CERTIFICATE OF ENTITLEMENT (Extension of validity period)

Mr Cheo Chai Chen asked the Minister for Communications whether he will consider (i) extending the validity of the Certificate of Entitlement from 10 years to 20 years and (ii) abolishing the surcharge imposed on vehicles which are more than 10 years old.

Mr Mah Bow Tan: Mr Speaker, Sir, may I have your permission to take Questions 14 and 15 together as they are related?

Mr Speaker: Yes.

Mr Mah Bow Tan: Mr Speaker, Mr Teo and Mr Cheo's questions seem to suggest that the lifespan of a COE should be related to the actual mechanical life of a vehicle. Let me take this opportunity to clarify that the two are quite separate. They are not inter-related. The COE is like a land lease, which is independent of the lifespan of the home or flat which sits on the land, if I may use that analogy.

We have set a fixed lifespan for the COE because road space is a scarce resource. It is the common property of all Singaporeans, and it should not be given away freely, nor should it be retained by any individual in perpetuity or over a prolonged period. A 10-year COE represents a right for a vehicle to take up road space for 10 years, no more no less. When the validity of the 10 years is over, the owner can choose to renew it by paying the Prevailing Quota Premium, or he can give it up, in which case the COE will be recycled for bidding amongst all prospective owners. Amongst all the COEs released for bidding this year, more than half are such recyled COEs.

This present system therefore allows ownership of COEs to change hands and to circulate amongst Singaporeans. If we were to extend the validity period of COE, say, to 15 years, 20 years or even longer, there will be fewer and fewer COEs available for future generations. The result is that COE prices will soar. Existing owners, of course, will benefit from a windfall, but prospective buyers, including younger Singaporeans, will find the aspirations of owning a car fading away. Sir, my Ministry does not intend to change the 10-year lifespan of the COE, as it is a fairer system for both existing as well as prospective car owners.

As for the road tax surcharge, it is part of a package of measures to ensure that all vehicles on our roads are in good condition and do not cause excessive pollution. These measures are needed because, as a general rule, older vehicles are less roadworthy and more pollutive. Inspection statistics show that cars above 10 years old are almost twice as likely to fail the regular inspection tests on their first try compared to younger vehicles. Additional statistics from the Automobile Association, which operates a fleet to look after vehicles that break down on the road, show that the breakdown rate for cars above 10 years old is 50% higher than for cars under 10 years old. Further, older vehicles are not as well-designed and are not fitted with gadgets that make them less pollutive. For example, the fitting of catalytic converters was made compulsory only in 1994.

Nevertheless, we recognise that there are owners who take great care in maintaining their cars in mint condition. That is why there is no statutory lifespan for cars, unlike taxis. In other words, car owners can keep their vehicles for as long as they like, provided they have a COE or pay the Prevailing Quota Premium. They can continue running their old cars so long as they are also able to pass the regular inspections and, of course, pay the road tax surcharge.

These measures have kept the fleet of vehicles here relatively young, roadworthy and help to check pollution. We enjoy smoother journeys and better air quality. As our city becomes more compact and traffic becomes heavier, it will be even more necessary to continue with these measures. 1.30 pm

Mr Speaker: Order. End of Question Time.

[Pursuant to Standing Order No. 21(3), Question Nos. 16 to 20 have been postponed to the next available sitting of Parliament.]