Sunday 29 July 2012

Taxis out of COE bidding process from August 2012

By Hetty Musfirah/Karen Ng, Channel NewsAsia, 27 Jul 2012

Taxis will be taken out of the Certificate of Entitlement (COE) bidding process from next month, as the government also plans to improve taxi availability on the road.

The move is in response to feedback that taxi operators may have influence on COE prices, said Transport Minister Lui Tuck Yew on Friday.

And to ensure that these operators use their fleets better, the number of COEs they are entitled to will be tied to taxi availability standards.

These standards will be introduced next year.

All taxis currently bid under the small car category or Category A of the COE system. But from August, they will be removed from the bidding process permanently.

Instead, COEs used for taxi fleet expansion will be extracted from the quota for Category E, which is usually meant for big cars.

Taxi operators will pay for the COEs based on Category A's Prevailing Quota Premium, which is the moving average of the COE prices over the last three months.

Mr Lui said: "There is evidence to show that the taxis, at least in the last bidding cycle and earlier bidding cycles, have not affected prices. But there is also some evidence that they may have affected prices in the Category A COEs.

"...Taking in the feedback from the public and from the industry and having studied this issue for quite some time, we thought that this is the appropriate thing to do. They will still be paying Category A prices, but they will be price takers henceforth, so they will just pay Prevailing Quota Premium."

Improving taxi availability to better serve commuters, especially during peak periods, is another issue.

The Land Transport Authority (LTA) says the number of taxis on the road has gone up by more than twice the growth of ridership in recent years.

Yet, there has been persistent feedback about taxis not being available.

So from 2014, the number of COEs for fleet expansion will be tied to the extent operators are able to meet taxi availability standards.

The LTA says it is still in discussion with operators on the proposed taxi availability standards and it expects to reveal the details in the fourth quarter this year.

Meantime, from August this year to December 2013, the number of COEs that operators are able to procure will be matched closely to the growth in taxi ridership.

Mr Lui said LTA will reveal details next week.

When contacted, the biggest taxi operator, ComfortDelGro, said it expects the impact to be minimal since it has been using the Prevailing Quota Premium for taxi replacements.

Another taxi operator, SMRT, said it will study the measures.

Mr Cedric Foo, chairman of the Government Parliamentary Committee for Transport, welcomed the move by the authorities. He also suggested another way to tackle the problem of taxi availability.

"If we were to set the standard, it could read something like (requiring) the fleet of taxis to be on the road 70 percent of the time, and create an average taxi miles per day. That will get the taxis out on the streets rather than have part of the fleet idling some part of the day," he said.

Mr Ang Hin Kee, adviser to the National Taxi Association, said that Friday's announcement will help ensure that more commuters are able to get a cab whenever they want to.

But Mr Ang, who is also an MP, said that having more taxis on the road alone does not solve the problem of availability.

"During peak hours, there must be alternative expansion plans other than just taxi availability. During peak hour at, let's say 8-9am, I can understand there will be huge congestion on the road. Buses are also quite packed, so is MRT. So, riding on taxis alone to solve availability problem will not be an easy one."

Welcoming the latest move by LTA, industry players said they expect prices for small cars to drop a little.

They said demand for small cars will still be high, as there is not enough supply of COEs in that category.

Some called for taxis to be taken out of the vehicle quota system entirely.

Mr Michael Wong from the Motor Traders Association of Singapore said: "The public transport numbers should be planned in accordance with how our public transport planners look at service delivery and utility. If that's the case...all that they really need to do is to fix the number of taxis you want per year and then pay the PQP (Prevailing Quota Premium), (just like) what they have formulated now."

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