What is COE and is it effective?

Oneshift Editorial Team
24 Sep 2013

COE. Three letters that are uniquely Singapore. Nowhere else in the world does one have to buy a piece of ‘paper’ that entitles one to purchase and own a car. Oh, and you merely ‘own’ it for only 10 years mind you. If you decide you want to hold onto your precious car past the 10-year mark, then it’s time to pay for another COE at the PQP (Prevailing Quota Premium). This is essentially a moving three-month average based on the prevailing COE prices. And then, you guessed it, you are allowed to drive your vehicle for another ten years. Note, that if you so decide not to fork out – or cannot afford to – some ludicrous sum of money for the PQP, you’re not allowed to keep your perfectly good automobile in Singapore – it has either to be exported or sent to the scrapyard. 

The Certificate of Entitlement (COE) system was started back in 1990 to regulate the number of vehicles that will be allowed on the roads on our tiny island state under the Vehicle Quota System masterplan. It started harmlessly enough with COE prices at a nominal $10 (that’s what dad said anyway) but by 1994, COE prices have skyrocketed to a whopping $110k for cars with engines displacing more than 2000cc. Vehicle growth rate at that time was set at 3% but in recent years, the government has reduced the growth rate – for 2013 and 2014, to a miniscule 0.5%.

So how does COE affect the general population in Singapore? Besides Singaporeans’ love for complaining about nearly everything under the sun, COE prices are rather prohibitive but in all honesty, effective from an objective standpoint. The reason behind COE was to control the car population in Singapore, thereby reducing congestion. In this aspect, COE appears to have done its job. Try driving in Bangkok and Japan or even downtown Kuala Lumpur or Shanghai. The traffic is horrible. I’m not implying that it’s smooth sailing all the way into the CBD (Central Business District) but compared to the countries mentioned above, we have it good.

However, distractors will argue that isn’t ERP (Electronic Road Pricing) meant to combat road congestion? Well, in theory it is, but we can only assume the government, being Singaporean, has the same kiasu attitude like the rest of us – hence a ‘double confirm’ system is in place. What if without the COE system to regulate the total number of vehicles on our road, and all car owners decided that even with prohibitive ERP, they all want to drive into town/CBD? What will happen then? A massive gridlock could still theoretically happen even if ERP was say $20 to enter CBD – as people will either just bite the bullet and pay up; or turn-away at the last minute, causing congestion at the ancillary roads.

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