Update on Vehicle Early Turnover Scheme and Impact on COE Prices

Mr Ang Wei Neng asked the Minister for Transport if he will provide an update on the Early Turnover Scheme (ETS) since its last enhancement in March 2014 in terms of (i) the number of vehicle owners who have benefited from ETS as compared to the period before the enhancement and (ii) the impact of ETS on the COE prices of commercial vehicles.

The Parliamentary Secretary to the Minister for Transport (Assoc Prof Dr Muhammad Faishal Ibrahim) (for the Minister for Transport): Mdm Speaker, as of end-September 2014, 3,212 vehicles were replaced under the Early Turnover Scheme (ETS) after it was enhanced from March 2014 to further encourage the early replacement of older, more pollutive commercial vehicles. This is 77% of the total number of vehicles replaced under the scheme since it began in April 2013. The increase in ETS take-up is encouraging.

When an ETS-eligible vehicle is deregistered, its Certificate of Entitlement (COE) is not channelled to the Category (CAT) C quota for bidding. Rather, the COE can be used to register a new vehicle directly within a one-month period. This means that the owners can purchase a new vehicle without having to bid for a fresh COE.

Not channelling the COE of a deregistered ETS-eligible vehicle to the CAT C quota may appear on the surface to reduce the CAT C quota available for bidding. However, at the same time, it makes available an additional COE outside of the bidding system, and thus also takes demand out of the system as well. So we should not be unduly worried if there are low quotas available for bidding.

The ETS impact on COE price is uncertain. The price of COEs is determined by many other demand and supply factors, such as the prevailing economic conditions and the vehicle statutory life remaining.

Mr Ang Wei Neng (Jurong): Mdm Speaker, I thank the Parliamentary Secretary for the reply. I also like to congratulate the success of the ETS since its enhancement. But I also note that ETS in the market may not directly benefit the vehicle owners, but rather the agents. Perhaps the Parliamentary Secretary can give us the figure on how many of the commercial vehicles that had been scrapped under the ETS have actually changed hands before scrapping. This figure would give us an indication whether the Early Turnover Scheme has benefited the car dealers as compared to the vehicle owners.

The second question is that I understand the ETS has reduced the number of COEs in Category C, but the Parliamentary Secretary is saying that it also takes demand out from the system. But this has a disadvantage for those companies that buy new commercial vehicles, without the old vehicles to take advantage of the ETS scheme. At the same time, we know that 15% of the COEs that are recycled from the deregistration of commercial vehicles are channelled towards the Open Category. Will MOT consider reducing the proportion of the COEs that can contribute to the Open Category?

Assoc Prof Dr Muhammad Faishal Ibrahim: Mdm Speaker, I thank the Member for the supplementary question. The ETS gives more options for current and would-be- vehicle owners to obtain a new vehicle: firstly, renew their existing COE under the ETS; secondly, to buy over a vehicle which is ETS-eligible, which then allows them to take advantage of the ETS to register a new vehicle; and thirdly, of course, to bid for a new COE. This, in my view, provides more opportunity for – those who would like to purchase vehicles, whether ETS-eligible or not. I do not have the figure of whether the vehicle is scrapped and is taken over by the dealers at this point in time. But those are the three options that someone who would like to purchase a vehicle would be able to do.

In addition to the ETS, commercial vehicles also have the benefits of lower vehicle taxes compared to other types of vehicles. The Additional Registration Fee, for example, is about 5% compared to at least 100% for cars.