Rationale for Current COE Validity Period

Mr Muhamad Faisal Bin Abdul Manap asked the Minister for Transport (a) what is the reason for the Certificate of Entitlement (COE) renewal period to be fixed at five years and 10 years; and (b) whether the Ministry will allow flexibility for vehicle owners, in particular motorcycle owners, to choose the period of renewal of their choice.

The validity period of COEs, whether first-time COEs or renewal COEs, was originally set at 10 years.

However, in response to appeals from vehicle owners, including motorcycle owners, whose COEs are expiring but feel that their vehicles might not last beyond another five years, we changed the policy in 1992 to allow them to renew their COEs for five years, as a concession. The vehicles must then be deregistered at the end of the five years. If, however, the vehicle is deregistered before five years, the amount paid for the remaining COE validity period will be refunded. In that sense, the vehicle owner already has some flexibility to keep the vehicle for less than five years.

Allowing vehicle owners to renew their COEs for any number of years they choose favours, in effect, existing vehicle owners over those who wish to buy a new vehicle. We have to strike a fair balance between the two groups and, therefore, are not inclined to extend such a concession to existing vehicle owners. Such a move could also give rise to more uncertainty over the supply and demand of COEs, and introduce more volatility into the prices, compared to the current situation where the validity period is fixed at five or 10 years.