By MP for Aljunied GRC, Low Thia Khiang
[Delivered in Committee of Supply on 11 March 2015]
Over the years, the LTA has tweaked the COE system to try to manage supply-demand mismatches and price fluctuations. The LTA has moved from linking COE quotas to deregistrations in the past 12 months, then to forecasting of deregistrations in the current year, and then to deregistrations in the past 6 months, and currently to deregistrations in the past 3 months.
However, the problems of feast-and-famine patterns of supply and wild price fluctuations are still persisting. There are now renewed calls for the LTA to make COE supply smooth by keeping COEs during bumper years in reserve for release in future dry spells. The LTA said it was studying the proposal in August 2013 and the Minister himself acknowledged it is a good idea worthy of consideration earlier that year.
I would like to know what is the status of the study and whether the LTA is seriously considering implementing a new formula to temper the supply and price fluctuations?
If so, when is the LTA going to implement it? What will the new formula be and over what time period? How many COEs will be reserved and when will they be released? How will the new system ensure the market mechanism of allocating COEs is preserved?
If the LTA is not considering implementation of such a system, then I would like to ask what are the reasons for not doing so and what other measures would be taken to temper the supply and price fluctuations of COE?