Permitting One-year Renewals of Certificate of Entitlement in Addition to Five-year and 10-year Renewal Options

Ms Joan Pereira asked the Minister for Transport whether the Ministry will consider permitting one-year renewals of the Certificate of Entitlement (COE) in addition to the renewal options of five-year and 10-year durations.

The current policy allows vehicle owners to renew their Certificates of Entitlement (COEs) for another five or 10 years. The decision to allow five-year renewals was made as a concession. Given the limited supply of COEs, we must strike a balance between existing vehicle owners who wish to renew their COEs and those who wish to buy a new vehicle. Each renewal is one less COE that is returned to the pool for new buyers.

Allowing one-year renewals may also inadvertently amplify the magnitude of the COE cycles, as vehicle owners may use it to time the market by deregistering their vehicles only when COE prices are low. The COE quota supply may be even scarcer when COE prices are high, exacerbating the COE cycle.