The COE Open Bidding System

COEs are a necessary evil to the car buying process in Singapore, for it is designed to, and in fact does, control the number of vehicles allowed on the roads. On a positive note, a restriction on the growth of vehicle population would translate to less congestion on the road and thus, more opportunities for car owners to drive, as opposed to sitting in traffic jams.

So, in 1990, COE bidding went hand in glove with car buying here.

To start with, the COE tender exercises were done by closed bidding. Bidders submitted bids, and paid 50% of the bid amount as deposits. At the close of the bidding period, the price of the COE would be that of the lowest successful bid.

As the name suggests, the Closed Bidding System did not allow any of the bidders to gauge the number of bids or the quantum of each bid. Thus, there is no way of knowing the lowest successful bid until the results are announced.

With the aim to providing a greater degree of transparency to the COE bidding exercises, the Ministry of Transport (then known as the Ministry of Communications) set up a Task Force in 1999, to look into the setting up and implementation of the COE Open Bidding system. The study was finalized and the contract for the design and development of the open bidding system was awarded to Stratech Systems Pte Ltd in November 1999. In about half a year, the $5.2 million system was operational, and in June 2001, the first open bidding exercise for COEs was carried out.

Initially, the open bidding exercise was carried out on trial, together with the closed bidding exercise every month, the former from the 18th to the 20th of the month, while the latter from the 1st to the 7th of each month. Half of the quota of COEs in a certain category available for a particular month was allocated for open bidding, while the other half was allotted for bidding under the closed bidding system.

After having tested the open bidding system in tandem with the original closed bidding system for many months now, the Land Transport Authority (LTA) has had sufficient time to assess the workings of the system. The LTA has decided that the time has come for all bids for COEs to be done with the COE Open Bidding System.

Thus, the last closed bidding exercise for COEs was held in March 2002. From April 2002 the COE Open Bidding System totally replaces the Closed Bidding System.

With open bidding, bidders have better access to real time information during the bidding exercise. Bidders are able to submit their bid at any time during the bidding exercise, monitor the current COE prices and revise their own bid if necessary. This system would, in turn, lead to less fluctuations in the prices of COEs from bid exercise to bid exercise. From April 2002, two tender exercises will be carried out each month, on alternate fortnights. The monthly quota for each category is to be divided equally between the two tender exercises.

The first tender exercise of each month will commence from 9 am on the first Monday of the month and end two days later at 4 pm. Similarly, the second exercise will commence from 9 am on the third Monday of the month and end two days later at 4 pm. When there is a public holiday on any of the three days the bidding exercise is carried out, the bidding period would be extended accordingly.

To participate in the COE Open Bidding System, a bidder must have a bank account with a participating bank, namely, Citibank, DBS or OCBC, and have sufficient funds for the bid deposit and administrative fees.

A bid deposit is payable upon a bid being made. For the time being, this is set at $200 for Category D (motorcycles), and $10,000 for all other vehicle categories. This amount is deducted from the bidder's bank account once the bid is made. If there are insufficient funds in the bank account, the bid will not be accepted by the system. In addition, an administrative fee of $2 is charged for each submission of bid or revision of bid.

Bids may be submitted through the automated teller machines (ATM) of DBS, the Internet banking facility of Citibank or the phone banking services of OCBC and Citibank.

A bid may be submitted at any time during the three-day exercise. For purposes of bidding, the bidder has to provide his name and NRIC number, in addition to his reserve price and the selected vehicle category.

If a bid is done through an ATM and the bid is accepted by the system, the ATM will print a receipt for the record of the bidder. This receipt will contain a six-digit acknowledgement code which is to be used by the bidder whenever he wishes to check on the status of his bid or revise his reserve price.

As in the previous closed bidding system, the minimum bid, or reserve price, is a mere $1. The system will not disclose the reserve price to any other bidder and only the bidder himself will know his own reserve price. The reserve price represents the maximum quantum the bidder is prepared to bid and pay for a COE. The system will then automatically adjust his bid price, at increases of $1 each time, until the reserve price is reached.

Thus, so long as the reserve price is above the current COE price, the bidder will remain in the bidding process for the COE. However, once the current COE price exceeds the reserve price, the bidder will automatically be out of the bidding, unless of course, he revises the reserve price. A bidder may at anytime during the bidding exercise check on the current COE price. As the bidder can see for himself the prevailing current COE price, and where it is, in relation to his reserve price, he may choose not to participate further in the COE bidding once the current COE price exceeds his reserve price, or he may revise upwards his reserve price.

The bidder may revise his bid through the same banking facilities as the submission of the bid, through the web site "http://ocoe.lta.gov.sg" or through the dedicated phone line of the LTA at 63621465. To revise his bid, the bidder has to key in his identification number and the six-digit acknowledgement code, unless he is revising the price at the facility of the bank where he first submitted his bid. The acknowledgement code serves as a security feature to ensure that only the bidder may revise the reserve price. Thus, if the bidder loses or forgets his acknowledgement code, he would have no choice but to revise the reserve price at the bank where he first submitted his bid, simply because the bank would then be able to authenticate the identity of the bidder. Another six-digit acknowledgement code will be issued to the bidder for each revision, as a record that the system has accepted the revised reserve price.

Non-bidders may also monitor the current COE price at the website "www.onemotoring.com.sg" or on the teletext on Channel 8. Once the bid has been submitted and accepted, it cannot be withdrawn. However, a bidder may revise his reserve price at any time and as many times as he wishes during the bidding exercise. The reserve price may only be revised upwards but not downwards. This is to prevent bidders from submitting initial bids that are higher than what they would be prepared to pay for a COE, and may lead to wild swings in the current COE prices during the bidding exercise. No matter what the reserve price is or how many times the bidder revises his reserve price, the bid deposit remains unchanged at $200 for Category D (motorcycles) and $10,000 for all other vehicle categories. This is unlike the previous closed bidding system where the bid deposit is dependent on, and fixed at, 50% of the bid.

If the bidder is unsuccessful, the bid deposit will be credited back to his bank account, at the latest, one day after the confirmation of the bid results. However, the $2 administration fee charged for each bid, and each revision of the reserve price will not be refunded.

If a bidder is successful, a notification letter containing a TCOE (temporary certificate of entitlement) serial number, vehicle category, bidder's name, expiry date and quota premium will be sent to the bidder. This letter can then be used for the registration of the new vehicle of the bidder. With the open bidding system, TCOEs will no longer be issued.

The COE Open Bidding System is secure and anyone who thinks that he would like to have a go at hacking into the system had better think again. In June 2001, several hackers tried to break into the system but were unsuccessful.

The attempts to break into the system ranged from relatively innocent attempts by, possibly, bored children, to serious vigorous attacks. However, Stratech Systems the local technology firm that designed and developed the system, has reported that none of the attempts even got past the first line of defence.

Thus, it looks like the COE Open Bidding System has had more than its share of ups and downs during the time it has been operational. However, one thing is for sure. For the foreseeable future, at least, it will be here to stay. And this can only be a good thing.

The COE Open Bidding System offers a greater degree of transparency to bidders and the public alike. With open bidding, buyers or potential buyers of vehicles in Singapore are able to submit their bids at any time during the two bidding exercises every month, and have better access to real time information during the bidding exercise to monitor the current COE prices and revise their own bids if necessary.

Of course the fixed bid deposit - instead of the previous 50% of the bid price - is useful, but more importantly, the COE Open Bidding System will lead to less fluctuations in the prices of COEs from bid exercise to bid exercise, and thus, more certainty and stability in the prices of vehicles.