Certificates of Entitlement (COE) give Singaporeans the right to own a vehicle. In Singapore, anyone wishing to buy a car or motorcycle has to bid for a Certificate of Entitlement (COE). Only public buses, school buses and emergency vehicles are exempted from this scheme. A certain number of COEs would be released every month for bidding. Once successful and only when one owns a COE that registration of the vehicle could take effect. The vehicle entitlement is valid for only 10 years and is transferred with the ownership of the vehicle.
COEs are part of the Vehicle Quota System (VQS), a landmark scheme implemented to regulate the growth of vehicle population in Singapore which is among the densest in the world. The VQS determines the exact number of vehicles of various categories allowed on the road. Under the VQS, vehicle growth could be pegged at 3% every year with the expansion of roads and highways taken into consideration. When the VQS was launched, it was based on a Closed Bidding System where bidders would not know how much others had bid. The quota premium payable for each category was the lowest successful bid. The lowest successful bid price is derived by dividing the total amount bidded by the number of COEs released in a particular month. Those who had bid this amount or more would be entitled to a COE at the lowest successful bid price. However Closed Bidding System lacked transparency and led to great fluctuations in the quota premium payable.