Oral Reply by Senior Minister of State for Transport Dr Lam Pin Min to Parliamentary Question on Motorcycle COEs

Er Dr Lee Bee Wah asked the Minister for Transport in light of the high prices of motorcycle COEs in recent biddings

a.     whether the Ministry is concerned about the COE increase;

b.     whether there is any market manipulation or any party who is keeping the COE prices up; 

c.     who bid for the nearly 400 bids that came in during the last moment before the tender closed at 4pm on 8 August 2018; 

d.     whether this high COE price has adversely impacted those who rely on motorcycles as a mode of transport or for their job; and

e.     whether the Ministry will consider increasing the bid deposit and shorten its validity period.

Reply by Senior Minister of State for Transport Dr Lam Pin Min:

1.     For auctions with a fixed end time, it is common to see a spike in bidding activity near the closing time. We have seen this effect in COE bidding over the years and across all COE categories.

2.     For the COE bidding session ending on 8 August 2018, 305 bids were received for Category D for motorcycles in the last 2 minutes. These were submitted by 25 different bidders and the bid numbers were generally small. Only one bidder submitted 2 block bids of 25 each. The bids also came in at different price points, which does not suggest price collusion. 

3.     The Member has suggested raising the COE bid deposit and shortening the validity period for motorcycle Temporary COEs (TCOEs). Both suggestions are not cost-free to the motorcycle buyers. While raising the bid deposit may encourage dealers to be more prudent in submitting the bids, it will raise costs for dealers. If the TCOE validity period is shortened, dealers may need to maintain a larger inventory of motorcycles to meet demand. This will increase business costs.  High business costs will mean higher prices for the buyers. Shorter TCOEs may also make it more difficult for buyers to obtain motorcycles immediately.

4.     In designing the COE system, we are mindful that motorcycle owners have different needs from owners of commercial and private cars. Our COE system therefore sets aside a separate Category D for motorcycle buyers so that they need not compete with commercial and private car owners. The cessation of the contribution by Category D to the Open Category since May 2017 has helped to stabilise the supply of motorcycle COEs. The majority of motorcycles also attract a much lower Additional Registration Fee (ARF) of 15% of the Open Market Value of motorcycles, compared to at least 100% for cars. 

5.     COE prices fluctuate based on supply and demand. In fact, Cat D COE prices have been falling steadily this year, from approximately $8,000 in February to $4,390 in the latest September bidding cycle.

6.     While we have not observed any irregular bidding activity or market manipulation, LTA will continue to monitor the situation closely.  We are mindful of the needs of motorcycle owners and businesses, and are prepared to review the COE regulations if and when warranted.