Outlook for COE Prices and Proposal for Support for Persons and Firms who Rely On Vehicles to Continue Their Trade

Mr Liang Eng Hwa asked the Minister for Transport (a) whether the continued rise in the prices of Certificates of Entitlement will impact business costs and those who depend on their vehicles to earn a living; and (b) whether there are any measures that can moderate further increases in prices.

Ms Ng Ling Ling asked the Minister for Transport with Certificate of Entitlement (COE) prices continuing to rise (a) which segment of the population is expected to be most impacted; and (b) whether the Ministry will consider reviewing and modifying the COE system to better meet the needs of Singaporeans.

Mr Yip Hon Weng asked the Minister for Transport (a) in light of the increased supply of Certificates of Entitlement (COEs) in the third quarter of this year, whether there has been a further increase in the COEs used to register Private Hire Cars (PHCs); (b) if so, what proportion of the additional COEs was taken up by PHCs; and (c) whether the Ministry will consider a different policy approach on COE bidding by PHCs vis-à-vis cars used for personal purposes.

Mr Don Wee asked the Minister for Transport in view of the high Certificate of Entitlement (COE) Category C prices, whether the Ministry can consider providing additional support to SMEs with a turnover of less than S$100 million that need to extend the COEs of their commercial vehicles in order to continue their trade.

Dr Lim Wee Kiak asked the Minister for Transport (a) with the prices of Certificates of Entitlement showing no sign of abating, what is the anticipated impact on the current inflationary situation, especially in sectors reliant on vehicular transport; and (b) whether there are specific measures in the pipeline to mitigate such impact on sectors heavily reliant on transport for deliveries like food and groceries.

Mr Leong Mun Wai asked the Minister for Transport whether he can consider providing additional support to existing owners of commercial vehicles who require these vehicles to continue their trade in light of high COE Category C prices.

Mr Gan Thiam Poh asked the Minister for Transport (a) what is the total number of cars currently available for car sharing; and (b) whether the Ministry will consider increasing the allocation of cars for car sharing and exclude these from the bidding for Certificates of Entitlement to make car sharing an attractive option for the benefit of Singaporeans.

Mr Melvin Yong Yik Chye asked the Minister for Transport (a) whether the Government has data on the current percentage of cars in Singapore that are of shared car fleets, excluding taxis and private hire vehicles; and (b) if so, how much have such fleets grown in the past five years.

Mr Pritam Singh asked the Minister for Transport (a) in view of the position taken for commercial vehicles' growth and the significantly smaller road footprint of motorcycles in general, whether the Ministry has conducted any studies allowing for a marginal growth in the number of motorcycles on Singapore's road space management; and (b) if not, why not.

Miss Cheryl Chan Wei Ling asked the Minister for Transport in view of the increases in private hire car population and demand for such services, whether the Ministry will consider (i) mandating the number of hours that private hire vehicles must be on the roads to serve its purpose and (ii) tightening the conditions which enable personal cars to be converted for commercial usage, such as setting a limit on Category A COEs allowed for this conversion.

Thank you. Sir, the Ministry of Transport (MOT) understands the concerns of Singaporeans regarding high Certificate of Entitlement (COE) prices. My residents and stallholders have also shared their feedback with me during my market and house visits. I thank Members for their questions on this topic.

My response will have three parts. First, I will recap why our zero-vehicle growth policy remains relevant, as the COE system is one of the policy measures, which supports this goal. Second, I will clarify some of the questions that Members in this House and the public have raised regarding how the COE system operates. And finally, I will explain the steps we have taken to address the concerns.

Let me start with our zero-vehicle growth policy, which is important for managing traffic congestion in land-scarce Singapore. We currently have about one million vehicles on our roads, including more than 650,000 cars. It is not tenable for our vehicle population to keep increasing, as it means that we have to either set aside more land to build more roads, or accept higher levels of congestion like what we see in many overseas cities.

The Government's aim is to build an accessible, inclusive and sustainable land transport system that meets the needs of all Singaporeans, while bearing in mind our two key constraints: land and carbon emissions. Roads currently take up about 12% of our total land and the land transport system accounts for about 15% of Singapore's total domestic carbon emissions.

Reflecting the views of many Singaporeans, we have adopted a "car-lite" strategy and placed mass public transport at the core of our transport strategy. Currently, 64% of peak-period journeys are made on public transport and we aim to increase this to 75% by 2030 as we expand our Mass Rapid Transit (MRT) network. Conversely, the percentage of car-owning resident households has fallen from 40% in 2013 to about one-third in recent years.

