LTA addresses concerns over COE categorisation

Media Replies 26 Sep 2013 COE system

We refer to the article, “Hri Kumar slams COE tweaks, urges push for cleaner cars” (TODAY, 16 Sep 2013) and letter by Tan Si An, “For COEs, best indicator of value is value itself, not proxies” (TODAY, 20 Sep 2013) on tweaking the COE system.

The intent for refining the Certificate of Entitlement (COE) categorisation is to keep Category A primarily for mass-market cars.

We did not re-categorise COEs using Open Market Value (OMV) because OMV can fluctuate with exchange rates and different car fittings. This could result in a particular car model fluctuating between Categories A and B, which would be confusing for car-buyers. There have also been instances when OMV was adjusted post-registration due to under-declaration, which could create consequential complications for COE categorisation.

While we understand the appeal of an OMV-based approach for COE categorisation, we have to carefully consider practical implementation concerns.  We felt that it was important to define the criteria for Category A cars in a simple, stable and consistent manner, and avoid creating confusion for car-buyers and the industry.  We have thus decided to continue categorising COEs using engine capacity but with an additional criterion of engine power, with the result that the vast majority (more than 90 per cent of cars based on 2012 registration data) of the cars remaining in Category A will have an OMV of less than $20,000. This would largely achieve the social equity intent of our review.

Some have suggested re-categorisation by some measure of family-friendliness, or consider environmental objectives. It will be a challenge to try to accommodate even more criteria for a Category A car. 

Some are concerned that re-categorisation by engine power could result in less efficient car models, or models being tuned down to qualify for Category A. We assure the public that LTA requires every new model to comply with internationally-recognised technical, safety and environmental standards. If the model has yet to be approved elsewhere, LTA will require it to be tested by a reputable and accredited laboratory. LTA will not approve models with an engine power specification that is lower than what was approved previously or declared in other markets.

Outside of the COE system, we have in place measures to address environmental concerns.  In particular, the recently-introduced Carbon Emissions-based Vehicle Scheme has seen a good take-up of lower carbon emissions cars, and we intend to review this next year to take into account technological advancements. 

Ultimately, given the need to reduce reliance on cars, we would take this opportunity to assure Singaporeans that the Government will continue to invest heavily in public transport and to improve taxi services. 

Helen Lim (Ms)
Director, Media Relations
Land Transport Authority


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