Certificate of Entitlement



A Certificate of Entitlement (COE) in Singapore represents the right to vehicle ownership in Singapore for a period of 10 years.1 COEs are integral to the Vehicle Quota System (VQS), a landmark scheme implemented to regulate the growth of the vehicle population in Singapore, which is among the densest in the world.2 The VQS determines the exact number of vehicles of various categories allowed on the road.3 Other measures to curb vehicle growth like raising taxes and fees do not have the advantage of knowing the exact increase needed to achieve the desired population of vehicles.4 The VQS was implemented in 1 May 1990 and the first bidding under the system started on 2 April 1990.5 Public buses, school buses and emergency vehicles are exempted from this scheme.6

Background
As Singapore developed and with increasing affluence, car ownership has grown. By the 1980s, there was a need to manage the rapid growth in the number of vehicles in relation to Singapore’s road capacity.7 Between 1975 and 1990, the growth rate of the car population was as high as 12 percent per annum before the recession of 1985. To ensure that Singapore roads would be smooth-flowing, the government undertook a combination of usage and ownership measures. Usage measures includes parking charges and the Area Licensing Scheme (later replaced by the Electronic Road Pricing), while steps to curb ownership comprise vehicle taxes (such as the Additional Registration Fee) and excise duty.8 To further control the growth of vehicle population at a rate that is sustainable by Singapore’s road infrastructure within its land constraint, the VQS was introduced.9 The VQS was the key proposal of the Parliamentary Select Committee on Land Transport, which released its report on 3 January 1990.10


Description

The VQS was implemented on 1 May 1990 and the bidding method was used to allocate quota.11 The first bidding exercise started on 2 April 1990.12 There are five categories of COEs available (down from the original seven): two for passenger cars, one each for motorcycles and commercial vehicles, and an open category that can be used to buy any vehicle.13 There is some segmentation in the number of categories for social equity reasons.14 Under this system, each motorist (or motor dealer) who wants to own a car (or other vehicle) would have to bid for a COE for that category of vehicle.15 The annual quota would be set at the projected number of vehicles deregistered the previous year with the addition of new COEs based on the three-percent growth in the vehicle population.16 The number of COEs released every fortnight is fixed before the start of the quota year and adjustments to the supply are made, if necessary.17 To ensure that existing car owners do not have an unfair advantage, the government decided that all vehicles would have an entitlement for 10 years from the date of registration. This entitlement can be revalidated for a further five or 10 years by paying the prevailing quota premium if the car owner decides to keep the car for more than 10 years.18 The vehicle entitlement can be transferred with the ownership of the vehicle.19 Central to the VQS is the outcome of capping the growth rate of the vehicle population at three percent per annum, compared with an average of 6.8 percent per annum in the three years prior to the implementation of the VQS. It was reported that, without the VQS, the growth rate would have spiralled over the last 10 years and traffic would have grounded to a halt, adversely affecting Singapore’s economic development and quality of life.20

Bidding system
When the VQS was first launched, there was only a closed bidding system where bidders would not know how much others had bid. All successful bidders would have to pay the lowest successful bid price for their respective quota category. Those who had bidded this amount or more would be entitled to a COE at the lowest successful bid price. However, the closed bidding system lacked transparency and led to great fluctuations in the quota premium payable.21 In November 1995, the electronic COE bidding system was introduced. In April 2002, the COE open bidding system replaced the closed bidding system.22 Open bidding enabled bidders to monitor current COE prices and ensured that the final quota premium reflected the true value bidders placed on the COE.23


Review of VQS
In 1998, a Government Parliamentary Committee (Communications) was appointed to do a review of the VQS, nine years after its implementation. The Committee presented its findings (published in the Report of the Vehicle Quota System Review Committee) to then Minister for Communications Mah Bow Tan on 2 March 1999.24 After seeking the views and participation from various interest groups, academics and members of the public, the committee affirmed the effectiveness of the VQS as one of the key pillars in Singapore’s traffic management strategies and recommended that the scheme be retained. The committee also concluded that competitive bidding was the most efficient and equitable means of allocation of quota.25



Authors
Marsita Omar & Nor-Afidah Abd Rahman




References
1. Land Transport Authority. (2016, November 1). Certificate of Entitlement (COE). Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/vehicle-quota-system/certificate-of-entitlement-coe.html
2. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee, p. 9. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf
3. Land Transport Authority. (2014, January 15). Overview of the Vehicle Quota System. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/vehicle-quota-system/overview-of-vehicle-quota-system.html
4. Lee, W. (1990). Quota system and the ARF/PARF scheme. Singapore: Ministry of Communications & Information, p. 8. (Call no.: RSING 388.049095957 LEE)
5. Bidding under car quota system starts tomorrow. (1990, April 1). The Straits Times, p. 1. Retrieved from NewspaperSG.
6. Lee, W. (1990). Quota system and the ARF/PARF scheme. Singapore: Ministry of Communications & Information, p. 2. (Call no.: RSING 388.049095957 LEE).
7. Land Transport Authority. (2014, January 15). Overview of the Vehicle Quota System. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/vehicle-quota-system/overview-of-vehicle-quota-system.html
8. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee, pp. 8, 33. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf
9. Land Transport Authority. (2014, January 15). Overview of the Vehicle Quota System. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/vehicle-quota-system/overview-of-vehicle-quota-system.html
10. Soong, M. (1990, January 4). Select Committee calls for car quota scheme. The Business Times, p. 1. Retrieved from NewspaperSG.
11. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee, p. 2. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf
12. Bidding under car quota system starts tomorrow. (1990, April 1). The Straits Times, p. 1. Retrieved from NewspaperSG.
13. COE system kicked off in 1990. (2007, April 7). The Straits Times, p. 82. Retrieved from NewspaperSG.
14. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee, p. 15. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf
15. COE system kicked off in 1990. (2007, April 7). The Straits Times, p. 82. Retrieved from NewspaperSG.
16. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee, p. 12. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf
17. COE system kicked off in 1990. (2007, April 7). The Straits Times, p. 82. Retrieved from NewspaperSG.
18. Lee, W. (1990). Quota system and the ARF/PARF scheme. Singapore: Ministry of Communications & Information, p. 3. (Call no.: RSING 388.049095957 LEE); Land Transport Authority. (2014, January 15). Overview of the Vehicle Quota System. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/vehicle-quota-system/overview-of-vehicle-quota-system.html
19. Lee, W. (1990). Quota system and the ARF/PARF scheme. Singapore: Ministry of Communications & Information, p. 10. (Call no.: RSING 388.049095957 LEE).
20. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee. Singapore: Govt. Print. Off., pp. 1–2. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf
21. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee, pp. 18, 20. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf
22. COE system kicked off in 1990. (2007, April 7). The Straits Times, p. 82. Retrieved from NewspaperSG.
23. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee, p. 20. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf
24. Land Transport Authority. (1999, April). Vehicle Quota System reviewed. Journeys, p. 21. (Call no.: RSING 388.4095957 SLTAJ).
25. Singapore. Parliament. Government Parliamentary Committee (Communications). (1999, March). Report of the Vehicle Quota System Review Committee, pp. 1–2, 10. Retrieved 2016, October 3 from Land Transport Authority website: https://www.lta.gov.sg/ltaacademy/doc/VQS%20Review%201999.pdf



The information in this article is valid as at 2006 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

 

Subject
Commerce and Industry>>Transportation
Urban transportation policy--Singapore
Law and government>>Safety administration>>Land transportation
Automobile ownership--Singapore
Transportation