Mass public transport enables the greatest number of people to get to their destinations with the least land take and carbon emissions. With our current energy mix where the bulk of our electricity is generated using natural gas, a journey that is made on an electric vehicle emits 50% of the carbon compared to an internal combustion engine vehicle. However, if the journey is made using an electric bus, the carbon emission level drops to 30%. Using MRT is even better, as the carbon emission level is only 10% compared to an internal combustion engine vehicle.

To keep our buses and trains running, the Government subsidises public transport by more than $2 billion annually; and this translates to more than $1 in subsidies per journey. We are also expanding our public transport network significantly – an additional 100 kilometres of rail by 2035, which is almost 40% increase from our current network. Today, seven in 10 households are within a 10-minute walk of one of our 202 MRT and Light Rapid Transit (LRT) stations. By the next decade, it will be eight in 10 households. To achieve these improvements, the Government is investing more than $60 billion in the rail network this decade.

Besides mass public transport, we are also enhancing the first-and-last-mile options such as walking and cycling, as well as access to point-to-point (P2P) services offered by taxis, private hire vehicles and car-sharing vehicles. These provide options for Singaporeans who do not own cars, but may need to use cars as a service from time to time, for example to take family outings during weekends or to send their parents for medical appointments.

As Members are aware, the COE system is an allocation mechanism for our vehicle quota, to achieve the zero-vehicle growth policy. COE bidding takes place twice a month and the bid prices can fluctuate depending on the prevailing demand and supply. When demand is weaker and there is plentiful supply, prices will be lower. However, when supply is tight, like what we are experiencing for the past year, and demand is strong, prices will increase.

Over the last three quarters, or from February 2023 to October 2023, the largest driver of demand has been from Singapore residents. Three in four Category A (Cat A) COEs and two in three Cat B COEs were won by Singapore residents. In comparison, foreigners won 1% of Cat A COEs and 4% of Cat B COEs. It is clear that the increase in COE prices was not due to foreign buyers.

Some have asked if the high COE prices were caused by households who own multiple cars and whether we should impose additional taxes on such households when they purchase their second or subsequent vehicle. The percentage of multiple car-owning households has been reducing – from about 19% of car-owning households in 2012 to less than 15% today. This translates to just 5% of all households in Singapore, since about one-third of households own cars. Given the low proportion, demand-measures such as imposing additional taxes on foreigners or households that own multiple cars would have little effect on COE prices.

Let me now turn to car-leasing companies, which bid for vehicles that are then leased out as private hire cars (PHCs). These companies won about 21% of Cat A COEs in the last three quarters. This is lower than the 27% of Cat A COEs they won in 2022. In fact, in the most recent bidding exercise, car-leasing companies won only 16% of the Cat A quota. Their proportion of Cat B winning bids also reduced slightly from 24% in 2022 to 23% in the last three quarters. The data shows that COE prices have gone up in a period where demand from car-leasing companies has come down, so it is unlikely that they are the main factor for the increase in COE prices.

There are two categories of PHCs: self-drive PHCs and chauffeured PHCs. Both are available for rentals, but only chauffeured PHCs may be used to provide ride-hail services. As of September 2023, the total PHC population is around 78,000 – similar to what it was in end-2019. About two-thirds are chauffeured PHCs and the remaining are self-drive PHCs including car-sharing vehicles.

As of September 2023, about 53,000 individuals hold a PHC Driver's Vocational Licence (PDVL), allowing them to provide ride-hail services using a chauffeured PHC. Two-thirds of PDVL holders who made at least one ride-hail trip in September 2023 drive company-owned cars, while the rest drive cars owned by individuals, including their own vehicles.

Sir, as I explained earlier, PHCs and taxis complement mass public transport by providing Singaporeans with an alternative option for point-to-point journeys. The demand for P2P services is increasingly met by PHCs rather than taxis. Pre-COVID, PHCs provided around three out of every five P2P trips. This has increased to about two out of every three P2P trips as of September 2023.

PHCs therefore play an important role in ensuring the availability of P2P services for commuters. They also serve more individuals and households compared to private cars. In addition, PHCs allow our drivers to earn a living using their own cars or leasing from PHC companies. The Land Transport Authority (LTA) has started a review on the industry structure and regulatory framework for P2P providers to ensure that services stay relevant and are able to meet evolving commuter needs.

