from 2026.
The additional 20,000 COEs, which constitute about 2 per cent of Singapore’s total vehicle population, would give the government more flexibility to meet this commitment, Chee said.
All else being equal, an increase in COE supply should help to moderate prices, he added, though the authorities cannot predict how prices would move as this depends on demand.
Meanwhile, LTA data showed that strong demand from local individual buyers is likely to have been the main driver of increasing COE prices in recent quarters, rather than demand from foreigners or car-leasing companies.
Successful Category A and B bids won by Singapore residents accounted for 84 per cent of all COE bids for the year to date. This is up from 69 per cent for the full year in 2023 and 66 per cent in 2022.
Foreigners accounted for just about 2 to 3 per cent, whereas car-leasing companies’ share fell to just 10 per cent year to date. The latter constituted 24 per cent of bids in 2023 and 26 per cent in 2022.
The fluctuating demand by car-leasing companies is also why it is “not a straightforward exercise” to simply create a separate COE category for private-hire companies, Chee reiterated.
