1. Minister for Transport Mr Raymond Lim announced today that the Land Transport Authority (LTA) has completed its VQS review and will change the way the number of COEs released to replace de-registered vehicles is decided.

2. Currently, LTA estimates the number of COEs needed to replace de-registered vehicles in the coming year. If there is any over or under estimate of the actual number of vehicles deregistered, the quotas for the second half of the year as well as the following years are adjusted to correct for this. Although this has ensured that the vehicle population growth rate on average keeps within the allowable rate¹, the year-on-year growth rate may differ from the allowable growth rate as a result of these corrections.

3. Going forward, under the new methodology, LTA will recycle the COE quota from the actual vehicle de-registrations in the most recent 6-month period back into the system. This eliminates the need to make any corrections due to any under- or over-estimation. The result is a more responsive VQS that can adjust its supply more quickly to any change in vehicle de-registration patterns. This would also allow us to keep more closely to the allowable vehicle population growth rate on a year-on-year basis. The COE quota to be made available will also include quota for allowable growth in vehicle population², and slight adjustments from cancelled or expired COEs³. LTA will effect the change from April 2010 onwards after the end of Quota Year 2009 (i.e. from April 2009 to March 2010).

4. In deciding the length of the recycling period, LTA had to balance the desire for greater system responsiveness to market demand against the motor industry's concern of uncertainty over the quota released. Therefore, LTA will start by recycling over 6-month periods to provide a measure of stability in the system. In the future, the recycling period could be shortened further to make the system even more responsive.

Announcement of COE Quota Every 6 Months

5. With a 6-month recycling period, the COE quota to be made available will be announced in January and July every year as summarised in the table below.

COE Quota for April to July 2010

6. This is the first announcement of available COE quota under the new methodology. It will only cover 4 bidding months from April to July 2010, instead of the usual 6 months. This is because the available quota from Quota Year 2009 covers the bidding exercises up till March 2010. Subsequent announcements of available COE quota will cover bidding periods of 6 months.

7. The monthly COE quota for the period from April to July 2010 will be 4,238. More details are in Annex. Bidding for this new quota will start in the April 2010 First Open Bidding Exercise.

8. The next announcement of available COE quota will be in July 2010.

¹The compound annual growth rate (CAGR) of the vehicle population from 1990 to 2008 is about 2.8%, which is within the allowable 3% cap.

²The vehicle population growth rate has been sett at 1.5% per annum for 3 years from 2009 to 2011.

³Cancelled COEs are COEs that have been successfully secured by bidders but are not utilised during their validity period, as well as expired COEs from taxis. Replacement taxis can renew their expired COEs by paying the Prevailing Quota Premium (PQP) or bid for a new COE. If the taxi does not renew its COE by paying PQP, the expired COE is then returned to the VQS.

⁴The one-month difference between the end of the recycling period and the next COE bidding period takes into account the time required to verify the vehicle de-registration figures upon the closing of the month and to tabulate it together with the additions from the allowable increase in vehicle population.