Mr Gan Thiam Poh and Mr Yip Hon Weng suggested having a separate COE category for car-leasing companies or treat them like taxis which do not have to bid for COEs.

There are trade-offs to having a separate COE category for car-leasing companies. Similar to taxis, the quota for this new category would have to be drawn from existing categories given our zero-growth policy. As PHC demand is still evolving and could vary from quarter to quarter, it is difficult to ascertain what is the exact quota required to meet the needs of drivers and commuters. If we move too much of the existing quota from Cat A and B to this new category for PHC companies, it will further reduce the supply in these categories and there is a risk that COE prices may spike further. On the other hand, if we do not move enough quota to the new category, drivers will end up with insufficient vehicles to rent and commuters could be affected by shortages in P2P services.

We will study if there are further options beyond COE bidding to address the concerns with car-leasing companies, recognising that PHCs do travel longer distances on our roads but they also serve an important function in providing P2P services for Singaporeans.

Next, let me turn to concerns over speculative demand, including by dealers, as raised by Mr Saktiandi Supaat. We have a suite of measures in place to discourage speculation. For Cat A and B, there are a number of restrictions. The Temporary COE (TCOE) bid must be made in the name of the buyer and transfers are not allowed. The TCOE is valid for six months, within which it must be used to register a vehicle, otherwise it expires and the bid deposit of $10,000 is forfeited. For Cat E, the validity period of the TCOE is shorter, at three months.

Specifically for Cat E, we have seen that the TCOEs are used to register vehicles, on average, within 14 days, way before the validity period of three months. Since January 2023, only one Cat E TCOE has expired. [Please refer to "Clarification by Senior Minister of State for Transport", Official Report, 06 November 2023, Vol 95, Issue 115, Correction By Written Statement section.]

This shows that the dealers are not speculating, but are bidding based on actual demand.

The large majority of bids for cars are clustered within a small range around the clearing price, with most bids being made within the final hour of bidding. This shows that bidders are closely monitoring the clearing price and making bids based on their willingness to pay, while not paying more than necessary. It is typically not in the interests of dealers to bid higher than what is necessary to win the bid, as they have to absorb the higher COE prices since they have committed to certain sale prices for their vehicles.

We will continue to closely monitor the COE market to detect speculative behaviour and, if necessary, we will introduce further measures to discourage such behaviour. The Government will also take enforcement action against dealers who make false claims or misleading representations to consumers on the nature of their transactions, for example, if they claim that consumers would have ownership of the motor vehicle with a 100% loan with no down payment when, in effect, consumers are merely leasing it from them.

Mr Speaker, let us move to the supply of COEs. Under a zero-growth policy, the number of COEs available for bidding is based on the number of deregistered vehicles. For Cat A, B and C, we are currently facing a tight supply situation because many of the existing vehicles have not reached the end of their COE period and are not due for deregistration. Looking ahead, industry players have correctly observed that the COE supply for these categories will increase significantly from the second half of 2024 before reaching the peak supply years from 2026 to 2027.

Large differences in the supply during the peak and trough years result in higher volatility in COE prices across different years, assuming demand stays relatively constant. A better outcome can be achieved for all stakeholders, while still allowing the COE system to play its role as an allocation mechanism, if we can reduce the peak-to-trough ratio, by using a "cut-and-fill" approach to shave off the future peaks and using the supply to fill the current troughs.

We have previously made several moves to reduce volatility in quota supply. Instead of just the preceding quarter, we now use the moving average of deregistrations in the four preceding quarters to compute COE quotas for the next quarter.

In May 2023, MOT announced that we will bring forward the quota from guaranteed deregistrations in the peak years. This has helped to increase COE supply over the last six months. On a quarter-on-quarter basis, Cat A supply increased by 11% in the second quarter and then 22% in the third quarter this year, while Cat B supply increased by 3% and 6% in the second and third quarter of this year respectively. However, demand has remained very strong and COE prices have continued to rise.

We will, therefore, do further cut-and-fill to bring forward more quota from the peak years to fill the current troughs, while maintaining our zero-vehicle growth policy. Last Friday, LTA announced that the supply for Cat A and Cat B quota for the fourth quarter of 2023 will both increase by 35%, compared to the third quarter. Industry players have welcomed this move, as the additional supply injection this time is more significant, compared what we have done in previous quarters.

