Certificate of Entitlement


Certificate of Entitlement

The Certificate of Entitlement (COE), instituted by the government of Singapore since May 1990, is a program designed to limit car ownership and hence the number of vehicles on the country's roads. This system in effect requires residents of Singapore to bid for the right to buy a motor vehicle, with the number of certificates deliberately restricted.

The COE allows holders to own a car for a period of 10 years, after which they must scrap or export their car with financial incentives or bid for another COE at the prevailing rate if they wish to continue using their car for a further 5 or 10 years.

Contents

Five categories of COE:

  • Non-transferable categories:
  • Category A : Cars (1600 cc and below) and taxis
  • Category B : Cars (1601 cc and above)
  • Category D : Motorcycles
  • Transferable categories:
  • Category C : Goods Vehicles and Buses
  • Category E : Open Category

Examples on Quota Premium

March 2009 2nd Open Bidding

Category Current Quota Premium Previous Quota Premium increase/decrease Difference
A (1600cc and below), taxi S$5,116 S$4,890 increase S$226
B (1601cc and above) S$5,001 S$5,101 decrease S$100
C (Goods Vehicle and Bus) S$5,600 S$5,300 increase S$300
D (Motorcycles) S$912 S$958 decrease S$46
E (Open) S$5,982 S$5,700 decrease S$282

April 2010 1st Open Bidding

Category Current Quota Premium Previous Quota Premium increase/decrease Difference
A (1600cc and below), taxi S$34,001 S$28,389 increase S$5,612
B (1601cc and above) S$45,501 S$36,089 increase S$9,412
E (Open) S$49,000 S$42,001 increase S$6,999

COE biddings starts on the first and third Monday of the month and typically lasts for three days to the following Wednesday. Bidding duration will be pushed further in some circumstances, including public holidays. Bidding results can be obtained through the local media on the same day or on a website.[1]

Non-transferable COEs are tied to the vehicle, but the vehicle and its COE may be sold to a new owner.

An additional restriction on car ownership is the requirement that motor vehicles more than ten years old, known as 'time expired' vehicles, must be either renew the COE for either 5 or 10 years or de-register the vehicle for scrapping or exporting from Singapore, usually to neighbouring countries. For vehicles which have a renewed COE for 5 years the owner of the vehicle has to scrap the vehicle at the end of the period with no option to renew the COE.

Some of these vehicles have been exported farther to other right hand drive countries like New Zealand, which has traditionally imported such vehicles from Japan. The result of the peculiarities of the Singapore car market has resulted in Singapore being the second largest exporter of used cars in the world after Japan. Cars are exported to many countries, including Libya and Trinidad.[1]

Owners of such vehicles are given financial incentives to do this, which include a Preferential Additional Registration Fee (PARF). According to the Land Transport Authority, the number of COEs planned for the year 2006 is 131,127. From 2006 to 2008, the vehicle growth rate will be kept at 1.5% percent per annum.

This program was implemented to reduce traffic congestion and it complements other measures to curb road usage such as the Electronic Road Pricing (ERP) program.

Detailed cost structures when buying a car can be found this site.[2]

Historical record since May 1990

Previous Category
May 1990-Apr 1999
Current Category
May 1999 till now
Highest Lowest Remarks
Cat 1 (1000 cc and below) Cat A S$41,008 (Jul 1997) S$2 (Nov 2008) A major historical plunge due to lower than minimum bidders at S$2.
Cat 2 (1001 cc - 1600 cc) and taxi S$62,208 (Jul 1997)
Cat 3 (1601 cc - 2000 cc) Cat B S$83,500 (Dec 1994) S$50 (Jan 1998) A major historical plunge due to lower than minimum bidders at S$50.
Cat 4 (2001 cc and above) S$110,500 (Dec 1994) S$800 (Apr 1991)
Cat 5 (Goods Vehicle and Bus) Cat C S$39,000 (Dec 1994) S$1 (Apr 1991) A minor historical plunge to S$1 due to high quota with minimum bid.
Cat 6 (Motorcycles) Cat D S$3,506 (Aug 1997) S$1 (May 1990, Jan-Feb 1994, Nov 2002 - Mar 2003) This is due to higher quota for motorcycles
Cat 7 (Open) Cat E S$95,986 (Dec 1994) S$998 (Mar 1991)
Cat 8 (Weekend Cars) Nil S$45,300 (Sep 1994) S$1,110 (Oct 1991) It was stopped on Sep 1994, the scheme was replaced by the Off-peak Car rebate

From April 1, 2010, the COE quota calculation was amended. Under the new methodology, the Land Transport Authority (LTA) recycles the COE quota from the actual vehicle deregistrations in the most recent six-month period back into the system. Instead of an annual quota, figures will be revised every six months. For example, there are 800,000 vehicles as of January. Based on the allowable growth rate of 1.5 percent, there will be an additional 6000 COEs for sale every six months. On top of the number of vehicles deregistered in the same period (for example, 20,000) this means the COE quota for July to December will be 26,000.

In early October 2011, Singapore Minister for Transport Lui Tuck Yew has said that Singapore's annual vehicle growth cap would be cut further from 2012. In the first COE bidding for October 2011, the COE price for Cat B fell S$1,289 to S$63,600 while that for Cat A cars, which include taxis, rose S$2,283 to S$50,289. COE price for the open category - where the COEs can be used for any vehicle type but are normally used for cars - increased S$2,556 to S$65,058.

Average vehicle pricing (March 2008)

All prices are in Singapore dollars.

  • Supermini : S$35,999 - S$56,500
  • Subcompact : S$56,400 - S$60,488
  • Compact : S$70,388 - S$80,000
  • Mid-size : S$90,000 - S$110,000
  • Full-size sedan : S$120,000 <

Criticism

The COE system has received the following criticisms:

  • The auction-style system that the COE system is based on favors the wealthy who can afford to bid with higher prices for COEs and the wealthy elite who can even afford a few COEs for multiple cars they own, while lower income families, which need a car more, are forced to pay the COE prices that are driven up by demand.
  • The COE prices vary from month to month and the differences can be in the tens of thousands of dollars.
  • Critics have suggested that the system could be changed to a pay-as-you-bid model such that successful bidders would pay the same figure they bid rather than pay the highest figure of all the bidders.
  • The COE system discourages car owners from keeping old, but high-quality cars, with expired COEs after 10 years. This is because of the high cost of a new COE and the financial incentives for scrapping or exporting a car with an expired COE. As a result, Singapore roads are overwhelmingly populated by models under 10 years old, and this causes the nation to have a very low population of classic cars that are valuable from a historic standpoint, compared to the high proportion of culturally insignificant economy cars.
  • The COE system does not factor into account why the person wishes to own a car by need. For example if a businessman was using the car to drive for business purposes then the usage of the vehicle becomes a element of the business model. Having high COE prices discourages growth of a business which is reliant on vehicular transport.
  • COE also impacts transportation businesses which have a fleet of vehicles.
  • Only by addressing why the owner of the car needs the vehicle can a more robust system be developed to cater for the public. If the vehicle was required for the person to commute in from say Malaysia then again this demonstrates that the person requires that vehicle as part of their life style and it is sad that such people have to pay a COE sum which amounts to more than the value of the car.

COE system also discourages growth markets such as accessories for cars and car restoration projects.

References

  1. ^ Farah Abdul Rahim (2005-10-23). "100,000 used Singapore cars expected to be exported this year". Channel NewsAsia. http://www.channelnewsasia.com/stories/singaporelocalnews/view/174881/1/.html. 

External links


Wikimedia Foundation. 2010.

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