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Understanding Singapore's COE system

By Deeq on 10 Nov 2016 in Advice, Singapore car news

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Certificates of Entitlement (COEs) give Singaporeans the right to own a vehicle. COEs are integral to the Vehicle Quota System (VQS), a landmark scheme implemented to regulate the growth of vehicle population in Singapore which, due to land space, is unsurprisingly among the densest in the world.

The VQS determines the exact number of vehicles allowed on the road. Other measures to curb vehicle growth like raising taxes and fees do not have the advantage of knowing the exact increase needed to get a desired level. Under the VQS, vehicle growth could be pegged at 3% every year with the expansion of roads and highways taken into consideration. The VQS was implemented in 1 May 1990 and the first bidding under the system started on 2 April 1990. Public buses, school buses and emergency vehicles are exempted from this scheme.

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In the 80’s, as Singapore developed and Singaporeans grew affluent, car ownership became prevalent. Thus, there was a desperate need to manage the rapid growth in the number of vehicles in relation to Singapore's road capacity. Between 1975 and 1990, the growth rate of the car population was as high as 12% per annum before the recession of 1985, which triggered the government to undertake a combination of usage and ownership measures, including parking charges and the Area Licensing Scheme (or ALS, and later the Electronic Road Pricing or ERP) while steps to curb ownership comprise vehicle taxes (such as the Additional Registration Fee or ARF) and excise duty. To further control the growth of vehicle population the Vehicle Quota System (VQS) was introduced. The VQS was the key proposal of the Parliamentary Select Committee on Land Transport, chaired by Professor Hong Hai, which released its report in January 1990.

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The VQS was then implemented on 1st May 1990 and the first bidding started on 2 April 1990. Under this system, a Certificate of Entitlement (COE) had to be bidded for that category of vehicle. A certain number of COEs would be released every month for bidding. Once successful and only when one owns a COE, which is valid for 10 years, that registration of the vehicle could take effect.

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Central to the VQS is the outcome of capping the growth rate of the vehicle population at 3% per annum, compared with an average of 6.8% per annum in the three years prior to the implementation of the VQS. It was reported that without the VQS, the growth rate would have spiralled over the last 10 years and traffic would have grounded to a halt, adversely affecting Singapore's economic development and quality of life(None of us would want that).

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VQS started as a Closed Bidding System where bidders would not know how much others had bid. The quota premium payable was the lowest successful bid. Those who had bid this amount or more would be entitled to a COE at the lowest successful bid price. But due to lack of transparency, it led to high fluctuations in the quota premium. In June 1999, the COE Open Bidding system was designed and tested, and was carried out in June 2001 in tandem with the closed bidding exercise. Every month, half of the quota was allocated for open bidding and the other half for closed bidding. In April 2002, the COE Open Bidding System totally replaced the Closed Bidding System. With open bidding, bidders could monitor the current COE prices and revise their own bid.

In 1998, a Government Parliamentary Committee was appointed to do a review of the VQS nine years after its implementation. The Committee presented its findings to Minister for Communications, Mr Mah Bow Tan, on 2 March 1999. The Committee affirmed the effectiveness of the VQS as one of the key pillars in Singapore's traffic management strategies and recommended that the scheme be retained. The growth rate of 3% per annum was fixed until 2005 and thereafter constantly reviewed.

So with all that being said, due to its effectiveness, it is almost certain that the COE system may be here to stay for good :)

coe, vqs, singapore roads and 1 more...

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Deeq
Written by Deeq
With intense love for cars and bikes since little, and passion for photography, Siddiq tries hard to bring cars to life on the screen, proving his worth as well as his passion for the job.



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Still2016 Nov 10 2016 07:23 AM

Truthfully what is a there to understand.

 

Firstly, what is the objective of COE?

Secondly, has the usefulness of COE of controlling the number of cars on the road being exaggerated?

Thirdly, are there any other types of measures that authorities can implement which can replace the COE without taxing financially?

Fourth, the burning question is why in our limited road space, sky high cost of not just acquiring cars but also maintenance does the average Singaporeans still want to stretch themselves to buy cars? The answer is because for many there is no other alternatives. If our public transport system can be greatly improved and cost brought down. Many would switch from private transport to public transport.

Lurpsexx Nov 10 2016 11:07 AM

Truthfully what is a there to understand.

 

Firstly, what is the objective of COE?

Secondly, has the usefulness of COE of controlling the number of cars on the road being exaggerated?

Thirdly, are there any other types of measures that authorities can implement which can replace the COE without taxing financially?

Fourth, the burning question is why in our limited road space, sky high cost of not just acquiring cars but also maintenance does the average Singaporeans still want to stretch themselves to buy cars? The answer is because for many there is no other alternatives. If our public transport system can be greatly improved and cost brought down. Many would switch from private transport to public transport.

 

+100000000 points for your statements.

 

Yes, I agree with your views and in Singapore, where they hv run out of ideas or not willing to take the hard way, they will take the easy way out of using $$$ to control behavior.. they have always done that and now with high taxi fares, ever rising MRT & Bus fares, things are worse off than they were 20 or even 10 yrs ago.. asking me to give up my car to take taxi would result in the same cost to me, so why would I give up my car? Don't talk abt MRT, which breakdown so frequently now that you can set your watch to its breakdowns. Bus won't cover all areas and the multiple transfers I need to do with bus, means the time taken by bus are many times more than if I drove.

 

They wont understand until they walked a mile in our shoes, esp since these policy makers earn high wages n can afford multiple cars in their household no matter how high the COE is... (KPK said he and his wife are professionals, so they need 2 cars ... LOL... the irony...

Watwheels Nov 10 2016 10:09 PM

Understand one thing and one thing only. Don't act smart and ask LTA to tweak the COE system. You will not only screw yourself but also other car owners. Just shut up and work hard to pay off your car loan.

Fuelsaver Nov 10 2016 11:57 PM
Actually traffic density seemed to have increased n remained for a longer period daily compared to several yrs back. Likely related to population white paper.
Fett Nov 14 2016 12:51 PM

Actually traffic density seemed to have increased n remained for a longer period daily compared to several yrs back. Likely related to population white paper.

Pls dont spoil market 

 

Understand one thing and one thing only. Don't act smart and ask LTA to tweak the COE system. You will not only screw yourself but also other car owners. Just shut up and work hard to pay off your car loan.

Yup, by far the smartest comment

Sdf4786k Dec 02 2016 09:10 AM
We used to have a reasonably good coe system till the 130bhp system kick in. And while i like the way the thought process of having disruptive technology and grab car and all that fuzzy stuff. Some part of me feel that the 130 bhp can be removed since the majority of the car agent has caught up with technology. Its really a pointless exercise as cars n coe cost more then the landed cost. Maybe its time to do like hk. Pay a premium for parking in the tune of half a million dolars and ensure you have a place to park before you can begin to register a car
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