I should also point out that the 35% increase in supply for both categories is larger than the proportion of bids won by car-leasing companies in the last three quarters. We will also ensure that the COE supply in the upcoming quarters will continue to increase in 2024 till the peak supply years in 2026 and 2027. As one motor dealer representative commented to The Straits Times, "more COE quota will be made available going forward. So, the message is quite clear. There is no need to rush."

With the increase in supply, we hope that COE prices would moderate. However, we know prices will also depend on market demand, and demand is not within the Government's control. I need to be upfront with everyone that it is not possible to predict how prices will move in the next few rounds of COE bidding, but I want to assure hon Members and the public that the Ministry of Transport (MOT) and the Land Transport Authority (LTA) are doing what we can to address the concerns. We will continue to closely monitor and explore ideas to improve the situation.

I will now turn to commercial vehicles. Mr Leong Mun Wai, Mr Don Wee, Dr Lim Wee Kiak and Mr Liang Eng Hwa asked about this segment.

Like Cat A and B, the quota supply for Cat C has also been rising in the recent quarters. It rose 58% in the second quarter and 66% in the third quarter. This has helped to moderate the Cat C prices, which have largely kept within the S$80,000 to S$85,000 range in the last few quarters, coming down from more than S$91,000 in March this year.

As LTA announced last Friday, the Cat C quota supply for this current quarter will increase a further 65%, compared to the third quarter of 2023. Similar to Cat A and B, I want to assure our businesses and commercial vehicle owners that the quota supply for Cat C will also continue to increase in 2024 and beyond, before reaching a peak in 2026.

Let me now turn to motorcycles, or the Cat D segment. Mr Pritam Singh asked about allowing a marginal growth in the number of motorcycles, given our approach for commercial vehicles and in view that motorcycles take up less road space. Mr Murali Pillai had raised a similar suggestion in this House in November last year and MOT had explained that we have no plans to increase the growth rate of motorcycles as part of our zero-growth policy.

It is true that motorcycles have a smaller footprint on the roads than cars. However, they can still contribute to congestion, as what we can see from the experiences of other cities. As individuals who own motorcycles may use them for both commercial and personal purposes, such use of motorcycles is similar to private hire cars, as compared to commercial vehicles which are used predominantly for business needs. The zero-growth rate policy, therefore, applies to both cars and motorcycles.

That said, the Government recognises that some Singaporeans rely on motorcycles for their livelihoods and there are also higher proportions of lower-income individuals among motorcycle-owners, compared to car owners. This is one reason why the Additional Registration Fees (ARF), road taxes and Electronic Road Pricing (ERP) charges for motorcycles are lower, compared to other vehicle types.

To safeguard against speculative bidding behaviour for Cat D COE, MOT introduced several measures in the last two years. These include raising the Cat D TCOE bid deposit to S$1,500 and reducing the TCOE validity period to one month. Cat D COE prices have come down from more than S$13,000 in November 2022 and have stayed at around S$11,000 in recent bidding exercises.

We will continue to study ways to improve the COE system for Cat D, including ideas which share the same intent as what Mr Singh and Mr Murali have raised.

Mr Speaker, I would like to seek clarifications from the Senior Minister of State for Transport. With regard to the "cut-and-fill" approach, will there be any trade-offs in respect of the impact on the roads with this initial reduction of the peaks and troughs that the Senior Minister of State mentioned?

The second clarification is that I am glad to hear that LTA is looking at the COE market, in terms of speculative activities in relation to my Parliamentary Question, and I am wondering whether the Senior Minister of State can share a bit more about the possibilities on what are the measures that we can take to relook into the speculative activities going forward, on the side of car COEs.

Mr Speaker, I thank Mr Saktiandi for his two supplementary questions. First, on "cut-and-fill", he is right that there is a trade-off. And the trade-off is this: because when we do "cut-and-fill", we are effectively borrowing from the future. We are taking the supply in the future peak years and we "cut" this to "fill" the current troughs. So, we are borrowing from the future peak years, ahead of time, before these cars are actually deregistered. What it means is that, in the near term, we do have the risk of having more cars on the roads in the next few years, before the cars are deregistered during the peak years.

But this is a trade-off that we have to make in order to strike a balance between the volatility and to be able to do some "cut and fill" to raise the supply in the current trough years. And that is also why, because of this trade-off, we have to be quite calibrated and not overdo this "cut-and-fill", because there will be downsides in the short term.

