[SINGAPORE] Reductions to rebates for the early de-registration of vehicles could make car buyers favour electric vehicles (EVs), dampen luxury car sales and lead to more owners renewing their Certificate of Entitlement (COE) after 10 years.

“This change means that for non-EV and luxury models, their depreciation increases and paper value is reduced, which could affect their sales negatively,” said Vincent Ng, automotive business consultant at Vincar Group.

“The purpose of the PARF (Preferential Additional Registration Fee) is to encourage more new cars on our roads by early de-registration. Now the incentive is reduced, it is counterintuitive,” said Nicholas Wong, CEO of Honda distributor Kah Motor.

On Thursday (Feb 12), Finance Minister Lawrence Wong announced reductions to the PARF rebate during Budget 2026.

The PARF rebate is designed to encourage earlier de-registration, with a higher rebate paid out for earlier de-registration before a car’s 10-year COE lifespan ends.

“EVs are less pollutive than conventional petrol cars, and as EVs become more common, the need to encourage early de-registration through the PARF rebate is reduced,” said Wong, who is also prime minister.

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The PARF rebate is calculated as a percentage of the Additional Registration Fee (ARF), a tiered tax on cars in Singapore. More expensive cars face a higher ARF.

The PARF has now been lowered by 45 percentage points across the board. For example, cars registered from Feb 22, 2023, onwards enjoyed a PARF rebate of 75 per cent if they were scrapped within five years. This has been reduced to 30 per cent for vehicles registered from the next round of COE bidding in February, which ends on Feb 20.

The maximum rebate has also been reduced to S$30,000 from S$60,000 currently.

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EVs charge further

Industry observers said that EV sales could benefit from the move because it will increase the depreciation of non-EVs, including petrol and petrol-electric hybrid cars.

“With the PARF rebate reduced by a significant percentage and a much lower cap, it means all cars will have higher depreciation,” said Ng Choon Wee, commercial director for Hyundai distributor Komoco Motors.

Depreciation, the reduction in a car’s value over time, is calculated based on the car’s value at time of potential de-registration. This is largely based on the pro-rated remainder of the COE value and the PARF rebate.

Industry sources said that for a typical mainstream sports utility vehicle such as the Honda HR-V, the PARF rebate for a car above nine years old but less than 10 years old would drop to around S$900 from more than S$8,500 previously.

In a Facebook post on Thursday after PM Wong’s speech, the Land Transport Authority noted that EVs would not be heavily impacted by the PARF changes due to the rebate schemes in place.

EVs receive up to S$30,000 of combined rebates, which are calculated as discounts on ARF. Accordingly, they have little or no PARF rebate, regardless of age, said Ng.

But EVs enjoy a significantly lower purchase price as a result of these rebates, which petrol and petrol-electric hybrids either do not have, or have much less of.

Timothy Wong, a principal for consultancy Roland Berger, said: “Ultimately, this translates into a sharper hike in annual depreciation for non-EVs. As long as upfront EV incentives remain in place, the depreciation increase for electric models will be less pronounced, potentially making them more financially attractive.”

Harder path for luxury cars?

The rule changes may also dampen demand for more expensive cars as their depreciation will increase, not only as a result of a lower PARF rate by percentage, but also due to the much lower cap.

The managing director of a European luxury car dealer said: “This new scheme increases depreciation quite a lot for luxury cars. With that, buyers might turn away.”

For a large German luxury sedan, the PARF rebate for a car above nine years old but less than 10 years old would be reduced to around S$4,000 from S$44,000 previously, he said.

But since the luxury market has models of varying cost – from S$200,000 to more than S$1,000,000 for brands such as Mercedes-Benz and BMW – the true effects remain to be seen.

“It won’t be as big of a drop like we saw in the (ultra-luxury) market in 2023. The cars will still have other residual value and not all owners will count depreciation as the sole factor,” he added.

In 2023, the government implemented a PARF rebate cap for the first time alongside ARF increases for more expensive vehicles, which resulted in a drop in ultra-luxury vehicle brand sales by as much as 80 per cent in 2024.

Hold on

But the significant reduction in PARF rebates could also lead to vehicle owners holding on to their cars for longer, rather than de-registering them.

“In this case, (the PARF rebate) is no longer a major incentive to scrap or de-register the car before 10 years is up. Owners will do their sums and realise it’s more cost-effective to keep the car for another 10 years by renewing the COE,” said Wong from Kah Motor.

