New COE category for private hire car fleets not ruled out, must be 'studied carefully': Chee Hong Tat

Pros and cons.

Nigel Chua | January 10, 2024, 09:19 AM



The topic of Certificates of Entitlement (COEs) for private hire cars has been in the news lately.

Back in November 2023, Members of Parliament (MPs) suggested having a separate COE category for car-leasing companies that bid for COEs for vehicles to be used as private hire cars, amid rising COE prices at the time.

Acting Transport Minister Chee Hong Tat responded, saying that it is unlikely that COE prices' rise was primarily caused by car leasing companies.

Chee, who is also Senior Minister of State for Finance, suggested that COE prices could "spike further" if a new category was created.

He said the Ministry of Transport (MOT) will study if there are further options beyond COE bidding to address the concerns around car-leasing companies, and that MOT will continue to monitor closely and explore ideas to improve the situation.

Possible difficulties of separate category

In an interview with Lianhe Zaobao published on Jan. 9, Chee elaborated further on the possible difficulties posed by creating a separate category, and shared his views on the suggestion that private hire car COEs should be allocated in the same way as taxi COEs, a possible solution which Zaobao said was favoured by "industry players".

Since 2012, taxi operators do not have to bid for a COE along with other would-be car owners.

Instead, COEs for taxis are taken from the Open Category (Category E) and their operators pay a three-month average of the COE prices for Category A cars.

Chee pointed out that the demand for taxi COEs is easier to deal with, given the trend of shrinking taxi fleets as older taxi drivers retire, while younger drivers opt to drive private hire cars instead of taxis. On the other hand, the demand for private hire cars fluctuates every quarter, due to factors like the evolution of the market and industry consolidation.

Chee said a new category for private hire cars would require an accurate estimate of demand.

Should the estimate be lower than the actual demand, there would be insufficient COEs for private hire cars, affecting the availability of point-to-point transport services.

On the other hand, if the estimate was higher than the actual demand, this would mean a lower quota available for other categories, which could push up the COE prices.

Government not ruling out separate category

Nevertheless, Chee said the government would not rule out creating a new category, though the pros and cons of this would need to be carefully weighed before a decision is made.

Chee said it would take time for this to be studied carefully, and if implemented, would be timed separately from other regulatory changes affecting the point-to-point transport sector.

Top image via Maritime and Port Authority of Singapore - MPA on Facebook and by Kylle Pangan on Unsplash