COE woes: When emotions get in the way of efficiency

SINGAPORE’S policymakers have always had an eye on efficiency. But efficiency may not be a convincing aim for citizens – as seen, for instance, with the perennial hot topic of Certificate of Entitlement (COE) prices.

In a recent interview with local media, Acting Transport Minister Jeffrey Siow disputed the popular narrative that demand from private-hire car (PHC) companies has pushed up COE prices. On the contrary, the PHC market helps to lower demand for private vehicles because it provides an alternative way to access private transport, he said. Without PHCs, there might be many more aspiring car owners competing for COEs. Crucially, the same single COE would serve many more commuters if it is allocated to a PHC, rather than to a privately-owned vehicle, he added.

As with practically any politician’s comments on COE prices, Siow’s points drew impassioned responses online. Some argued that a COE given to a PHC results in greater congestion, as such drivers are on the road for much longer. Yet, this objection is arguably misaimed. It stems from a lack of clarity over the role of the COE system: as an allocation mechanism for vehicles, or a way to tackle congestion. In his interview, Siow made it clear that he sees the COE system as the former. Congestion, meanwhile, is being tackled by updates to Electronic Road Pricing.