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A CERTIFICATE of Entitlement (COE) category specifically for private-hire cars (PHCs) in Singapore is still being studied, said Transport Minister Chee Hong Tat.

He noted that the creation of a separate COE category for PHCs has challenges because the supply of certificates would need to come from existing passenger car categories.

There are also additional difficulties in classifying PHCs and predicting the demand for them.

The concept of a separate COE classification for PHCs is “not wrong, but the details are very important, and that’s why… we need to continue to study this carefully, because of the difficult trade-offs,” Chee explained.

The study is part of the second phase of an ongoing point-to-point (P2P) transport sector review, said Chee, and added that the ministry aims to give an update on its progress at its Committee of Supply (COS) in March 2025.

He did not elaborate on when the review is expected to conclude. Announced in September 2023, the review was originally planned for completion in the second quarter of 2024, but is still ongoing.

Changes to improve the P2P sector based on the first phase of the review were announced in this year’s COS by Senior Minister of State for Transport Amy Khor, and included reduced regulatory requirements for taxis, plus more guidelines for P2P operators on managing disruptions.

On Wednesday (Dec 4), she announced that most of these changes will come into force from January 2025.

Not like taxis

The P2P sector covers taxis and PHCs, including PHCs that are chauffeured (ride-hailed) and self-driven.

The automotive industry and consumers have called for a separate COE category for PHCs because they use passenger car COEs (categories A and B), which has been a factor in driving up COE premiums.

According to Land Transport Authority figures as at October 2024, the population of PHCs in Singapore reached 87,845 – an all-time high – while the population of taxis was 13,218, less than half of the 27,695 in 2013.

Since 2012, taxis have not bid for COEs, with their certificates drawn from the quota of the open category, E. Before that, they bid for COEs under Category A.

Chee said that making a separate COE category for PHCs is difficult, as taxis and PHCs have key differences that make the latter difficult to classify.

Unlike taxis, a regular passenger car can, at any time, be converted to a PHC and vice versa; and so classifying a PHC is “not so straightforward”.

While some PHCs are privately owned, there are also corporate or fleet PHCs that are owned by companies, which rent them to drivers.

“The demand (for PHCs) also fluctuates quite a lot. It’s not quite stable because (PHC fleets) decide when they want to come in, when they want to expand. So because of that, it is quite difficult to have a very accurate assessment of what is the supply that they will need,” explained Chee.

Chee also noted that the COEs for a separate PHC category would have to come from the quota for passenger cars, namely categories A and B – a move that would require careful balancing.

If too many COEs are taken to form a PHC category, it could spike COE prices, while taking too few could result in a shortage of PHC supply for rides, especially during peak hours, he added.

“And if you’re not careful, you calculate wrongly, or you estimate wrongly, and you transfer too much or too little, then there will be downstream negative consequences. So that’s why we need to be a bit careful when it comes to whether or not we want a separate category.”

Chee said that the concerns driving the creation of a separate PHC category were “not so much about having a separate category as an end (in) itself”, but about the demand having an impact on COE prices.

The October announcement of an additional 20,000 COEs to be added from February 2025 is one way the government is giving the industry a “greater assurance of the supply” of COEs moving forward.

Fare competition

Chee said that the second phase of the P2P review will look at ensuring fair competition in the sector and increasing the number of taxi drivers, among other things.

It is examining ways to convince drivers entering the P2P market to drive a taxi, rather than just PHCs.

This is to address the fact that it is important for Singapore to continue to have a sufficient supply of taxis serving certain commuters, he noted, despite the major shift in consumer and driver preferences towards PHCs.

Over the past decade, PHCs have eclipsed the number of taxis. In 2014, there were 28,736 taxis and 18,847 PHCs.

The review is also investigating ways to keep the sector “competitive and contestable”.

A single entity with a very large network of cars and drivers would be more efficient than competitors and have more options to match between supply and demand, said Chee.

“It is important for us to look at what some of the safeguards (are) for drivers and for commuters; (we) want to make sure that they continue to have choice, to be able to choose between the different platforms, different services they want to use, and that the larger operators cannot just implement measures that effectively lock in passengers and drivers,” he added.

In July, the proposed acquisition of taxi company Trans-Cab was called off after a provisional ruling from the Competition and Consumer Commission of Singapore said that it would lead to a substantial reduction of competition in the ride-hailing market.

The minister also pointed out that the P2P review was taking longer than expected because of the complexity of the issues being studied in the second phase.

“In phase one, we tackled some of the more straightforward, more direct (issues). (For) phase two, we need a bit more time, but we think these issues are equally important, because they can affect the way the market functions and the outcomes for drivers and for competitors.”