COE allocates scarce resource based on demand and supply: MOT
The system allows for transparent allocation, rather than reliance on subjective notions of fairness
I REFER to the letters “Granularity is essential for a more accurate perspective on car ownership” (Neo ChinHwee, Aug 8) and “Bulk bids, influx of ultra-wealthy into Singapore exert upward pressure on COE” (Chia Cheng Tiam, Aug 13).
While there are often meritorious reasons for allocating Certificates of Entitlement (COEs) based on need, there is no easy way for the government to adjudicate such needs or to implement a needs-based system that satisfies everyone.
The current COE system allocates car ownership based on the ability to pay. This allows a scarce resource to be allocated transparently, based on demand and supply, rather than relying on subjective notions of fairness.
Vehicle taxes such as the additional registration fee, which are tiered based on open market value, provide some progressivity. Among car-owning households, the proportion that owns more than one car has steadily declined, from about 19 per cent in 2012 to 14 per cent today. The proportion of cars owned by foreigners has similarly dropped, from 2.4 per cent in 2015 to 1.8 per cent in 2024.
As the total quota of vehicles is fixed, a separate COE category for private-hire cars would mean fewer COEs for passenger cars. In 2025 thus far, 8 per cent of COE bids are won by car leasing companies, while the vast majority (89 per cent) are won by individuals.
There is no evidence to suggest that bidding is distorted. On the contrary, more COE categories may result in greater inefficiencies in allocation. This may push up private-hire vehicle (PHV) fares and rental fees, and disadvantage many people who are unable or unwilling to drive, but would like to take point-to-point transport.
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There are other reasons why PHVs should not receive the same benefits as taxis, such as paying only the prevailing quota premium. For instance, PHVs are both for private use and ride-hailing, unlike taxis which are regulated more strictly on usage and livery.
COE revenues contribute towards the government’s overall subsidies for public transport, which amount to more than S$2 billion every year. The government will continue to invest in our public transport system, which serves all Singaporeans.
We may not be able to guarantee car ownership, but we will ensure high quality and affordable transportation for everyone.
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Elaine Koh Director, private and shared mobility division Ministry of Transport
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