CERTIFICATES OF ENTITLEMENT FOR MOTORCYCLES (Categories based on engine capacity)

Mr Low Thia Khiang asked the Minister for Communications, in view of the escalating prices of Certificates of Entitlement (COEs) for motorcycles, whether he will consider having different categories of COEs for motorcycles based on engine capacity.

The Minister for Communications (Mr Mah Bow Tan): Mr Speaker, Sir, like all vehicle categories, the COE quota for motorcycles is allocated based on an annual growth rate of 3%. Having fixed the supply, the price of COEs is then determined by demand. The higher the demand, the higher the price will be. The recent increase in the price of motorcycle COEs reflects the rising demand for motorcycles.

On traffic management considerations, all motorcycles, regardless of engine capacity, should be subject to the same quota premium as they occupy roughly the same amount of road space. However, my Ministry recognizes that there is a growing concern among buyers of small motorcycles who feel that they cannot compete against buyers of big motorcycles for their COEs. This is notwithstanding the fact that buyers of small motorcycles, ie, 200 cc motorcycles and below, are still taking up about 70% of all motorcycle COEs.

My Ministry is monitoring the situation and is carefully studying the feedback and the various proposals that we have received on this subject. If necessary, adjustments will be made to the COE system while ensuring that the system remains fair to all road users and at the same time keeps our roads free flowing.

Mr Low Thia Khiang (Hougang): Sir, under what circumstances will the Ministry consider it necessary to have different categories of COEs for motorcycles? Is the Minister waiting for the COE price for motorcycles to increase to a more substantial sum and then make a decision?

Mr Mah Bow Tan: As I have indicated just now, the price of motorcycles is not determined by the Ministry. It is determined by the buying public and it is a reflection of the demand for motorcycles. We will monitor the situation, as I said, and we will take all factors into consideration. Ideally speaking, there should be just one category for motorcycles. However, if there is cause for us to change, we will certainly make the necessary changes, bearing in mind the fact that we have to be fair to all other categories of road users and we have to make sure that the limited road space that we have is optimally used.

Mr Low Thia Khiang: Sir, I do not think the Minister has answered my question. Under what circumstances would the Ministry consider revising the category of COEs for motorcycles? The Minister also mentioned about the principle of COEs for all categories of motor vehicles which are occupying road space. Did the Ministry also apply the same principle to motorcars based on engine capacity or based on how much road space the motorcar is occupying?

Mr Mah Bow Tan: Sir, as I said, strictly speaking, there should be only one category. It applies to cars as well as to motorcycles. But for equity reasons, we have decided that we have to split the COEs for motorcars into various categories in order to make sure that the small car and big car owners have a fair chance of competing. One could argue that this similarly applies to motorcycles. At this stage, there is no reason for us to make any changes, but we are monitoring the situation very carefully. As to whether the motorcycle COEs are high or not, at this stage, the motorcycle COE premium is about one quarter that of the premium for a small car, even though a motorcycle occupies, on a moving basis, much more than one quarter of the road space occupied by a car. Whether the motorcycle COE is high or not high is at this stage a moot point. We will have to take into account all factors into consideration before we make the adjustments.

Mr Low Thia Khiang: Sir, why is it not justified to make changes to the motorcycle COEs at this stage? Is it because the COE price for motorcycles is still too low to make the change?

Mr Mah Bow Tan: I do not know what the Member means by "low", Sir?

Mr Low Thia Khiang: Why is it that there is no justification for a change?

Mr Mah Bow Tan: Sir, the categorisation of motorcycle COEs into various categories is not the main determinant of the price. It is determined by, first of all, how much road space a motorcycle occupies. Secondly, what is the demand for road space? In other words, what is the demand for the number of COEs that we issue?

The Government has fixed the number of COEs that are being issued every month. It allows an increase based on what it feels is sustainable in order to make sure that our roads are not congested. We just fix the supply. Having fixed the supply, then it is up to the demand to determine the price. That is on an overall basis.

The next question is whether we should segment them into various categories. There are reasons for us to segment the car COEs into various categories. Similar reasons could apply to motorcycles but at this stage we do not feel that there is a necessity for us to segment it. The Member asked when will that stage be. I can honestly say that I do not know. I will monitor the situation and I will make the necessary decision at the appropriate time.

Mr Low Thia Khiang: Sir, the Minister says that there was a need to segment the car COEs into different categories, probably because of affordability of people who need cars. What about motorcycles? Why is it that the same principle does not apply to the motorcycle COEs?

Mr Mah Bow Tan: Sir, I did not say that the same principle does not apply to motorcycle COEs. I am saying that it could very well apply to motorcycle COEs. However, this is not the appropriate time for us to make the decision just yet. The prices for motorcycle COEs, as far as we have been monitoring it, have only recently started to move. We will make sure that the situation is kept well under control.

Mr Low Thia Khiang: Sir, is the Minister saying that motorcycle COE prices will not move up further, since he says that it will be kept under control?

Mr Mah Bow Tan: No, Sir, I certainly did not say that. The Member is misquoting me.

Mr Chiam See Tong: Sir, it would appear to me that it is inequitable since motorcycle prices vary so much, if you buy a 50 cc Honda Cub and you buy a big Harley Davidson costing $40,000-$50,000, and the COE costs $4,000. Do you not think that it is inequitable? The inequity is so clear cut. I do not know the price of a Honda Cub. It is probably under $2,000. If you buy a Harley Davidson, it costs $40,000-$50,000, and you pay $4,000 for the COE. There is an extreme inequity between the people who are buying small motorcycles and the big ones.

Mr Mah Bow Tan: Sir, what is the question?

Mr Chiam See Tong: The question is: is it not time to have different categories of COEs for motorcycles?

Mr Mah Bow Tan: We are reviewing the situation. We are looking at the situation very carefully before we make such a change, because we have to decide whether such a change is fairer or not.

Mr Chiam See Tong: My point is that the facts are already there and it should be changed now. Is the Minister going to do it? What is he waiting for? The facts are so clear cut.

Mr Mah Bow Tan: As I said, Sir, we are monitoring the situation and, if necessary, we will make the change.

Mr Low Thia Khiang: When is it necessary?

Mr Mah Bow Tan: We will decide, Sir.