COE: Allocates Scarce Resource Based on Demand and Supply

I refer to the letters “Granularity is essential for a more accurate perspective on car ownership” (Neo ChinHwee, 8 Aug) and “Bulk bids, influx of ultra-wealthy into Singapore exert upward pressure on COE” (Chia Cheng Tiam, 13 Aug). 

While there are often meritorious reasons for allocating COEs based on need, there is no easy way for the government to adjudicate such needs or to implement a needs-based system that satisfies everyone. The current COE system allocates car ownership based on the ability to pay. This allows a scarce resource to be allocated transparently, based on demand and supply, rather than rely on subjective notions of fairness.

Vehicle taxes like the Additional Registration Fee, which are tiered based on Open Market Value, provide some progressivity. Among car-owning households, the proportion that owns more than one car has steadily declined, from about 19% in 2012 to 14% today. The proportion of cars owned by foreigners has similarly dropped, from 2.4% in 2015 to 1.8% last year.

As the total quota of vehicles is fixed, a separate COE category for private-hire cars (PHC) would mean fewer COEs for passenger cars. In 2025, thus far, 8% of COE bids are won by car leasing companies, while the vast majority (89%) are won by individuals. There is no evidence to suggest that bidding is distorted. On the contrary, more COE categories may result in greater inefficiencies in allocation. This may push up private-hire vehicles (PHV) fares and rental fees, and disadvantage many people who are unable or unwilling to drive, but would like to take point-to-point (P2P) transport. There are other reasons why PHVs should not receive the same benefits as taxis, such as paying only the Prevailing Quota Premium. For instance, PHVs are both for private use and ride-hail, unlike taxis which are regulated more strictly on usage and on livery.

COE revenues contribute towards the government’s overall subsidies for public transport, which amount to more than $2 billion every year. The government will continue to invest in our public transport system, which serves all Singaporeans. We may not be able to guarantee car ownership, but we will ensure high quality and affordable transportation for everyone.

Elaine Koh 

Director, Private and Shared Mobility Division 

Ministry of Transport