Private-hire cars (PHC) will not have their own category for Certificates of Entitlement (COE), said the Singaporean Parliament last Wednesday, March 5. The government also decided that taxi companies may sell used taxis more than three years old and use pre-owned vehicles as part of their fleet. Both measures are part of the government’s efforts to “level the playing field” for both PHCs and taxi operators.
A DIFFERENT LANE
In December last year, Singapore’s parliament was still deciding whether private-hire cars should get their own COE category. Later in January, Transport Minister Chee Hong Tat stated that such a decision requires thorough “studying” before finalisation.
As of 2024, PHCs make up 13 per cent of the city-state’s overall fleet. These vehicles are part of fleets of different business such as ride-hailing, car-sharing, and vehicle rentals. Singapore’s Land Transport Authority (LTA) recorded 90,383 private-hire vehicles last year.
According to Senior Minister of State Transport Dr. Amy Khor, demand for PHCs, which is heavily reliant on consumers, is not stable enough to establish a quota. Demand for PHCs vary between each quarter of the year, making it difficult to settle on a specific requirement.
“We have studied this carefully and decided not to proceed with such a move,” she said. Currently, PHCs make up only 6 per cent of successful bids for Category A and B (passenger cars) vehicles.
Another reason why it would be difficult to add a new category would be the current balance between COE category quotas. “If we move too much quota away, Cat A and B COE prices will spike because of inadequate remaining quota. Conversely, if we move too little, COE prices for PHCs (private-hire cars) will be high, with drivers and commuters facing higher rental and fares,” Khor explained. “Therefore, the allocation between PHCs and private cars is best left to the market.”
According to Dr. Khor, the government’s solution will instead be increasing COE quota for both passenger cars and commercial vehicles per quarter until 2026.
The LTA injected 20,000 COEs last year. Car dealers responded that this injection may significantly hurt their sales. Politician Lim Bow Chian attributed high prices of COEs as a contributing factor to Singapore’s high cost of living.
Demand and supply for PHCs and COEs have increased due the rise of ride-hailing apps. This increase necessitated measures from the government to stabilise the market for these vehicles. Ride-hailing businesses specifically will face additional requirements to be implemented by the LTA. This move specifically targets large-scale ride-hailing operators. According to the LTA, the reason behind this is “large operators should bear greater responsibility to set market norms that continue to protect the interests of commuters and drivers.”
USED CARS FOR TAXIS
In lieu of an independent category for PHCs, the government has announced that taxi operators can convert used vehicles into taxis for their fleets. The used vehicle should be no more than 5 years old. Before doing this, taxi operators must first inform and seek the approval of the LTA.
Furthermore, taxi companies can now sell their used vehicles, provided the cars are more than three years old. According to Dr. Khor, this decision seeks to reduce risk for taxi companies when pilot testing new multi-purpose vehicles (MPV). Though MPVs are used for transport, they are more compatible for passengers that require larger vehicles.
“These moves give taxi operators more flexibility to manage cost and grow their fleet,” stated Khor. “They complement our moves in the PHC sector to further level the playing field between taxis and PHCs.”
Aside from this, the government will continue to halt its cap annual fleet growth for taxi operators. Originally capped at 2 per cent growth per year, this limit was established in 2013 but was paused in 2021. The pause was to help taxi companies recuperate their fleets from low operations during the pandemic. According to the LTA, Singapore’s fleet of taxis have decreased significantly in the last 10 years. The number of taxis on the road were recorded to be around 28,700 in 2014 but have dropped to 13,100 vehicles in 2024.
Singapore’s government hopes that these measures will stabilise the demand and supply for PHCs and eventually “level the playing field” for both taxi operators and private-hire businesses.
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