Why the COE system in Singapore isn’t changing anytime soon

In Singapore, the certificate of entitlement (COE) isn't just a licensing mechanism—it's a policy instrument for controlling scarcity. This week, Acting Transport Minister Jeffrey Siow made clear that the Government is in no rush to overhaul the current COE framework. Instead, attention is squarely on a foundational upgrade: rolling out on-board units (OBUs) for ERP 2.0.

This isn’t a delay—it’s a sequencing move. And it reflects the way Singapore manages macro constraints with systems-level discipline.

Singapore’s transport planners understand something fundamental: you don’t introduce usage-based road pricing without the infrastructure to make it technically and socially viable. ERP 2.0, launched under a $556 million contract awarded in 2016, isn’t just a hardware refresh. It enables real-time, distance-based charging—turning the policy playbook from flat congestion pricing into precision micro-tolling.

As of June, over 500,000 vehicles have been fitted with OBUs, passing the halfway mark towards nationwide coverage by 2026. That’s the gating factor. Until then, any serious talk about revising COE allocation—let alone moving to distance-weighted charges—would be premature. In this light, the lack of immediate COE reform isn’t political hesitation. It’s infrastructure alignment.

Mr. Siow also moved to reframe the popular narrative that private-hire vehicle (PHV) fleets are pushing up COE premiums and pricing out would-be car buyers. His argument: PHVs operate as shared assets, unlocking mobility for more users at a lower marginal cost per trip. In contrast, a privately owned car might only serve a household—and sit idle most of the day.

From a systems view, allocating a COE to a PHV generates more utility per vehicle-hour than to a low-usage private car. Seen through that lens, PHVs aren’t the problem—they’re a release valve. This logic echoes a deeper principle in Singapore’s transport philosophy: maximize network yield, not individual ownership.

While ERP 2.0 lays the groundwork for smarter charging, pricing alone won’t solve the core friction: people still want cars. And in a dense urban island where land is finite, that desire inevitably runs into physical constraints.

Minister Siow’s remarks—“there won’t be space for every Singaporean to own a car”—aren’t new. But they carry sharper urgency as vehicle ownership aspirations climb with income growth, even as land use intensifies around public transit.

This is where COE remains a blunt but necessary tool. It's not just about affordability—it's about credible signal control in a market where demand can’t be met with physical supply.

Where the long game shifts, however, is in how electric vehicles (EVs) could change the design logic of Singapore’s streets. Silent, zero-emission EVs create opportunities for mixed-use corridors and closer integration of roads and residential areas.

Minister Siow framed EVs as urban design enablers—allowing roads to go through buildings, or run closer to homes without noise or air pollution concerns. This isn't just about vehicle electrification. It's about land-use liberalization.

But again, adoption takes time. The 2030 mandate for all new car registrations to be cleaner-energy models gives the system runway to absorb change gradually.

A more sensitive issue—PHV driver fatigue—surfaced with the recent death of a 49-year-old Grab driver, reportedly after working prolonged hours. Mr. Siow acknowledged the tragedy but reiterated that the Land Transport Authority (LTA) does not currently regulate maximum working hours for gig drivers.

Instead, a light-touch approach is maintained: WSH Council guidelines recommend a 12-hour cap, and LTA monitors accident data for abnormal patterns.

But this restraint carries risk. As the digital platform economy embeds itself deeper into Singapore’s labor market, regulatory passivity may not hold if a pattern of health risks emerges. Ministerial sympathy, while genuine, does not substitute for systemic safeguards.

On night transport, the Government’s stance is pragmatic. Manpower—not cost—is the constraint. Buses require drivers; trains need overnight maintenance. Prioritizing late-night demand risks undermining core service reliability during peak hours.

This is a policy posture of triage: optimize for majority utility, not marginal convenience. And it underscores a broader principle—Singapore’s transport strategy isn’t demand-led. It’s infrastructure-limited and resource-aware.

Singapore’s transport ecosystem isn’t static—it’s preemptive. ERP 2.0 is less about toll tech and more about enabling new policy bandwidth. The reluctance to tweak the COE system now is deliberate—not a failure of imagination, but a sequencing discipline that ensures policy ambitions don’t outrun system capacity.

The signal is clear: reform will come, but only once the pipes are in place. Until then, scarcity pricing and infrastructure rollout remain two sides of the same mobility coin.