Balloting for Certificates of Entitlement (COE) will send the signal to genuine buyers that getting a COE depends on the luck of the draw or resorting to the black market, said Minister of State for Transport Josephine Teo on Friday.
Ms Denise Phua (Moulmein-Kallang GRC) had asked if the current system of bidding for a COE to own a vehicle can be changed to balloting of fixed-priced COEs while retaining the current quota.
Mrs Teo said in a balloting system, even those who have no real intention to buy a car would try their luck because if they get it, they can cash out and "make a small fortune".
This would generate additional demand and reduce the chances for those who want to buy a car. It would also lead to a black market where balloted COEs are resold to genuine car buyers at a much higher price, she said. This was the case when Beijing introduced a balloting system for cars in 2011. It saw more than a million applicants for the monthly quotas of 20,000.
Mrs Teo said balloting does not better satisfy the demand for cars. It would be "next to impossible" to fix an arbitrary price for balloted COEs that is high enough to deter speculators and yet not too high for genuine buyers.