Rising Incomes and Zero Car Growth: Upward Trend in Singapore’s COE Prices
In a recent parliamentary session, Singapore’s Transport Minister, S Iswaran, highlighted the expected upward trend of Certificates of Entitlement (COE) premiums due to the country’s policy of zero growth in the car population and rising household incomes. While addressing concerns about the impact on various segments of society, Iswaran reiterated Singapore’s commitment to a car-lite future, prioritizing pedestrians, cyclists, and public transport users. This article explores the factors contributing to the anticipated increase in COE prices and the government’s efforts to ensure a smooth transition toward a more sustainable and inclusive transport system.
COE Prices Reflect Limited Supply and Growing Demand:
Transport Minister S Iswaran emphasized that the prices of COEs are influenced by the demand for a limited and decreasing supply. Despite economic recovery from the COVID-19 pandemic, demand for vehicles has remained resilient. Furthermore, as household incomes continue to rise, the ratio of COE prices to median monthly household income has fallen. Consequently, the long-term trajectory of COE prices is expected to be upward.
Commitment to a Car-Lite Society:
Minister Iswaran reiterated Singapore’s commitment to becoming a car-lite society with accessible and inclusive transport for all citizens. He highlighted that Singapore faces two significant constraints regarding land transport: land availability and carbon emissions. With roads occupying 12% of the land area and contributing 15% of domestic carbon emissions, the need to reduce private car dependence becomes even more apparent.
Prioritizing Pedestrians, Cyclists, and Public Transport:
To achieve a car-lite future, Singapore is focused on prioritizing pedestrians, cyclists, and users of public transport. Minister Iswaran outlined the government’s vision for planning and redeveloping precincts to support this objective. By increasing the efficiency and inclusivity of road usage, Singapore aims to provide an enhanced experience for those relying on various modes of transport.
Impact of Private Hire Cars and Shared Transport:
Responding to concerns about private hire cars (PHCs), Minister Iswaran revealed that demand from PHC companies has been moderating, despite rising COE prices. He cautioned against imposing an arbitrary cap on the number of private hire cars, citing the benefits of shared transport, including car-sharing services, in achieving more efficient road utilization. The government is studying the impact of PHCs on the market, taking into account the evolving landscape and the disruptions caused by the COVID-19 pandemic.
Improving the COE System:
In addressing questions about the COE system, Minister Iswaran highlighted the continuous adjustments made to serve the policy objective of efficiently allocating the limited supply of COEs. The proportion of COEs secured by foreigners remains low, at less than 3%, and has remained relatively stable over the years. Additionally, the proportion of households owning multiple cars has been declining steadily. To reduce volatility, the Ministry of Transport has implemented measures to smooth COE supply, including considering the moving average of car de-registrations over four quarters. However, Minister Iswaran emphasized that historical factors and broader market conditions will still contribute to supply fluctuations and that the long-term upward trend of COE prices will persist due to rising incomes and zero vehicle population growth.
Conclusion:
Singapore’s commitment to a car-lite future, along with the policy of zero-growth in the car population, is expected to drive up COE prices in the coming years. While rising incomes contribute to the increasing demand for limited COEs, the government remains dedicated to prioritizing pedestrians, cyclists, and public transport users. Efforts are underway to improve the COE system, smoothen supply fluctuations, and ensure a more sustainable and inclusive transport landscape