Commercial vehicle owners have other options to manage costs

Media Replies 09 Aug 2014

We thank Mr Lim Kum Seng for his letter “Rising premiums for commercial vehicles will hurt consumers” (TODAY, 29 July 2014).

The Certificate of Entitlement (COE) quota depends on the vehicle growth rate, currently at 0.5% per year, and the number of vehicles deregistered in the preceding quarter. There were fewer Category (Cat) C vehicles deregistered in the most recent quarter compared to the one before it, hence fewer COEs are available this quarter.

The number of COEs for bidding is also smaller because more vehicle owners are also taking advantage of the Early Turnover Scheme (ETS), which incentivises them to replace their old pollutive diesel vehicles early. Under this scheme, the COE from the deregistered vehicle is topped up at a heavy discount and goes straight to the replacement vehicle, and not into the pool of COEs for bidding. Thus, while it may appear that there are fewer Cat C COEs for bidding, the demand is also correspondingly less. To date, more than 2,100 owners have benefitted from the ETS.

Besides the ETS incentive, businesses now have the option to renew their Cat C COEs for five years more than once, which helps with their cash flow and provide them with more flexibility. Moreover, Cat C vehicles have historically enjoyed lower vehicles taxes compared to cars. For instance, the Additional Registration Fee is charged at 5% of the vehicle’s Open Market Value (OMV), compared to at least 100% for cars.

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

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