Chee Hong Tat: Injection of 20,000 COEs unrelated to distance-based charging plans

On Tuesday (12 Nov), Transport Minister Chee Hong Tat told the House that plans to inject up to 20,000 additional Certificates of Entitlement (COEs) from February 2025 are not connected to any potential implementation of distance-based road pricing.

“We have not made a decision on whether to implement distance-based charging, though ERP2.0 gives us the option to do so,” Chee said.

Chee suggested that with the adoption of distance-based charging, there may be room for a further increase in the COE quota, as this mechanism would provide the Land Transport Authority (LTA) with an additional tool for congestion management.

Chee’s remarks were in response to several parliamentary questions regarding COE quotas, ERP 2.0, and their impact on road traffic.

Asked how the injection of COEs aligns with Singapore’s “car-lite” vision, Chee reiterated the government’s commitment to the vision, stating that “having a car-lite vision does not mean that our total car population cannot increase.”

“The key is to avoid road congestion through the use of both ownership controls and usage-based pricing, which is what we have been doing over the last few decades,” he told the House.

LTA assesses injection of up to 20,000 additional COEs without risk of traffic gridlock amid changing travel patterns post-Covid

Given changing travel patterns post-Covid, Chee explained that LTA had assessed that it could inject up to 20,000 additional COEs across vehicle categories over the next few years without the risk of causing traffic gridlock.

However, Melvin Yong, Member of Parliament for Radin Mas, noted in a supplementary question that while flexible work had led to lower car usage post-pandemic, more companies are now requiring employees to return to the office.

He asked whether this would affect LTA’s planning assumptions.

Chee replied: “If indeed there is a change, whether it is due to the removal of flexi-work arrangements or other reasons, we will have to respond accordingly using this tool we have, which is usage-based pricing. ”

“ERP 2.0 gives us additional capabilities to do so in a more responsive and quicker manner.”

Earlier in his response, the minister reiterated previously announced plans to raise the COE quota for Categories A, B, and C every quarter, before reaching the projected peak supply in 2026.

The additional 20,000 COEs, which make up about 2 per cent of Singapore’s total vehicle population, would provide the government with more flexibility to meet this commitment, Chee explained.

All else being equal, an increase in COE supply should help to moderate prices, he added, although the authorities cannot predict how prices will move, as this depends on demand.

Chee: Recent COE price increases driven by strong demand from local individual buyers

Meanwhile, LTA data indicated that strong demand from local individual buyers is likely to have been the primary driver behind increasing COE prices in recent quarters, rather than demand from foreigners or car-leasing companies.

Successful Category A and B bids by Singapore residents accounted for 84 per cent of all COE bids so far this year, up from 69 per cent in 2023 and 66 per cent in 2022.

Foreigners made up just about 2 to 3 per cent, while car-leasing companies’ share fell to just 10 per cent year-to-date, compared to 24 per cent in 2023 and 26 per cent in 2022.

Chee also reiterated that the fluctuating demand from car-leasing companies is why it is “not a straightforward exercise” to create a separate COE category for private-hire companies.