VEHICLE QUOTA SYSTEM

[Mr Speaker in the Chair]

Dr Yeo Ning Hong: Mr Speaker, Sir, on 26th February, 1990, I made a Ministerial Statement to Parliament where I announced the details of the vehicle quota system. I indicated then that after the quota system has been introduced, the tenders can be held monthly instead of quarterly to reduce fluctuations in tender premiums. I indicated also that with experience and feedback, we can make minor adjustments to improve the system.

Sir, the first tender exercise was held in April 1990. The exercise went very smoothly. Since then, we have received much feedback from our members of the Government Parliamentary Committee on Communications and Information, Members of Parliament, the Feedback Unit and from the media. I want to thank all of them for their feedback which my Ministry has studied very carefully.

Sir, today, I want to announce two minor adjustments to improve the quota system.

Firstly, beginning July 1990, tenders will be held on a monthly instead of a quarterly basis. This will make it more convenient for prospective vehicle buyers. It will also minimise future fluctuations in premiums in between tenders. As a consequence of this change, the maximum number of certificates of entitlement that will be available for each authorised motor distributor will be reduced from 100 to 30 for each tender.

Secondly, the validity period of the temporary certificates of entitlement will be shortened from six months to three months. This reduction will apply to new certificates issued from the first monthly tender onwards.

These changes will discourage speculation on the certificates.

The first monthly tender will be held in July 1990. The tender will open from 9.00 am on Monday, 2nd July 1990 and will close at 4.00 pm on Wednesday, 11th July, 1990. As a consequential change, the number of vehicle entitlements available for tender would be one-third of that previously projected for the quarter August-October 1990. I have circulated a copy of the figures (Cols. 261 -262) for Members' information. figures - VEHICLE QUOTA SYSTEM (Cols. 261 - 262)

The certificates issued from the tender in July will be valid from 1st August to 31st October 1990. This means that these certificates (those derived from the tender in July) will not enjoy the reduced ARF of 160% OMV because that will only be effective beginning 1st November, 1990.

Mr S. Chandra Das (Cheng San GRC): Mr Speaker, Sir, I am glad to hear the Minister saying that the transferability period of the certificates will be reduced from six months to three months. I am wondering why the Ministry, in spite of the feedback, is not prepared to consider dropping the idea of transferability completely.

Dr Yeo Ning Hong: Sir, transferability plays a useful role in the allocation of the scarce resource, namely, the certificate of entitlement to buy a car. It enables this distribution to be made more effectively. Where you have a willing buyer and a willing seller, that is the best way for the free market to work. Hence, I would prefer that we keep transferability. What we have done is to discourage speculation which results when people think they can make large profits from transferability.