New 3-year lock-in for business-owned private-hire cars, which could change COE bid behaviour
During the time, the vehicles must remain classified as PHCs and may be transferred only to other businesses, not to individuals
PRIVATE hire cars (PHCs) that are newly acquired by businesses in Singapore now have a mandatory three-year lock-in period, in a move that could constrain how such companies bid for Certificates of Entitlement (COEs).
During the time, the cars must remain classified as PHCs and may be transferred only to other businesses, not to individuals.
The Land Transport Authority (LTA) announced the new rule, effective immediately, on Wednesday (Feb 19).
The rule applies only to chauffeured PHCs, which are used to provide ride-hailing trips on platforms such as Grab, Gojek and Tada. It does not apply to self-driven PHCs operated by the likes of GetGo and BlueSG.
LTA said that the move ensures that businesses which acquire PHCs do so “predominantly for the purpose of leasing them to drivers providing ride-hail services and prevents the premature conversion of such PHCs out of the chauffeured PHC scheme, which will affect the supply of vehicles available for point-to-point services”.
Point-to-point transport includes trips served by taxis and PHCs. Businesses that own PHC fleets include ride-hailing operators such as Grab, and PHC rental companies like Lumens and Lion City Rentals.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Transport minister Chee Hong Tat said last year that a COE category specifically for PHCs is still being studied.
‘More circumspect’ about securing COEs
Industry sources have said that company-owned PHC fleets may contribute to higher COE prices, as PHCs require a passenger car COE. In contrast, taxis do not bid for COEs and cannot be sold as passenger cars.
Before the new rule, fleet companies were free to sell off PHCs as used passenger cars. They might have done so, for instance, when very high COE prices were driving up the price of second-hand cars.
SEE ALSO
A lock-in period may moderate such behaviour.
Automotive consultant Say Kwee Neng said: “If a PHC company needs to hold a car for at least three years, they will be more circumspect about going all-out to secure COEs, as they cannot simply off-load it to the market as a used car.”
LTA said it had originally planned to announce the new rule after February’s second round of COE bidding, but the accidental release of information by its vendor NCS notified “some industry players” before this.
“To ensure transparency and fairness for all stakeholders, LTA decided to bring forward the implementation of this new policy to Feb 19, before the close of the COE bidding process,” it said.
February’s second round of COE bidding ends at 4 pm on Feb 19.
How the new rule applies
The new rule pertains to PHCs owned by business entities registered with the Accounting and Corporate Regulatory Authority with a Unique Entity Number, including sole proprietorships.
It applies to PHCs registered or converted by businesses, as well as those transferred to businesses from individuals. The lock-in period begins on the date of registration, conversion or transfer, respectively.
The lock-in period does not apply to business-owned PHCs that were registered, converted or transferred before Feb 19. Nor does it apply to PHCs owned by individuals.
The rule will apply to new vehicles with COEs issued under the bidding round from Feb 17 to 19. If such a PHC is transferred to another business, the remaining lock-in duration will be carried over to the new business.
Copyright SPH Media. All rights reserved.
