Concern over High Prices of Motorcycle COEs in Recent Biddings

Mr Speaker, for auctions with a fixed end time, it is common to see a spike in bidding activity near the closing time. We have seen this effect in Certificate of Entitlement (COE) bidding over the years and across all COE categories.

For the COE bidding session ending on 8 August 2018, 305 bids were received for Category D for motorcycles in the last two minutes. These were submitted by 25 different bidders and the bid numbers were generally small. Only one bidder submitted two block bids of 25 each. The bids also came in at different price points, which does not suggest any price collusion.

The Member has suggested raising the COE bid deposit and shortening the validity period for motorcycle Temporary COEs (TCOEs). Both suggestions are not cost-free to the motorcycle buyers. While raising the bid deposit may encourage dealers to be more prudent in submitting the bids, the higher bid deposit will raise costs for dealers. If the Temporary COE (TCOE) validity period is shortened, dealers may need to maintain a larger inventory of motorcycles to meet demand. This will increase business costs. High business costs will mean higher prices for the buyers. Shorter TCOEs may also make it more difficult for buyers to obtain motorcycles immediately.

In designing the COE system, we are mindful that motorcycle owners have different needs from owners of commercial and private cars. Our COE system, therefore, sets aside a separate Category D for motorcycle buyers so that they need not compete with commercial and private car owners. The cessation of the contribution by Category D to the Open Category since May 2017 has helped to stabilise the supply of motorcycle COEs. The majority of motorcycles also attract a much lower Additional Registration Fee (ARF) of 15% of the Open Market Value of motorcycles, compared to at least 100% for cars.

COE prices fluctuate based on demand and supply. In fact, Category D COE prices have been falling steadily this year, from approximately $8,000 in February, to $4,390 in the latest September bidding cycle.

While we have not observed any irregular bidding activity or market manipulation, the Land Transport Authority (LTA) will continue to monitor the situation closely. We are mindful of the needs of motorcycle owners and businesses and are prepared to review the COE regulations if and when warranted.

Sir, I have one supplementary question for the Senior Minister of State. According to my resident, the COE bidding was $1 up to the last three minutes and then suddenly, 400 bids came in and pushed the COE to $5,514. And a lot of my residents who depend on motorcycles for their transport as well as their job, like despatch rider, they are very concerned with this trend. I would like to ask the Senior Minister of State: are there any measures that can be taken to address the concern of residents who depend on motorcycles as a mode of transport and for their job?

I would like to thank Er Dr Lee Bee Wah for the supplementary question. As I have mentioned in my reply, the last-minute bids that came in towards the end of the bidding cycle is a common practice, not just only in Category D COE but also in all classes of COEs, and this is not unusual. In fact, COE prices, like I mentioned, fluctuate based on the supply and demand. And like I have mentioned in my reply, the COE prices have come down from $8,000 to about $4,300 in the most recent September bidding cycle.

With the tiered Additional Registration Fee, we have a very progressive ownership tax structure that favours buyers of motorcycles with a low Open Market Value. And I have also mentioned that we have already stopped the contribution of COEs from Category D to the Open Category. This also increases the supply of motorcycle COEs in the market. And, more importantly, besides our concern about the occasional increase in COE prices, the Government will also continue to enhance our public transport network and promote active mobility to create more commuting options for Singaporeans.

I would like to thank the Senior Minister of State for his reply. I just want a particular clarification. I just want to know from the Senior Minister of State whether there are any other cases of such similar situation that happened, in terms of last-minute bids in the recent years.

I would like to thank the Member for the supplementary question. Like I have mentioned, it is not an uncommon practice for bidders to come in at the last minute to bid for additional COEs. In fact, if I look at the bidding patterns, just over the last two to three months, about 20% to 26% of the bids were actually submitted in the last two minutes of most of the bidding cycles.

May I ask the Senior Minister of State whether the Ministry has any intention to prevent block biddings at the last minute?

I thank the Member for the supplementary question. I think at this point in time, we do not have an intention to prevent that. But, of course, the Ministry will continue to monitor the bidding patterns and, if necessary, we may make changes in the future.

Sir, I would like to ask the Senior Minister of State whether for those who bid for $1, do they pay for their COE $1 or follow the rest. If not, can the Ministry study, just pay for what they bid for? That would prevent the last-minute bids coming in at high price.

I would like to thank Er Dr Lee Bee Wah for that suggestion. I think the COE bidding system does not work this way. But nonetheless, we can it take back and take a look and see what we can do about it.