Debated in Parliament on 5 Oct 2021.
Mr Deputy Speaker, Sir, I beg to move, "That Parliament do now adjourn."
Question proposed.
Mr Deputy Speaker, Sir, my speech today calls for the Government to make motorcycle ownership more affordable, in particular, for fellow Singaporeans who are reliant on this mode of transportation for their livelihood. Largely, my speech will focus on reviewing and making necessary and reasonable changes to the current Vehicle Quota System (VQS), namely Category D of the Certificate of Entitlement, better known among Singaporeans in short as the COE. Additionally, I would also like to raise two other related proposals.
The VQS was introduced and implemented in 1990 with the objective of regulating the growth of the vehicle population in Singapore. Under the current VQS, the COE are categorised into, A, B, C, D and E. Categories A and B are for cars. Category C is for goods vehicle and buses. Category D is for motorcycles and Category E for all vehicles except motorcycles.
Sir, the COE for motorcycles has been getting more attention compared to other vehicles in recent years and the attention has heightened in the recent two months due to the skyrocketing prices. I have brought up the issue of motorcycle’s COE multiple times in this Chamber in the form of Parliamentary Questions (PQs) and Committee of Supply (COS) cuts.
This time around I am tabling this matter as an Adjournment Motion as I strongly feel that this issue needs to be conveyed, explained and discussed more in depth with the hope that MOT will consider reviewing motorcycle’s COE system which is Cat D. At this point, I would like to reiterate that the intention of calling for this review is mainly to benefit our fellow Singaporeans who depend on motorcycles to feed their family.
Sir, let us explore the trend for motorcycle’s COE prices over the years. In 2001, the lowest COE prices for Cat D was $509 in December while highest was $1,313 in January. Ten years on, 2011, the lowest price was in December, $1,481 and highest in March, $2,534. This year, 2021, the COE price in January was $7,501 and it has skyrocketed in the last couple of months, to $8,899 and $9,689 for August and September, respectively.
According to MOM’s statistics for 2020, there were 220,000 residents who declared themselves as engaging in "own account work", that is, they are self-employed or freelancers. A number of these residents are likely to be motorcyclists engaged in delivery and dispatch services with one of the existing platforms. In addition, there are riders who are direct employees of various companies. There are no clear indicators on the number of Singaporeans who are riding commercially.
However, browsing through the job listings for riders on the MyCareersFuture website, I noticed that the monthly salaries offered range between $1,000 and $2,500. That is to say, that someone who wants to purchase a Class 2B motorcycle so that he can earn an income as a dispatch rider, will need to set aside four to 10 months of a salary he has not yet earned just to afford the latest COE for a motorcycle. When we take into consideration the road tax, insurance and other costs involved in purchasing a new bike, the number can go up to 14 months. More than a year of working just to afford a vehicle that is needed.
There is the option of second-hand motorcycles. However, those are not cheap either. A three-year-old motorcycle can go for around $10,000. A motorcycle with three years left on the COE can cost around $5,000. After buying a second-hand motorcycle, the new owner will soon be faced with a decision on whether to renew the COE when it expires. And again, the difficult choice has to be made between buying a new machine or a second-hand vehicle. They can also rent motorcycles, but that is not a sustainable option in the medium to long term, given the rental rates of around $70 daily. One month’s salary does not even cover the rental costs. And this is before we consider the cost of petrol, parking, ERP and more.
The COE remains the largest cost factor in the purchasing of a motorcycle. In this regard, I am making a few proposals towards improving the COE system for Cat D. I am mindful that the ultimate goal is not to lead to an increase in the number of motorcycles on the road. Rather, my intention is to improve the well-being of our fellow Singaporeans who rely on riding motorcycles to make a living.
