The Mysterious case of Taxis and Cat A COE

28 Mar

In case you missed it, it was reported in last Saturday’s Straits Times that local listed transport giant Comfort DelGro would be buying 120 new Mercedes Benz E220 CDI cabs to renew their fleet. With COE prices at a high of $56,501 for cars below 1600cc, more purchases from the taxi companies will help to maintain this high or drive it even higher. It was earlier reported that from Feb 2012 to Jul 2012, there will be 1,239 COEs per month for cars up to 1,600cc and taxis. 

 

 

Until today, I still don’t quite understand why taxis (instruments of generating corporate profits) are competing with private citizens in Cat A COE (for private cars under 1600cc). It was reported in the Straits Times in Sep 2011, “If not for taxi companies submitting a barrage of bids in the final minutes before the tender closed at 4pm, the premium could have closed at $20,000 or so.” So for people who bought their 1600cc and below cars in that particular COE exercise in Sep 2011 you could have bought your COE at around $20K instead of the resultant bid price of $48K. 

 

The engine capacity of taxis are usually above 1600cc so why aren’t they competing with the rich dudes buying big cars? Aren’t the taxi operators also rich dudes earning a decent profit on their operations? Why should they be competing with citizens aspiring to buy simple cars? 

 

 

Also, why aren’t COEs of taxis placed together with commercial vehicles as they are instruments of business? And like goods vehicles, taxis are on the road much longer (contributing more CO2 emissions) than normal private cars. 

 

For some illuminating answers, let us look at the reply from Ministry of Transport:

 

25 Aug 2011

 

Dear Sir/Madam,

 

We refer to your feedback dated 18 August. 

 

Taxis are allowed to bid for COEs in Category A as they are part of the public transport spectrum, although at the higher end.  Taxi companies replacing older taxis need not necessarily bid for a new COE as they have the option to do so by paying the Prevailing Quota Premium (PQP) instead and therefore do not need to compete in Category A.

 

Note: The PQP is calculated based on the moving average of the QP in the last 3 months.

 

It would not be advisable to start a new COE category for taxis. Based on the proportion of bids by taxi companies versus the total quota in Category A, a COE category specifically for taxis would have a small quota. This would be undesirable as small quotas in any category would likely lead to anomalies and high fluctuations in prices. Furthermore, having a quota for taxis would also go against the move to deregulate the taxi industry where the intent was to leave the determination of the supply of taxis to the market and not by the quotas allocated to the taxi category.

 

We hope this clarifies.

 

Thank you for your feedback.

 

Quality Service Manager

Ministry of Transport

 

http://www.reach.gov.sg/YourSay/DiscussionForum/tabid/101/mode/3/Default.aspx?ssFormAction=%5B%5BssBlogThread_VIEW%5D%5D&tid=%5B%5B3775%5D%5D

 

First, what kind of statement is “taxis are allowed to bid for COEs in Category A as they are part of the public transport spectrum”, what is MOT trying to say? So why are public buses excluded from COE? Besides buses and taxis, what other kind of public transport are on the road? 

 

Next, by the taxi companies paying the PQP to acquire a COE, are they not similarly reducing the supply of Cat A COEs? If supply is lower, prices would naturally increase. 

 

Lastly, the COE in itself is a quota system. No matter how big or small the number of taxi COEs, there are only so many vehicles in total we can have on our roads to ensure that traffic flows smoothly. There is no such thing as a quota in a quota so to speak. By placing the COEs of taxis together with the smallest category of private cars goes to indicate that the business of this govt is pro-business. 

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8 Responses to “The Mysterious case of Taxis and Cat A COE”

  1. Nice try Buddy March 29, 2012 at 3:43 pm #

    What a load of bull shit, it’s just like the 1.1billion subsidy to the commuters.

  2. Gintai_昇泰 March 29, 2012 at 4:26 pm #

    Ok. Someone from the corporate world shared this fact with me. After his calculations if that transport company put a taxi on the road after 7 yrs (taxis only last 7 yrs instead of 10 yrs for private cars), the company would have made about $200K from each taxi. This is on the assumption that it’s rented out for 7 yrs and the COE then was much lower. Now you know why there are so many transport companies operating taxis even giving gratuity or pay for you the course with allowances provided you sign with them! Luckily taxis are still exclusively meant for citizens – not open up for FTs. Do you remember someone running NTUC Comfort (ex MP) paid so many millions just to run a taxi co-operative? I’m not going to name it here but U can email you that person. You see the greed and shame? Really langgar!

  3. mrbig March 30, 2012 at 4:31 pm #

    Good stuff. Actually I very long unhappy with this taxis using Cat A COE thing already but the mainstream media refuse to print this type of thing. Think about it, with this high price in COEs even the unscrupulous second hand car dealers are earning a lot of money from selling lousy cars to consumers.

  4. Charlie March 30, 2012 at 4:46 pm #

    Hi there blogger, I have been reading your stuff on public transport since last year. You write with great insight and creative thinking but too bad no one from LTA or MOT is reading this.

    By the way, if taxi is to induce car owners from giving up their cars, it is not happening because it’s very hard to get a taxi these days. Many of them like to zoom around and choose their fares.

  5. driver March 30, 2012 at 8:01 pm #

    No issue which category the taxis get their COE from. Even with COE prices so high, so many people are buying cars making road SIngapore so crowded. Congestion on the road is harming the economy. The govt should look into ways to make car ownership even more costly as obviously Singaporeans will pay arm and leg to drive a car. Like higher COE, tolls, and carpark. Crowded roads make drivers fly into rage more often.

  6. Unbranded BreadnButter April 9, 2012 at 9:28 am #

    Dated 21 Mar on CNA: “This round (of COE bidding) we have taxi companies coming in in a very big way… they constitute almost 30 per cent of the bids being put in. And that sort of keeps the prices from falling, so the current premium is not really reflective of the current demand,” Ron Lim, General Manager of Tan Chong Motor, said.

    On the front page of ST for the first round of bidding for Apr 2012, it was again reported that the bidding of taxi companies have drove up the prices of COE. The bidding of taxi companies inflates demand which results in an unfair market price for private citizens buying a COE.

Trackbacks/Pingbacks

  1. Daily SG: 29 Mar 2012 « The Singapore Daily - March 29, 2012

    […] Disclosure – Unbranded Bread n Butter: The Mysterious case of Taxis and Cat A COE – Gintai: Passenger got burnt in train? – Loh and Behold: Proliferation of Sex Crimes Disturbing; […]

  2. The Road Towards Re-Tuning the COE System « Chemical Generation Singapore - August 2, 2012

    […] new taxis under Cat A and have to compete in Cat E instead. This is a good move advocated by many others before and the government should be lauded for making a u-turn, suggesting that it was wrong […]

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