Sir, on Mr Saktiandi's second question, this is not only by MOT and LTA, but we also working closely with the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) to closely monitor the situation and, certainly, if there are speculative behaviours that we need to take action against, we will do so.

Mr Speaker, the Progress Singapore Party (PSP) agrees that we need to control our vehicle population in Singapore. However, given the recent rise in the COE prices, we are concerned about whether the average Singaporeans will be squeezed out of car-owning opportunities very fast in the future. As a result of that, I would like to raise two supplementary questions to the Senior Minister of State.

In the recent announced COE quota increase of 1,614 additional COEs, the Government has allocated 863 to Cat B; 546 to Cat A and 200 to Cat C. May I ask what is the reason for the Government to allocate fewer COEs to Singaporeans who are in need and more to Singaporeans who can pay?

The second supplementary question is: would the Government consider scrapping the Open category altogether, because it tends to be for the bigger cars, and allocate the COEs in that category to Cat A and Cat C?

Sir, just to clarify factually for Mr Leong's first supplementary question, when we announced last Friday the additional supply that we are injecting for the different Cats A, B and C, is on top of what we had announced earlier in October. So, I would suggest maybe Mr Leong can add up the two numbers and he would then see very clearly that, since we started this "cut-and-fill" earlier this year, we have been allocating more additional COE supply to Cat A, and less so to Cat B overall. So, do not look at the 1,614 in isolation. Please add up also what we had earlier injected and look at the complete picture.

The second supplementary question that Mr Leong raised, the design of our system is that we have the different categories contributing to Cat E, the Open category, and then the people who bid for Cat E can then decide what cars they want to use it for.

If we look at Cat C, which is a question that Mr Leong has filed, because we have a growth rate of 0.25%, it is not zero-growth for Cat C. So, what happens is that the number of COEs that we transfer out of Cat C is still less than the number of new COEs that we have injected. So, the overall supply for Cat C has continued to rise, albeit less than if we have not taken out to transfer to Cat E. But the overall supply for Cat C has been increasing over the years.

We will continue to monitor the situation carefully. And what we have done recently, with the additional injections into for Cat C, I hope it will help our business owners.

Mr Speaker, I have a few supplementary questions for the Senior Minister of State. First, will the high COE lead to fewer cars deregistering? Second, is there an increasing trend or decreasing trend for high-end cars purchased as a result of higher ARF that has been introduced? Third, are there any plans to change it to a usage-based system, that is to say, drivers will be charged based on usage?

Mr Speaker, has the higher COE prices in recent quarters resulted in fewer people deregistering? Maybe what Mr Gan meant was that they then extend their COEs. We are seeing some of that. That is the individual's prerogative because, all along, we have allowed this option that if you extend your COE by five years, then you cannot extend anymore; but if you extend by 10 years, we allow you to extend. It is an individual's decision. But when we look at it from a systems point of view, we have to bear in mind that most people do not extend their cars because we have a policy as well that if you extend your cars beyond 10 years, the road tax that you have to pay will be higher. So, what we have found is that the large majority of car owners, whether in years when the COE prices are lower, also including when years when COE prices are higher, most people do not keep on extending. They actually do deregister. So, that is the first point.

The second point about high-end cars, after we increased the ARF for the high-end cars, the luxury cars, we have actually seen a moderation in terms of people buying those cars. And if you look at car ownership system as a whole, beyond COE, that is why we have the ARF tiered in a very progressive manner. So, if you buy a more mass market car, typically it will be in Cat A; and for most of the cars in Cat A, the amount of ARF you pay will be a lot less than if you were to buy a bigger car and, certainly, a lot less, than if you were to buy a luxury car.

I am sorry. Can I ask Mr Gan to repeat his last question? Oh, yes, usage-based. Sir, we have already been using both. Our policies to control congestion require us to do both. So, we control the population of the cars through the COE system, but we also have ERP which manages the usage. As to whether we can look at the ERP policy, whether there is room to tweak this further? In the past, some people have suggested whether it is possible to tilt more towards usage and then, therefore, give us a bit more confidence on the car population side of the house. These are things that we can continue to review. But I do want to point out that there is a need for both tools. Because if you only rely on usage, it will not be adequate, it will not be enough; if you only rely on controlling the population, then you are also not achieving the optimal outcome. So, I think the best balance is to have both: control the car population, but also look at usage-based.