I am reiterating my call for MOT to consider categorising the COE for motorcycles into classes according to engine capacity, similar to how the licences to ride motorcycles are categorised. This is a proposal I first mentioned in a cut I filed for the 2016 COS debates. I am also renewing my call for the number of COEs available for each category to be allocated in accordance with the percentage of these vehicles on our roads. Under the current practice, all motorcycles are grouped into a single Category D regardless of its engine capacity.
When I raised this point in 2016, then Senior Minister of State for Transport Ng Chee Meng had replied, given that 70% of the motorcycle population in Singapore had an engine capacity below 200 cc, introducing such a differentiation would lead to rigidity and, subsequently, lead to higher volatility in the COE prices for motorcycles.
This volatility has already set in as we can see from the COE prices for motorcycles, especially in the last few months. In this regard, I call upon MOT to consider my proposal towards making a proper and fairer allocation of quotas among the three different classes of motorcycles, according to the demand of the respective classes.
Sir, my second proposal to MOT is to consider abolishing COE bidding for Class 2B motorcycles with engine capacity 200c and below, and to replace it with a balloting system. This is to ensure that the cost of motorcycle ownership in this category is affordable for those who need it for income.
In 2014, I filed a Parliamentary Question (PQ) asking if the COE for Class 2B motorcycles can be abolished and the reply was that the COE is needed to regulate the motorcycle population. I have thus refined my proposal to propose balloting as a substitute for the bidding process.
I understand that in 2013, then Minister of State for Transport Josephine Teo had replied to a PQ about a balloting system for the COE for cars and said that it was not viable as it could encourage a black market. Mrs Teo also said that it was not possible to set a price for balloted COEs to deter speculators and yet remain feasible for genuine buyers. That was for cars.
However, I believe that an introduction of a balloting system with conditions attached, similar to what is done for Build-To-Order (BTO) flats, could be a way to regulate the Class 2B motorcycle population. Like BTO buyers, prospective owners of Class 2B motorcycles are more likely to be first-time buyers with a genuine need.
However, if MOT intends to retain the bidding system, I would like to ask the Ministry to consider allowing motorcycle buyers to bid for COE under their own name rather than through the dealership. This is to address the issue of possible speculation by dealers.
LTA has maintained that there is no evidence of speculation. However, the number of expired or unused Category D COEs and the fact that the COE prices rose significantly in the May 2021 exercise despite the higher number of motorcycles COEs on offer, are signs that LTA may need to update its information.
Next, Sir, I would like to propose that MOT consider allowing the extension or renewal of another five years for motorcycles whose COE was initially renewed for only five years, provided that the motorcycle is used primarily for the earning of income.
The current practice is that a motorcycle's COE can be renewed either for (a) a continuous period of 10 years or (b) for five years only. However, if the COE is renewed for five years, it cannot be renewed for another five years upon the expiry of the first five years.
I understand that this additional legislation is only available for Category C vehicles, that is, goods vehicles and buses, and is subject to the statutory lifespan for this class of vehicles currently set at 20 years.
Given that there is a segment of our population that depends on their motorcycles for work, I am asking for the same flexibility offered to owners of goods vehicles and buses to be extended to the riders as well.
In addition to the changes I am proposing to the COE system for Category D, I have two other proposals which I believe will benefit Singaporeans who rely on the motorcycle for work.
First, I would like to reiterate my call for the Preferential Additional Registration Fee (PARF) rebate for motorcycles with Additional Registration Fee (ARF).
I note that then Minister for Transport Khaw Boon Wan had said that given the ARF for motorcycles are about 15% of the Open Market Value (OMV), the PARF rebate value would be too low to incentivise deregistration for motorcycle owners.
But I am of the view that most motorcycle owners who choose to deregister their vehicles early would still value receiving the PARF rebate, given that most of them do not earn a high income.
There should be also consistency in the payment of ARF and the PARF rebates for all vehicles.
Sir, my second proposal is to have allocated areas for dispatch and delivery riders to temporarily park their motorcycles while they are making their deliveries in the Central Business District (CBD) area, regional business hubs such as Changi Business Park and International Business Park, to name a few, as well as shopping malls located in housing estates, especially in the public housing estates.
