Taxi fleet growth rate during August 2012 to December 2013 will be capped at 2 per cent per annum.
The 2 per cent growth is in line with taxi ridership growth since 2003.
The Land Transport Authority says this rate will be applied on individual taxi operators based on their respective fleet sizes.
Since 2003, the taxi population has been growing at an average of 4.3 per cent per year.
But despite the growing taxi population, commuters are still complaining about not being able to get a cab when they need one.
To address these complaints, the government is taking steps to improve taxi availability.
After January 2014, taxi operators will be required to meet new taxi availability standards before they will be allowed to expand their fleet.
The biggest taxi operator in Singapore, ComfortDelGro, says the taxi fleet growth rate of 2 per cent will contribute to the long term sustainability of the industry.
It has been expanding its fleet at an average of 1.8 per cent annually over the last three years.
However, smaller operator prime Taxi said that there will be very little room to expand with the two per cent growth rate.
The operator is hoping the government can level the playing field. Otherwise bigger companies would have an advantage, it said.
In a statement, prime Taxi said there could be a review in the policy to maintain the competitive spirit in the market.
Prime Taxi said it has been growing its fleet by 25 per cent on-year, and that expansion should depend on market demand.
The operator also voiced concerns over whether there will be enough taxis to service the industry, should tourist arrivals increase by a million or two million per year.
Prime Taxi said there has to be a transition period for taxi companies to tweak their business model to cater to the government’s objectives.
The two per cent growth rate cap comes on the back of last week’s announcement that taxis would be removed from the bidding process for Certificates of Entitlement (COE).
Operators wanting to expand their fleet can no longer get COEs from Category A used for small cars. Instead, the quota will come from the Open Category, usually used for luxury cars.
But taxi operators will pay the prevailing quota premium (PQP) of Category A, which is the moving average of COE prices in the last three months.
Each operator’s COE quota depends on its fleet size, and takes into account the two per cent growth rate.
Lower COE quota numbers for a five-month period also kicked in this month, so dealers do not think that the development will help cool COE prices.
“Even with taxis out of Category A, the impact will not be great because (of) the small numbers of COE being allocated from August till next year February,” said Raymond Tang, honorary secretary of the Singapore Vehicle Traders Association.
Meanwhile details for the first open bidding exercise for COEs in August are out. The total quota available for this tender is 1,670.
There will be 421 COEs for Category A cars (1,600cc and below), 350 COEs for Category B (1,601cc and above) and 456 for Category D (Motorcycles).
260 COEs will be available for Category E (Open Category) and 183 for Category C (Goods Vehicles and Buses).
The tender opens on Monday, August 6 at noon, and closes on Wednesday, August 8 at 4pm.