Motormouth: Maybe the Singapore Government does not consider high COE prices to be a problem

We keep fussing about high quota premiums, but expensive certificates of entitlement were not a burning political issue in GE2025.

[Story by guest columnist Say Kwee Neng]

Can we conclude that high COE prices are acceptable to a majority (at least 66.57 percent) of Singaporeans? 

Here is a reasonable hypothesis: The Singapore Government does not consider high COE prices to be a problem, and therefore, is not actively seeking solutions to it. Despite choruses of protests, the Government has not opined that high COE prices are a problem that needs fixing. 

There are three possible reasons for this. 

Firstly, COEs were designed to regulate the number of cars on our roads and (very) indirectly control traffic congestion. The higher COE prices go, the greater will be the financial pain of owning a car. Which should theoretically lessen Singaporeans’ demand for cars, and lead to less traffic congestion on our roads.

Secondly, the revenues generated from COEs are mostly paid for by the more affluent. Therefore, this serves as a form of consumption tax for a luxury item in Singapore. Our Government probably does not deem using a car in Singapore as life’s necessity, not when our public transport is so exemplary. 

Thirdly, the Government collected over $6 billion in COE revenue in 2024, which is too substantial an amount to be ignored or experimented with. In 2024, the Government would have operated close to a budget deficit without the cushion of COE revenue. 

As such, high COE prices are probably not a problem that needs a solution from the Government. 

It is not accurate to say that the Government has actively sought to address the problem of high COE prices by applying supply-side solutions. 

Everyone in the car industry knows that just simply raising the supply of COEs will not solve the problem of record high COE prices. Strong commercial interests have usurped the bidding of COEs, almost guaranteeing that COE prices remain at nosebleed levels. 

The Government’s reluctance to tackle demand-side issues is telling, and it is reasonable to assume that the revenue implications of lower COE prices probably have a large part to do with this reticence.

But is there a darker side to high COE prices?

High COE prices directly and collaterally drive up the cost of living for Singaporeans. High COE prices make transportation exorbitant, which will inevitably filter down to the rest of the economy, raising costs and dragging down consumption. High COE prices eat up a large chunk of a household's budget when the daily usage of a car is not a luxury but a real necessity for families. 

High COE prices make owning a car out of reach for a generation of Singaporeans, and hobbles their aspirations for living and building the good life here. 

Perhaps 66.57 percent of Singaporeans see these as small gripes when compared to the other "benefits" we can gain from high COE prices.

So, what’s the fuss? Learn to love high COE prices!

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