Transport Minister defends use of engine output as new criterion for COE

Transport Minister has defended the Government's latest tweak to the COE system from next February where engine output - along with engine displacement - will be considered to segregate Cat A and Cat B cars. According to The Straits Times, Minister Lui Tuck Yew, defended the government's move by claiming the added criteria of engine power would help better differentiate mass market cars - mostly of Asian make - from luxury models for better rule enforcement and compliance.

The tweak to the COE system, which takes effect from next February, requires cars up to 1,600cc of displacement to have no more than 130bhp of engine power to fall under Cat A of the COE system. The announcement has stirred controversy among industry experts with many raising questions as to why Open Market Value (OMV) or carbon emissions were not used instead to differentiate luxury with 'bread and butter' cars.

"We have chosen something which I believe is more simple, more stable, easier and more straightforward to implement and to police," said Transport Minister Lui Tuck Yew on Friday.

Mr Lui added, the authorities had considered "very carefully" the use of OMV as a criterion but decided against it as the value fluctuates due to factors such as currency movements and cars of different origins.

"We wanted to avoid some of these oscillations between Cat A and Cat B, and some of these implementation issues where using OMV as a criterion could make it very confusing, very complicated," said the Minister. The ministry also avoided the use of carbon emissions as "not to conflate environment issues" with the goal of improving social equity within the COE system.

He also commented the recent spike in COE premiums were "expected" due to the recent rule changes and will take several COE premiums for prices to stabilise. "It will take some time - several bidding cycles - before you see an equilibrium being reached. Hence, we decided that we would give five month's early warning before we implement the changes in 2014," he told reporters at his Ministry's Family Charity Outreach event at S.E.A Aquarium.

Mr Lui added, "Those who are thinking of buying a car, if they can afford to pay, they ought to monitor the fluctuations carefully - watch this process for a while and then decide whether they want to go and purchase a car at this point in time."

Buyers considering to tune down the power output of models to register under Cat A might want to reconsider as Land Transport Authority (LTA) have "stringent" processes in place to prevent manipulation of the engine-power criteria, with models to be checked with identical cars offered in the overseas market before they are registered.