Balloting and bidding in one COE system

The Certificate of Entitlement (COE) system has morphed into a conundrum in raising car prices since 1990. The market-oriented competitive bidding system has created difficulties for lower-income households to purchase this “non-basic” need, due to limited supply and sky-high prices.

The recently-commissioned survey by the Land Transport Authority (LTA) on the COE system appears to cover the mechanics of refining vehicle classifications without probing for solutions to improve allocation of the COE. But perhaps, the solution is a compromise between the two.

Transport Minister Lui Tuck Yew said the Government was considering ways to make the vehicle quota system more socially equitable to give mass-market car buyers a better chance against those who are more well-off.

What we can try is to create a concessionary COE category — called Category S — with a discount on the premium, allocated via a balloting system.

Such a composite system would ensure that a small portion of the COEs for mass-market cars — perhaps 10 per cent — reaches the less well-off while retaining the bulk for bidding.

The LTA could work out an appropriate quantum of Category S for each bidding exercise to moderate demand. We can use a vehicle’s Open Market Value — for example S$11,000 and below — as the definition of a mass-market car.

A “composite” COE system would benefit low-income households. However, eligible Category S owners should accept certain restrictions and be subject to means-testing.

Such a system would support families as well as allocate COEs in a socially equitable way for targeted households. It can also be refined by the LTA along the way.