The Straits Times reported that the Land Transport Authority (LTA) is calling a surprise industry-wide meeting with motor traders today, sparking speculation that it will announce more changes to the Certificate Of Entitlement (COE) system. The authority - which refused to comment on the meeting - is expected to release details on the next six-monthly supply of COEs mid-January.
Observers said the number of COEs is expected to fall by double-digit levels across the categories, with supply already at its lowest since the system started in 1990. This will mean premiums - hovering between $72,000 and $80,000 now - could go higher before settling down in the latter half of the year, when the quota is expected to expand appreciably.
Motor Traders Association President Glenn Tan said, "I would think that they (the LTA) are worried that COE prices will shoot up further, especially with the smaller supply expected in the next six months." Observers said if premiums approach or breach $100,000 - which Mr. Tan does not rule out - it will prompt the authorities to take action.
Other industry players, however, expect the authority to announce more changes to the system, which was tweaked just last year. Singapore Vehicle Traders Association secretary Raymond Tang said, "They might split Category C (for commercial vehicles) into two - one for big vehicles and one for small."
Other traders said commercial vehicles might even be removed from the current COE supply formula, which is based on the number of vehicles scrapped in the preceding six months, as well as an allowable annual growth rate of 0.5 percent. Having a separate formula for commercial vehicles will also immediately mean more COEs for businesses, as the category no longer has to contribute part of its allocation to the Open category.
Yet, others speculate that the LTA will do away with Open COEs altogether. Although Open COEs are meant to add flexibility to the system as they can be used for any vehicle type, they mostly end up exclusively for bigger cars. There is also talk that the LTA will put off a clawback of COEs oversupplied in 2008 to 2009, to ease the immediate crunch.
