Proposal for New Category of COEs for Motorcycles Used for Delivery Work

Mr Chong Kee Hiong asked the Minister for Transport whether the Ministry will consider creating a new category of COEs for motorcycles used by riders for delivery work or increasing the quota for motorcycles.

The recent increase in motorcycle COE prices has raised concerns amongst the public. Fundamentally, COE prices are determined by demand and supply. Due to the closure of motor vehicle showrooms and dealerships during the 2020 circuit breaker, COE bidding was suspended from April to June 2020. The accumulated COE quotas from the suspended COE bidding cycles were restored to the monthly pool over 12 months, thereby increasing COE supply by about 30% from July 2020 to July 2021. Despite the higher-than-usual number of motorcycle COEs, more than 99% of motorcycle temporary COEs (TCOEs) issued have been used to register motorcycles before they expired. For instance, from June to August 2021, only seven out of 3,188 Category D TCOEs were not utilised. This represents a 99.8% utilisation rate within the TCOEs’ six-month validity period. This high utilisation rate suggests a high demand for motorcycles.

As the return of earlier accumulated COEs concluded in July 2021, the COE supply dropped by 28% from August to October 2021 compared to the preceding three months. The combination of high demand for motorcycles and the drop in COE supply may have contributed to the high COE prices.

Unlike for cars, the COE quota for motorcycles is relatively small. Dividing it further into smaller sub-categories may distort the market and result in significant volatility in COE prices. Increasing the supply of motorcycle COEs has broader ramifications for our total vehicle population and our vision of a greener and more vehicle-light environment.

A subsidy scheme for delivery riders will raise questions of equity and would be difficult to implement given the dynamic inflow and outflow of workers in the gig economy. Moreover, such subsidies are likely to be priced into bidding and purchasing decisions.

We recognise that some workers rely on motorcycles for their livelihoods. This is why the Government subjects motorcycles to lower Additional Registration Fees, road taxes and ERP charges compared to other vehicles types.

There have only been three COE bidding exercises since the redistribution of the accumulated COEs concluded. LTA is monitoring the market situation closely and will respond if there is any evidence of undesirable bidding behaviour.