Government rejects call for shorter COE renewal tenures

[SINGAPORE] The government will not consider shorter validity periods for Certificate of Entitlement (COE) renewal, said Acting Minister for Transport Jeffrey Siow in Parliament on Wednesday (Jan 14).

“If we allow for shorter renewals, it is likely to amplify the peak and the trough of COE cycles,” he said.

It would mean that more car owners will renew their COEs when prices are high, and this would reduce the supply of new COEs for prospective car owners, he added.

Siow was responding to Member of Parliament Poh Li San (Sembawang West), who asked that the Ministry of Transport reconsider implementing COE renewal for shorter durations, such as annually or every two years. This is so that existing car owners can have more affordable options to extend their car ownership beyond 10 years.

COEs are valid for 10 years and can be renewed for another 10 years upon paying the prevailing quota premium (PQP), which is the moving average of the COE prices in the last three months.

The minimal period for COE renewal is five years.

For passenger cars, COEs can be renewed with five years’ validity at half the PQP, but the car must be deregistered afterwards. Commercial vehicles can be renewed for five years at a time, up to the vehicle’s statutory lifespan, which is typically 20 years.

“We have to balance the interests of existing car owners who wish to renew their COEs and that of buyers of new cars. However, we need to balance their interest with those who wish to buy a new car, and today, we already allow existing car owners to renew COEs for five years as a concession,” added Siow.

As car population growth in Singapore is closely controlled, COE supply for passenger cars is determined largely by deregistrations in the preceding period.

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The Republic has maintained a zero vehicle population growth rate since February 2018, except for commercial vehicles, which are allowed 0.25 per cent growth a year.

As COE premiums rise and cars become more expensive, more car owners renew their certificates, which reduces supply, driving premiums up.

COE prices have historically followed a roughly decade-long pattern of boom and bust cycles over the last 20 years.