THE Singapore government is studying the certificate of entitlement (COE) system and is prepared to refine it if needed, Transport Minister S Iswaran said on Sunday (May 7).

“We are studying this… If you look at the history and evolution of our COE system, we’ve always been ready to make refinements and adjustments in response to material developments in the market, and it’s no different at this point in time,” he said.

Iswaran was speaking to reporters on the sidelines of the launch of Jampacked@West Coast, a new one-stop integrated community services centre. His comments came amid record-high prices for COEs, which must be obtained in order to own a private vehicle.

Iswaran said that while the recent set of adjustment measures for motorcycles have resulted in a “correction” in their COE prices, it will be difficult to predict if premiums for the category will hold out as there are many factors at play.

“It will be difficult to predict the trajectory of prices, so our objective (with the measures) is really to ensure that the market is functioning smoothly,” he said.

Last month, the Land Transport Authority (LTA) raised the bid deposit for motorcycle COEs to S$1,500 from S$800. Motorcycle COEs that are secured will also need to be used within a month instead of three months.

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At the latest bidding exercise on Thursday, motorcycle premiums fell by 58.9 per cent to close at S$5,002, down from S$12,179 in the previous tender.

“The idea was really to ensure that we are able to smoothen the market mechanism and deter speculative-type activities,” Iswaran said.

He also pointed out the addition of 450 motorcycle COEs, which had been secured earlier but were not utilised, back into the COE quota as another factor for the price correction.

But there is a need for the market to be “cautious” about expectations moving forward: “At the same time, the prevailing demand continues because of economic considerations.”

When asked if changes would be introduced for other types of vehicles, including cars, Iswaran replied that “fundamental material differences” exist between the various categories of vehicles.

In the car market, dealers typically bid in the name of the car buyer, he said; in the motorcycle market, in contrast, dealers bid and secure the COE first before selling the vehicle with the COE to a buyer.

Singapore has seen a persistent rise in COE prices in the last few months.

Premiums for Category A – for smaller cars and electric vehicles (EVs) with up to 110 kilowatts of power – and Category B – for larger cars and more powerful EVs – have broken records for the past three consecutive cycles.

In the latest exercise, however, these categories saw a marginal dip in premiums. Premiums for Category A closed at S$101,001, down from S$103,721, while premiums for Category B closed at S$119,399, down from S$120,889.

Since end-February, car buyers have also been required to pay an Additional Registration Fee (ARF) of 320 per cent of the portion of their vehicle’s open market value exceeding S$80,000, up from 220 per cent.

The ARF hike was announced in Budget 2023, alongside other adjustments to Singapore’s tax regime.

A cap of S$60,000 was introduced for the Preferential Additional Registration Fee (PARF) rebate for cars and taxis, with the aim of achieving a more progressive vehicle tax system.