Speaker, many small and medium enterprises (SMEs) are facing manpower constraints and rising business costs which include the escalating COEs when they refresh their commercial vans. I am enlightened by MOT's consideration, as explained by the Senior Minister of State. Can MOT work with agencies, like Enterprise Singapore and PUB, to promote the application of schemes like the Enterprise Sustainability Programme and Energy Efficient Grant so that the SMEs can reduce the overall business costs via these schemes?

Sir, the short answer is yes, we have been doing so and we will continue to do so. There are different ways of helping our SMEs to reduce costs and to look at how to increase also on the other side, that means, it is not just the cost side of the equation, but also to help them to be able to increase their revenue and improve productivity.

Sir, I have a question for the Senior Minister of State on the zero-vehicle growth policy which he mentioned, where we cap our vehicles at around one million on the road and the underpinning consideration is the road space as well as carbon emissions. So, can I ask the Senior Minister of State as we incrementally increase our road spaces and more vehicles are converted to EVs, will there be scope to review these numbers to have some growth when capacity can take it?

Sir, I think that will require a much larger review to look at what will best meet the commuting needs of Singaporeans and balancing the trade-offs very carefully. First, we need to recognise that we cannot keep on building roads. There is a cost to doing that because the roads will take up land. So, instead of building roads, if we could use the space that is taking up by roads for other purposes, it could generate more value for society as a whole.

One example I can share with Mr Liang and the House is that as part of the North-South corridor, because we are building this corridor and moving the cars underground and, therefore, freeing up some of the surface space. So, over the next few years as a project is being completed, we will go round and talk to different communities along this stretch of the North-South corridor to explore how we can make better use of the surface space that is freed up. So, instead of roads, we use it for gardens, community space, public spaces, cycling and walking. That is something which we need to bear in mind. There is a trade-off to building more roads to cater to more cars.

Second is: are there better ways to allow our people to still meet their commuting needs without necessarily having to own a car? That is one option, of course, that will still be available to some Singaporeans. But for the majority of households, which as I mentioned earlier, now only one-third of resident households own a car and two-thirds do not. So, the main mode will be public transport. I think what we can do to also meet their needs where on occasions they need the P2P service is to look at how we can also enhance point-to-point services and car-sharing services.

Mr Speaker, I thank the Senior Minister of State for his response. I just have a very short supplementary question which relates to my Parliamentary Question No 38. I thank the Senior Minister of State for sharing that LTA will study the issue of PHVs as well as P2P transport further. I just want to ask whether the Senior Minister of State can share what are the likely areas will be looked into under this study?

Sir, I thank Mr Yip for his question. We have just started this review not too long ago, but the purpose is to look at how we can further enhance the provision of P2P services. So, I would say it is not focused only on the COE issue, even though today we are here in this House talking about the COE issue right now. But this P2P review is actually a larger review looking at how P2P services can better meet the evolving needs of commuters. So, we will share more information with the House when the study is completed. We are now going through the different parts of it together with our tripartite partners.

Speaker, on Cat A versus Cat B supply, if we look at the car population statistics, beyond any bidding exercise or even in any given year, but if we look at the population level, in 2012, 55% of cars were Cat A. But this has fallen to less than 50% in 2022. So, that is what the statistics tell us. I just wish to ask the Senior Minister of State if the Ministry would consider redeploying some Cat B supply to Cat A, especially in the longer term. I believe that at least part of the demand for Cat B will not be fungible and, therefore, will not move to Cat A. So, net-net, I am asking if the Ministry would consider increasing Cat A supply, which should mean decreasing Cat B supply, but I believe for the benefit of a middle-income Singaporean household who may just need to own an entry-level car.

Mr Speaker, I understand where the Member is coming from. But I think we need to be mindful of the trade-offs when we make such a move. As we can see from the recent bids, there is a strong demand from Singaporean buyers for both Cat A and Cat B. So, in deciding how to re-allocate, we have to bear that in mind as well. It is actually the same kind of complexities that I explained earlier about why there are trade-offs to having a separate category for private hire cars. Because then, how do you decide how much to shift, to re-allocate? And if you do not do it correctly, it will actually lead to more negative outcomes for everyone.