Most of the time, dispatch and delivery riders do not park at the prepared car parks at the area mentioned above because they will or might incur parking charges and also due to time factors, both of which will affect their earnings.
In situations where they have been issued a fine for indiscriminate parking, it will further add into their expenses. Additionally, indiscriminate parking also poses a safety hazard for other road users.
Having a designated area for dispatch and delivery riders to park their motorcycles would reduce incidences of indiscriminate parking, enhance the safety of pedestrians and other road users and is also time-saving for these riders. In short, an allocation of such an area will enhance the work routine and life circumstances for these riders.
Sir, I will now speak in our national language.
(In Malay): [Please refer to Vernacular Speech.] Today, I would like to highlight the problems faced by Singaporeans who depend on motorcycles to support themselves and feed their families.
In particular, I will concentrate on the Certificate of Entitlement system, better known as COE. In particular, I would propose several ways to improve the COE system for Category D, which is for motorcycles.
I have questioned multiple times as well as given my opinions and proposals on the COE for motorcycles in this Chamber. I will highlight this again because the issue of motorcycle COEs involves as well as impacts motorcycle owners who need their vehicles to earn a living to support their lives and their families.
COE prices for Category D have continued to rise and have skyrocketed recently. In 2001, the lowest price was $509 in December and the highest was recorded in January with $1,313. Ten years later, in 2011, the lowest price was recorded in December, which was $1,481, and the highest price in March was $2,534. This year, the price reached $7,501 in January and continued to soar to $8,899 in August and $9,689 for September.
Sir, I have several proposals to improve the COE system for motorcycles.
Firstly, I would like to propose to divide motorcycle COEs into three categories, much like the existing categories for the motorcycle riding licence system. Further, I suggest that the number of COEs available be allocated in accordance with the percentage of motorcycles on the roads in each category. This is not a new proposal. In 2016, the Senior Minister of State for Transport at the time had replied that the move would lead to rigidity and further volatility in the COE prices for motorcycles. However, it is clear that the situation mentioned by the Senior Minister of State still happened recently in the current COE system. So, I hope that MOT will consider my suggestion so that we can create a fairer system for motorcyclists in Singapore.
The second proposal is abolishing COE bidding for Class 2B motorcycles, that is, motorcycles which use engines below 200 cc, and replace them with a conditional balloting system. I understand that the then Minister of State for Transport had once replied to a question about balloting system for the COE for cars. She explained that such a system will cause problems like a black market and also mentioned the difficulty of determining a suitable price for the COEs. In my opinion, we should consider the creation of a system similar to the one used to purchase BTO flats. Those who wish to buy BTO flats and those who wish to buy Class 2B motorcycles are both definitely first-time buyers.
If MOT does not wish to make changes to the existing bidding system, I would like to suggest that every possible buyer be allowed to participate in the bidding and not just rely on motorcycle dealerships. This move could reduce the negative effects caused by speculation on the part of the motorcycle dealers. Although LTA maintained that there is no evidence of speculation, the number of COEs that had been obtained but remain unused, as well as the increase in COE prices in May despite a higher number of COEs on offer, indicate the possibility that this problem really exists.
Next, I would like to suggest a renewal or extension for COEs that had already been renewed for only five years, for motorcycles that are used primarily for work. Presently, such renewals or extensions are only offered for Category C vehicles, that is, goods vehicles and buses.
Besides the COE, I would like to submit two more proposals. First, I propose that a Preferential Additional Registration Fee (PARF) be also extended to motorcyclists who de-register their motorcycles early. As MOT had explained previously, given that the ARF for motorcycles is only 15% of its Open Market Value (OMV), the amount of PARF that motorcyclists can receive is not high enough to incentivise them to de-register their motorcycles. Since most of them who work as delivery workers do not earn a high income, any PARF rebates, even a modest amount, will be appreciated. More importantly, policies should be implemented consistently across all vehicles.
