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Taxi operators may soon be allowed to compete with car buyers for certificates of entitlement again, a move which may fuel competition for COEs.

14 May 2019 | Local News : Singapore


Taxi operators may soon be allowed to compete with car buyers for Certificates Of Entitlement (COE) again - a move which may fuel competition for COEs.

Since 2012, taxi firms were not allowed to bid for COEs, instead, they have been paying for prevailing quota premiums
Regulations banning cab firms from bidding for COEs were put in place in 2012 to address a longstanding gripe among car buyers and sellers that taxis were driving up premiums and providing unfair competition.

The Straits Times understands that those regulations are being reviewed, and it is possible that they could be reversed.

The Land Transport Authority (LTA), however, said that it would not comment on market speculation.

Even though taxis were almost always larger cars - which should rightfully be competing for COEs in Category B (cars above 1,600cc) - they were lumped with Category A (cars up to 1,600cc) in the past. It was not uncommon then for taxi companies to make up one-third of the bids submitted during a tender.

With the removal of taxis from COE bidding, put in place by former Transport Minister Lui Tuck Yew, cab operators have been paying Category A's prevailing quota premium, a moving average of past premiums. The move eased pressure on Category A almost immediately. But two years after the rule change, private-hire operators such as Uber and Grab started to grow their fleets and, unlike taxis, were allowed to bid for COEs.

The pressure on prices eased when Uber pulled out of Singapore last year, but started to build up this year with the arrival of Indonesian ride-hailing firm Gojek. With Grab's fleet expansion, and smaller players like Ryde and Tribecar joining the fray, premiums are once again heading north.

Although many have heard of the possible change in how taxis acquire their COEs, the LTA has not made an official announcement
The Straits Times understands that allowing taxi firms to bid for COEs again could form part of an industrywide review of taxi and private-hire operations. Results of the review, conducted by the LTA, are expected by the middle of this year.

Industry players said they have been hearing about the possible change, although no one has been informed officially. Trans-Cab Managing Director Teo Kiang Ang said such a move would not be desirable as it is likely to drive up COE prices, translating into higher business costs.

Premier Taxis Managing Director Lim Chong Boo said companies would have to make strategic changes to the business model if they are allowed to bid again. Motor traders expect the move, if implemented, to displace more private car buyers. For the past few years, private-hire operators have edged out thousands of car buyers with aggressive fleet expansions. Yet, many of the cars they bought lie idle.

Mr. Ang Hin Kee, adviser to the National Taxi Association and the National Private Hire Vehicles Association, concurred. "We have a zero car growth policy. This is not a very smart way of doing things," he said when asked what he thought about the massive idle fleet, estimated to number more than 2,000.

Mr. Ang, who is also deputy chairman of the Government Parliamentary Committee for Transport, had called for a cap on the taxi and private-hire car population. He pointed out that there are about 130,000 taxi and private-hire vocational licence holders, and too many drivers vying for commuters. Mr. Ang said the age requirement for new taxi and private-hire drivers could also be raised to prevent an oversupply of drivers.
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