Certificate of Entitlement

The Certificate of Entitlement or COE is the quota license received from a successful winning bid in an open bid uniform price auction which grants the legal right of the holder to register, own and use a vehicle in Singapore for a period of 10 years. When demand is high, the cost of a COE can exceed the value of the car itself.

On 1 May 1990, the then transportation unit of Singapore's Public Works Department (PWD) instituted a quota limit to vehicles called the COE when rising affluence in the city-state catapulted land transport network usage and previous measure to curb vehicle ownership by simply increasing road taxes was ineffective in controlling vehicle population growth. The premise was that the small city-state had limited land resources and with demand for vehicle ownership spiralling out of control, would result in traffic conditions exceeding the criterion of a healthy road network that is sustainable by developments in land transport infrastructure resulting in gridlock. Along with a controversial congestion tax called Electronic Road Pricing, the COE system is one of the key pillars in Singapore's traffic management strategies that aims to provide a sustainable urban quality of life.

Before buying a new vehicle, potential vehicle owners in Singapore are required by the Land Transport Authority (LTA) to first place a monetary bid for a Certificate of Entitlement (COE). The number of available COEs is governed by a quota system called the Vehicle Quota System (VQS) and is announced by LTA in April of each year with a review in October for possible adjustments for the period of one year starting from May. Approximately one-twelfth of the yearly quota is auctioned off each month in a sealed-bid, uniform price auction system and successful bidders pay the lowest winning bid.

The number of COEs available to the public is regulated by the Vehicle Quota System (VQS) that is calculated every 6 months based on the following conditions:

Since the change in the total motor vehicle population is given by the number of registrations minus the number of de-registrations and any unallocated quota in a given year may be carried over to the following year, the quota formula is as follows:

In the formula above, the subscript ${\displaystyle y}$ denotes calendar year and the subscript ${\displaystyle qy}$ denotes quota year (May to April). Initially, projected deregistrations for (calendar) year ${\displaystyle y}$ were simply taken to be equal to actual deregistrations in ${\displaystyle y-1}$ but from quota year 1999–2000 onwards, a projected number of deregistrations has been used.

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