Most car owners with a car nearing the end of its COE lifespan will consider buying a new vehicle by trading in their existing one. With increased depreciation as a result of reduced PARF rebates, this could reduce trade-in values and make them reconsider their decision.

Roland Berger’s Wong said that while renewing COEs makes sense from a mathematical standpoint, several other factors would also play a part, including reliability, the advancement of EVs and emotional considerations.

However, Vincar’s Ng added that renewals would be likely regardless of COE premium levels.

“If the COE price is low, it is attractive to renew instead of de-registering the car. If the COE price is high, then it’s even more attractive because a new car will be more expensive and you have less rebate to factor in,” he said.

He added that the move makes sense from a revenue collection perspective.

“With this change, the merit is not for buyers, but for the government – it has to provision less for early payouts and effectively increases ARF tax revenue recognised. It’s a tax measure,” he said.

For more of BT’s Budget 2026 coverage, go to bt.sg/budget26

[SINGAPORE] The Singapore market pulled back on Friday (Feb 13) following Budget 2026 announcements, even as the government unveiled measures to boost existing equities, startups and new listings.

On Thursday, the Straits Times Index (STI) crossed the 5,000-point barrier before the statement was delivered, buoyed by a strong 43.5 per cent net profit increase for Singtel. It later closed 0.7 per cent up at 5,016.76 points after the Budget statement.

But the momentum did not hold. In the first hour of trading on Friday, the STI fell 1.1 per cent back below the 5,000 mark to 4,963.68 points, and fell further to around 4,955 by late morning. This drop was led by local banks’ shares; DBS : D05 -1.32% fell 1.1 per cent, OCBC : O39 -2.53% by 2.3 per cent and UOB : U11 -2.38%, by 2.1 per cent.

Shares of Singtel : Z74 -0.6% dipped 0.4 per cent, ST Engineering : S63 -1.47% retreated 1.3 per cent and Frencken : E28 -1.05% dropped 1.6 per cent. Household spending staple Sheng Siong : OV8 0% also fell 0.7 per cent.

The drop in Singapore’s market echoed a fall in the US, where the Dow Jones Industrial Average index declined 1.3 per cent, the S&P 500 dropped 1.6 per cent, and the Nasdaq composite contracted 2 per cent.

Despite the morning dip, analysts believe the broader narrative remains positive. Growth in 2026 is expected to be underpinned by what Maybank calls a “sustained AI boom” and a “buoyant capital market” supported by falling interest rates.

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The bank’s economists on Friday noted that while near-term handouts were scaled back from those given out in the 2025 election year, the Budget leaves ample “fiscal dry powder” to support the economy if needed.

JP Morgan also reiterated a positive view on Singapore equities after the Budget statement, pointing to the STI’s sustained outperformance against its Asean peers. The index has rallied 28 per cent in the past 12 months.

“A strong macro backdrop, positive surprises in the fiscal buffer and a continuing strong government commitment to reinvest and transform the economy should fuel growth in the private sector,” said JP Morgan on Friday.

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These factors, alongside an extension of financial market support, should drive Singapore equities closer to its 6,000-point STI target, it added.

Budget 2026 to boost equities

In his statement, Finance Minister Lawrence Wong announced that the Equity Market Development Programme (EQDP) of the Monetary Authority of Singapore would receive further support – a S$1.5 billion top-up to the Financial Sector Development Fund. Wong is also the prime minister.

The Anchor Fund will also get more support, through a second S$1.5 billion tranche from the government and Temasek. The fund aims to attract and anchor high-quality listings.

Not only that, S$1 billion will be set aside for the Startup SG Equity Scheme, as its scope is broadened to cover growth-stage companies, instead of just early-stage startups.

JP Morgan said that the new optional CPF lifecycle investment scheme would enable investors to generate higher returns over the longer term, and provide additional inflows into riskier asset classes.

Sheng Siong, ST Engineering and banks the winners

Analysts on Friday singled out winners of the budget, including domestic consumption, defence and technology as key beneficiaries.

Household support packages are expected to lift mass-market spending, favouring staples like Sheng Siong and DFI Retail : D01 -2.35%, said RHB analyst Shekhar Jaiswal.

Maybank analysts said that the CDC vouchers – S$500 to each Singaporean household – would specifically sustain “heartland spending and supermarket traffic”.

The vouchers should “further enhance purchasing power”, said JP Morgan, which is “rising on a firm trend”, with the median household’s real income improving by 6.8 per cent.

The government’s readiness to spend “more than the usual 3 per cent of GDP” on defence – with the focus on unmanned systems – supports a bullish outlook for engineering firms like ST Engineering : S63 -1.47% and Addvalue Tech : A31 0%, said Maybank.

