Subdividing COE categories may result in more volatile prices: Iswaran

SINGAPORE: Subdividing Certificates of Entitlement (COE) categories may result in more volatile prices, said Transport Minister S Iswaran on Sunday (May 7).

This comes after suggestions from dealers and buyers to split Category D, which is for motorcycles, separating luxury bikes from the rest.

"The more you subdivide the COE categories, the smaller the supply for each category," said Mr Iswaran on the sidelines of the official opening of a new integrated community services centre, Jampacked@West Coast.

"Therefore, the more volatile the price will become because basically, you have a smaller supply and all you need is a small increase in demand, and the price will go up significantly and vice versa."

Last month, the Land Transport Authority (LTA) announced changes to “improve allocation efficiency”.

Among the new measures implemented, LTA increased the bid deposit for motorcycles to S$1,500 (US$1,132) from S$800. 

At the same time, the validity period for motorcycle temporary COEs was cut from three months to one month.

In the latest bidding exercise on May 4, which was the first tender involving new measures for Category D, premiums for motorcycle COEs plunged nearly 60 per cent.

Speaking to reporters during a media doorstop, Mr Iswaran said the latest set of measures aims to minimise speculation and improve the overall functioning of the market, but added that it is difficult to predict future prices.

"We've seen the result of one bidding exercise after the changes that have taken place so I think we should let the market work itself," he said.

"Don't be premature and draw any conclusions at this juncture."

If there is a need for any further moves, the Government will consider that at the appropriate time, he added. 

Turning to a question from the media about whether a similar approach would help to bring COE prices for cars down, he pointed out that the mechanism for securing car COEs is different from motorcycles. 

"In the case of Cat D, dealers bid and secure the COEs, they hold them before they onsell a motorcycle with the COE to a buyer, whereas in the case of cars, it is a different kind of mechanism because typically, the dealers bid in the name of the buyer," he said. 

"So, there are some material differences between … the different segments of the COE market,” he added. "Having said that, we are studying this."

"We have always been ready to make refinements and adjustments in response to material developments in the market and it's no different at this point in time."

Prices for cars in Category A and B broke records for the third consecutive tender in April, closing at S$103,721 and S$118,501 respectively. 

While both closed lower in the latest bidding exercise in May, they remain above S$100,000. 

Mr Iswaran is scheduled to deliver a ministerial statement on meeting the transport need of Singaporeans in the next Parliament sitting, which begins tomorrow.