Recent COE price spike not caused by private-hire firms or foreigners, says Chee Hong Tat

SEPARATE COE CATEGORY FOR PRIVATE-HIRE CARS? 

The decrease in bids won by car leasing companies in the past few years also illustrates why the suggestion of having a separate COE category for private-hire cars is “not a straightforward exercise”, said Mr Chee. 

“Demand for COE from car leasing companies can vary quite a bit from quarter to quarter, and from year to year. It is difficult to ascertain upfront the quota required to meet the needs of point-to-point drivers and commuters,” he said. 

If too much of the existing quota from Categories A and B is moved to this new category for private-hire cars, it would reduce the supply in both categories. This could lead to an increase in COE prices for these categories, said Mr Chee. 

“On the other hand, if we underestimated the quota to be moved to the separate category for private-hire cars, it would lead to insufficient private-hire car supply which would in turn cause an increase in private-hire car prices and reduce accessibility for point-to-point commuters,” he said.  

“There are the difficult trade-offs and it is not a straightforward exercise, so we are still carefully assessing this option.” 

“NOT EASY” TO CLASSIFY PRIVATE-HIRE CARS

MP Louis Chua (WP-Sengkang) noted in a supplementary question that recent COE prices have fallen compared with a year ago, but at the same time, the proportion of bids won by car leasing companies fell from 2022.

He asked: “Wouldn’t this actually suggest that the car leasing companies do have actually an influence on the quota premium?”

Mr Chee said that between 2022 to 2024, COE prices have gone up.

“So, this is one indication that the main driver for the increase in COE price is unlikely to be due to the private-hire car leasing companies,” he said. 

“Now, having said that, I am certainly not saying that they don’t contribute to the overall demand, they do. That is a fact.

“But the point I’m making is, what are the key drivers that are contributing to the increase in demand?”

He added that while a separate category for private-hire cars is being studied, having this category “doesn’t mean that you have suddenly got a windfall of COE supply dropping from the sky”. 

He added that the classification of private-hire cars under another category is further complicated by the fact that “quite a number of them” are also used as private vehicles.

“So, it’s not so clear cut that these are just point-to-point vehicles or private vehicles, it’s a bit of a hybrid … and because of that, it is not so easy to ascertain what is this total number that will then fit into this separate category, if we decide to have a separate category,” he said.