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COE rises by over 10% just two days after Senior Minister assures 0% car growth cut will not affect COE

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The premiums of Certificate of Entitlement (COE) has risen significantly across all categories, despite the government’s assurances that the impending car and motorcycle growth cut will have little bearing on COE prices.

It was revealed at the end of the latest COE bidding exercise today that premiums have been increased by over 10% for all categories:

Category A (Cars up to 1600CC & 97KW): S$47,112 (up from S$41,617) risen by 13%
Category B (Cars above 1600CC OR 97KW): S$57,414 (up from S$49,996) risen by 15%
Category C (Goods vehicles and buses): S$58,036 (up from S$51,890) risen by 11%
Category D (Motorcycles): S$5,502 (up from S$4,903) risen by 11%
Category E (Open category): S$57,000 (up from S$52,000) risen by 10%

A total of 7,870 bids was received, with a quota of 4,334 COEs available.

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The increased premiums follows Land Transport Authority (LTA)’s announcement last month that the growth rate for COE Categories A, B and D will be cut from the current 0.25% per annum to 0%, with effect from February 2018 until at least 2020.

Analysts have speculated that premiums would rise, even though the zero growth rate is yet to be implemented, due to panic bidding. The results of the latest bidding exercise today shows that their concerns were well-founded, despite the government’s assurances that COE premiums will not be affected by the growth cut.

Just two days ago, on Monday (6 Nov), Senior Minister of State (Transport) Lam Pin Min assured in Parliament that the zero growth rate for cars and motorcycles is not expected to significantly affect COE premiums since the COE quota is largely determined by the number of vehicles deregistered.

He was responding to MP Member of Parliament Saktiandi Supaat’s question on the impact of adjustments to the vehicle growth rate, which LTA previously assured will not affect the supply of COEs.

In a statement last month, the LTA explained that the decision to cut the growth rate for cars and motorcycles was made because “in view of land constraints and competing needs, there is limited scope for further expansion of the road network.”

It added that public transport will step up and that the government has set aside a whopping $28 billion dollars to improve the public transport system.

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