Secondly, I propose to have allocated parking lots made available for dispatch workers in areas such as the Central Business District (CBD), regional business hubs such as Changi Business Park as well as shopping malls located in housing estates especially public housing estates. Riders often avoid using the available parking lots because they want to save money and time. In situations where riders are fined for parking their motorcycles indiscriminately, those fines will further impact their livelihood. By setting up allocated motorcycle parking lots for dispatch workers in such areas, it can help them perform their duties without compromising public safety, save delivery time and, at the same, enhance their work routine and their life circumstances.
(In English): Sir, in conclusion, the Singapore Government has set targets for the number of vehicles on the road, including for motorcycles. Towards this end, policies such as the COE, the ARF, Electronic Road Pricing (ERP) and such, have been introduced and continuously refined towards this goal.
At the same time, you must recognise there is a segment of our population that relies on motorcycles to make a living and they have been affected negatively by the impact of the policies.
In my speech, I have proposed several refinements to existing policies; some of these are not new but they have been updated. I hope the Government will look into these proposals towards improving the conditions of our fellow Singaporeans who have had to endure challenging circumstances. [Applause.]
Mr Baey Yam Keng.
Mr Deputy Speaker, Sir, the high motorcycle Certificate of Entitlement, or COE, prices since bidding resumed in July 2020, have considerably led to concerns of several Members of this House. Besides Mr Muhamad Faisal Bin Abdul Manap, various Members, including Mr Chong Kee Hiong, Mr Sitoh Yih Pin, Ms Joan Pereira and Mr Abdul Samad have raised similar concerns and offered various suggestions.
We have also heard similar feedback from members of the public and the industry and have responded both in this House and through the media.
In land-scarce Singapore, unfortunately, we do not have the luxury of letting everyone own private vehicles, be it cars or motorcycles. The COE system is a market-based mechanism that allows us to allocate limited resources efficiently. While it is not a perfect solution, the system has generally worked and COE prices fluctuate based on supply and demand, as should be the case.
That said, we are mindful that motorcycle owners could have different needs from owners of other vehicle types. This is why there is a separate Category D for motorcycle buyers so that they need not compete with commercial vehicle and private car owners.
So, unlike the other categories, Category D COEs do not contribute to Category E COEs, or the open category, which means that the quota of COEs is determined largely by the number of deregistered COEs in the preceding quarter.
The high prices observed for motorcycle COEs of late indicate strong demand. It would indeed be a cause for concern if the COE prices are propped up because dealers are bidding for more COEs than they need and are not using them.
However, we have observed very high utilisation rates over the past year, which suggests that the higher premiums are a result of higher demand. Let me explain.
Successful bidders of Category D COEs are issued temporary COEs or TCOEs, which need to be used to register motorcycles. These TCOEs will expire if they are not used by the bidders to purchase and register motorcycles within the six-month validity period and their bid deposits will be forfeited.
Since COE bidding resumed in July 2020, the proportion of utilised TCOEs has been high at approximately 99% as compared to the historical average of about 91%. This remains the case even for the TCOEs that just expired at the end of September 2021 where the utilisation rate was 99.7%. These were the COEs that were secured in March 2021. We will continue to closely monitor the utilisation rate of TCOEs issued in recent months over the respective six-month validity period.
Mr Deputy Speaker, the COE supply from July 2020 to July 2021 was also about 30% higher. This was because we returned the additional COE quota accumulated when bidding was suspended during circuit breaker from April to June 2020, together with the closure of vehicle showrooms.
This return of the additional quota was completed with the second bidding exercise in July 2021. So, for the current August to October 2021 period, the COE supply is 28% lower than the preceding quarter, May to July 2021 period, with the supply being predominantly determined by deregistration. So, this combination of increased demand and the lower COE supply would likely have contributed to the higher premiums in the bidding exercises since August but has receded somewhat in the most recent bidding exercise.