Meanwhile, Maybank analysts highlighted the “sizeable liquidity boost” from the expanded EQDP as a key driver for the financial sector. This is expected to lift the Singapore Exchange and trading platforms such as iFAST; local banks like DBS, OCBC and UOB stand to gain from increased market activity and lower credit risks.

The push for artificial intelligence (AI) and advanced manufacturing is set to benefit tech manufacturers such as AEM : AWX -2.9%, Frencken and UMS : 558 -0.73%, while Keppel DC Reit : AJBU +0.89% is tipped to benefit from the new AI park at one-North.

The government’s upward revision of its surplus estimate to S$15.1 billion was also more than double the earlier one of S$6.8 billion. JP Morgan said this “creates a significant buffer to reinvest into the economy, extending the growth momentum”.

With the Budget statement throwing the spotlight on key sectors – including semiconductor advanced packaging, AI applications and adoption, quantum technology and green energy – the investment bank said this should benefit stocks in the Internet, telecom and semiconductor sectors.

Its top picks included DBS and UOB – but not OCBC – as well as SGX : S68 -1.89%, UOL : U14 +0.62%, Keppel : BN4 -0.32%, CapitaLand Integrated Commercial Trust : C38U -1.21%, City Development Limited : C09 -0.41%, ST Engineering, Singtel : Z74 -0.6% and Seatrium : 5E2 -0.93%.

[SINGAPORE] The announcements from Prime Minister and Finance Minister Lawrence Wong’s Budget 2026 statement on Thursday (Feb 12) spanned themes of driving artificial intelligence (AI) adoption and addressing proposals put forth by the Economic Strategy Review committee.

With these developments set to impact various sectors across Singapore’s economy – from essentials to manufacturing, defence, property and energy – some sectors and stocks on the Singapore Exchange (SGX) could benefit, while others might be disadvantaged.

Banks

RHB analyst Shekhar Jaiswal highlighted that banks – DBS : D05 -1.32%, OCBC : O39 -2.53% and UOB : U11 -2.38% – should gain from larger wealth and investment banking fee pools, and firmer trade finance and foreign exchange flows from enterprise internationalisation.

Consumer

The domestic consumption and essentials sector is likely to benefit “most immediately” from Budget 2026 developments, said the RHB analyst. 

This comes as sizeable household transfers – such as CDC vouchers, U-Save, cash and child credits – alongside wage support should lift mass-market spending, favouring Sheng Siong : OV8 0% and DFI Retail : D01 -2.35% through “resilient staples demand and voucher-enabled traffic”, Jaiswal added.

Technology

The AI and advanced manufacturing sector also stands to benefit from Budget 2026 developments, said Jaiswal. He noted that the National AI Council, one-north AI park, AI missions and RIE2030 funding point to a “sustained R&D and capex cycle”.

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Tech stocks, such as Frencken : E28 -1.05%, UMS : 558 -0.73% and Venture : V03 -1.86%, could gain from Singapore’s deeper push into AI and manufacturing, said Jaiswal.

Another winner from Budget 2026 developments is the defence and cybersecurity sector, with defence spend anchored around 3 per cent of Singapore’s gross domestic product and broader security outlays rising, he said. Jaiswal added that this could support multi-year order visibility for ST Engineering : S63 -1.47%.

Infrastructure providers, such as Singtel : Z74 -0.6% and Keppel DC Reit : AJBU +0.89%, may also benefit from AI-driven innovation supporting Singapore’s next growth phase, said DBS in a Feb 5 report.

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Energy

Jaiswal highlighted that the energy transition sector remains “structurally positive” given potentially lower-than-expected carbon pricing, the import of low-carbon electricity from the region, and the pursuit of longer-dated diversification options. ComfortDelGro : C52 0%, Keppel : BN4 -0.32%, Keppel Infrastructure Trust : BN4 -0.32% and Sembcorp : U96 -1.11% should be key proxies, he said.

Property

Property developers should benefit mainly from there being no new cooling measures, said Jaiswal. For real estate investment trusts (Reits), uplift is targeted to retail names such as CapitaLand Integrated Commercial Trust : C38U -1.21% and Frasers Centrepoint Trust : J69U +0.89%, although industrial and business park Reits such as CapitaLand Ascendas Reit : A17U +1.11% could also benefit, said Jaiswal.

For more of BT’s Budget 2026 coverage, go to bt.sg/budget26