Frequently Asked Questions

COE prices are determined by the interaction between demand and supply at each bidding exercise.

Demand can be affected by factors like the economic climate (whether the economy is rapidly growing or in financial recession), launch of new vehicle models, and competition among vehicle manufacturers among others. Supply of COEs is influenced by the allowable vehicle growth rate and the number of replacement COEs from vehicle deregistrations. The latter forms the bulk of the COE quota. Supply and demand are also related in that a significant portion of the demand will come from existing car owners who have or will deregister their existing cars around the same time.

The COE system helps prevent our roads from being gridlocked by setting a quota on the number of new vehicles to be registered in Singapore each year.  Once the COE quota is fixed, the COE price is determined by market forces such that demand can match the supply available. The lower the demand, the lower the COE price and vice versa. To intervene and manage the price of COEs will lead to a situation where we would have to release more COEs if COE prices rise significantly. Doing so would undermine the larger transport aim of having the vehicle population grow at a sustainable rate and preventing gridlock.

The objective of the COE system is to control the growth of the vehicle population by limiting the number of COEs available each year. It already has progressive elements. For example, there are separate COE categories for small cars and big cars, so that buyers of small cars and big cars do not bid against each other. Purchasers of bigger or more expensive cars also pay more in Additional Registration Fee (ARF) and Road Tax than other buyers.

The COE system does not judge which households deserve to own cars. Any administrative allocation or preference for COE allocation would have to take into account the diverse and varied circumstances of each household.  For instance, a certain household may be buying their second car but it could be for the wife to send her sickly elderly mother for medical checkups. With the many possible variations of reasons, such a system would be difficult to administer as every household will deem that they are more deserving of a COE than others. To keep the system simple and meet the objective of managing the vehicle population, we let market forces determine the allocation of individual COEs in an open and transparent way.

The ERP revenue collected goes to the Government’s Consolidated Fund to fund programmes that benefit Singaporeans. The annual amount collected is much less than what the government spends on road improvement projects. For example, the total amount collected for Financial Year 2009 and 2010 is about $149 million and $159 million respectively. In comparison, we have invested more to improve our road networks. The recently completed Woodsville Interchange Upgrading project costs $130 million and the Marina Coastal Expressway, which is currently under construction will cost $4.1 billion. ERP operating hours and charges are set based on traffic conditions. The amounts collected are a function of ERP operating hours and charges, as well as the traffic volume or number of vehicles passing through.

 

 

 

No. If drivers choose to drive less and the traffic speeds improve, the Government will be happy to collect less ERP revenue. In fact, when the Government enhanced the ERP system in 2008, road taxes for cars, motorcycles, taxis and goods-cum-passenger-vehicles were reduced. The ARF was also reduced from 110% of OMV to 100% of OMV.  Between 2007 to 2009, annual ERP revenue increased by $44 million, but Additional Registration Fee (ARF) and road tax collections fell by several times more over that period - $234 million and $95 million respectively.

Related: Watch a video that explains why we need ERP

LTA determines the number of COEs to release for bidding based on a 6-monthly cycle. The 6-monthly COE quota consists of:

a. Provision for vehicle growth, which is currently 1.5%
b. Replacement COEs for vehicles de-registered over the preceding 6 months
c. Adjustment for over-projections of vehicle de-registrations in 2008/2009 (up to January
 2014 only)

The bulk of the quota comes from the replacement COEs, and LTA provides monthly updates on the de-registration figures. Click here for the latest 6-monthly quota.