Sir, any adjustment to the COE system will have knock-on effects and potentially unintended consequences on the consumer. Hence, it is important to assess whether the market-based COE system is working as intended or if there is some market failure.
Let me address Mr Faisal's suggestions in turn.
First, Mr Faisal suggested splitting the motorcycle COEs into sub-categories according to vehicle classes in the same manner as riding or driving licences, as well as allocate the COE supply for each category according to the percentage of these vehicles on our roads. This is not new. Former Member of Parliament, Mr Zainal Sapari had in 2015 suggested this as well as Mr Abdul Samad who just filed a Parliamentary Question for this Sitting. Ms Joan Pereira had also spoken about separate quotas for motorcycles based on the different categorisation. Mr Chong Kee Hiong also asked to create a new category of COEs for motorcycles used for delivery work.
We have explained the considerations in the past and these considerations remain relevant today. Let me reiterate.
Unlike cars, the quota for motorcycle COEs is relatively small. For example, for August to October 2021, about 440 Cat D COEs were available in each bidding exercise. If we were to divide this further, there will be even smaller quotas for each sub-category. This will likely result in greater volatility and potential increases in COE prices. Of note, allocating sub-category quotas based on the prevailing split in motorcycle population has its challenges. The percentage of Class 2B motorcycles registered fluctuates across the years and even from month to month. It would, therefore, be very difficult for us to arbitrarily select an allocation basis.
Second, Mr Faisal also suggested abolishing COEs for all Class 2B motorcycles and to replace it with a balloting system. I understand that the intent is to make COEs affordable for those who need a motorcycle for livelihoods but this is not necessarily better. Such a two-tiered COE system is not equitable since other types of vehicles, such as cars and commercial vehicles, can also be used for livelihoods. More importantly, such a system requires us to arbitrarily set a price. This is different from BTO flat prices. If the price is too low, it will increase demand and crowd out those who truly need the motorcycle for a living and are prepared to pay a bit more for the value it brings.
Third, on allowing motorcycle buyers to bid for COE under their own name, this is already allowed as individuals can bid for COEs through the ATMs. However, many motorcycle buyers still choose to go through dealers as this will allow them to get their motorcycles immediately, using the TCOEs that the dealer has already secured. The removal of this option could have unintended consequences for buyers and will have to be studied carefully.
Fourth, the five-year COE renewal option is something we created for vehicle owners who need their vehicles for only five years instead of 10 years. If we were to allow COEs to be renewed for five years repeatedly, there will be fewer COEs recycled for bidding. This would tilt the current balance between existing and prospective vehicle owners.
Fifth, on establishing a Preferential Additional Registration Fee (PARF) rebate for motorcycles, such suggestions to extend the PARF scheme for cars to other vehicles have been raised in this House before.
The PARF system is intended to encourage early turnover of older vehicles and to keep our car population relatively young. PARF needs to be taken in totality with the significantly higher ARF on cars. Motorcycles pay significantly lower ARF with a base rate of 15% of the vehicle's OMV, compared to 100% for car.
We do not have plans to extend the PARF scheme to other vehicle types.
Last but not least, on the issue of parking. The parking provisions depend on the nature of the development and the geographical zone, including whether it is near public transport.
We acknowledge that the food delivery sector has grown rapidly in recent years and that commercial developments have their own circumstances and needs as well. Commercial building owners are strongly encouraged to set aside motorcycle parking lots for food delivery riders and to provide a reasonable parking grace period for them.
Mr Deputy Speaker, we understand the concerns on the impact of COE prices on motorcycle owners who ride for a living and are mindful of the needs of motorcycle owners. I would like to assure the House that we are monitoring this situation closely and will take action if warranted.
*Question put, and agreed to.*
*Resolved, "That Parliament do now adjourn."*
Adjourned accordingly at 7.38 pm.
PAPERCUTS