Mr Speaker, I would like to seek two clarifications from the Senior Minister of State. Firstly, the Senior Minister of State mentioned that for motorcycles, he recognised that it is used for commercial purposes and for livelihood, but that it is similar to private hire vehicles and, therefore, no special considerations given. Can I ask whether MOT has done a study into what percentage of motorcycles is being used for commercial purposes, compared to private cars?

The second clarification is: does the Senior Minister of State have a breakdown of the percentage of COEs in the Open category that is eventually registered to the different categories? And when these COEs are being used to register, say, for Cat B vehicles, when it is deregistered, does the COE go back to the Open category or does it go to the Cat B category?

Mr Speaker, first, I need to clarify that I did not say that there are no additional support given to motorcycle owners. If Ms Poa had heard my speech correctly earlier, I said that we do recognise that some Singaporeans rely on motorcycles for their livelihoods and there are higher proportions of lower-income individuals among motorcycle owners compared to car owners, and that is why the ARF, road taxes and ERP charges for motorcycles are lower, compared to the other vehicle categories. So, just to clarify that point.

Sir, if I may just also add to earlier questions on the commercial vehicles. Our Light Goods Vehicles ARF is also set at a lower rate: 5% of open market value (OMV), which is much lower than cars as well.

So, we do recognise and we will, as part of the policy that we set, try and see how we can cushion and provide more help for these categories of vehicle owners, while not going against the fundamental principles that, ultimately, defines COE as an allocation mechanism, and we do need to allow the market to work to decide how to allocate the limited supply of COEs.

Sir, as for the motorcycles – it is actually not so straightforward because how do you consider whether this motorcycle is used for commercial or used for personal, when the individual actually uses it for both? And in different cases, and for different individuals, the proportion may actually change. Some of them do use it for commercial purposes from time to time, some of them use it more frequently, similar for PHCs that are owned by individuals. So, I think it is very difficult for us to tell for sure that this is the exact percentage.

But what we recognise is that the nature of how these motorcycles are being used is similar to PHCs because you use it effectively for dual use, unlike say, commercial vehicles, where it is mainly, predominantly for business needs.

Sir, the second question that Ms Poa raised about the Open category, I think I have explained earlier that this is a way for the system to be able to re-allocate, to better meet the demand from the car buyers. So, if the Open category bids are being won and it is being then used for a certain category, it actually reflects what the buyers, what the market demand is.

There are different ways of addressing the need for a more progressive system. But I would put forth to Ms Poa and to the House that COE, while there is an element of that in having Cat A and B, it is actually not the only tool that we have to achieve that progressive element in our car ownership system. Actually, the bigger, and perhaps more direct, tool is the ARF where you very clearly differentiate based on different OMV of the vehicles, how much ARF they have to pay, and it is tiered and progressive.

Just one question for the Acting Minister for Transport. How does the Government, or specifically LTA, determine at any given point what is the appropriate number of motorcycles on the road in view of the incomes of Singaporeans across the board? In the past, we have had situations where motorcycle COEs were transferred to Open category, for example. So, how does the LTA determine and regulate what would be the appropriate level of motorcycle ownership in Singapore?

Mr Speaker, Mr Singh is correct that previously, there was a transfer of the motorcycle COE to the Open category, but I think Mr Singh will be aware, that practice has now stopped. So, now it is not done for Cat D anymore.

The second point is that the total number of supply for motorcycles in view of the changing and evolving needs of the users, I think that is something which, as I pointed out in my reply, we are studying – whether they are ways to achieve a better outcome to reflect the intent of, I think what Mr Singh has in mind and what Mr Murali Pillai had raised earlier as well, but perhaps not going to the extent of treating them like commercial vehicles and having a growth rate. Because the risk of doing that is it then becomes a structural change and then, every year you will have an increase. And the downsides of road congestion that can be caused by motorcycles, even though they take up less road space, are still there.

But we will study the intent of what Mr Singh and Mr Murali Pillai had raised earlier to see what steps we can take on motorcycle COEs.

Thank you, Mr Speaker. I would like to ask the Senior Minister of State again. Just now, there was a question I asked which was not answered and that is when Open category COE is deregistered after being used to register for a certain category, when it is deregistered, does that COE go into Open category again or to the category that it was registered for?

Mr Speaker, if the Open category COEs is used for a particular category of cars, then when that car is deregistered, it will go back to that category. But there is a mechanism to then flow part of it back to the Open category, in order for the quota to be re-allocated again. That is part of the system design.