In a recent interview by The Straits Times, Deputy Prime Minister Tharman Shanmugaratnam said that limiting car loans was not the first solution to dealing with rising car prices.
"It's not the first recourse at all. The short term impact isn't so significant for the majority of people, but eventually it feeds through into inflation more generally," he said.
To the criticism that the curbs are shutting out people who really need a car, he stressed that they are not permanent and also 'not suitable for the long term'. He also said that the Government will observe how prices 'evolve over the next several months'.
Mr Tharman, who is also Finance Minister and Chairman of the Monetary Authority of Singapore (MAS), noted that the Government learnt a lesson from previous loan restrictions on cars up to 2003.
At that time, the loan-to-value ratio was at 70 percent, but it did not have much of an impact on COE premiums.
"That's why we decided this time we've got to do something larger. Do it larger, but don't hold it there permanently, because we are well aware of the fact that there are people who really need a car," he said in his first comments on the curbs.
On whether a review of the COE system itself is needed, Mr Tharman said that 'there are issues the Ministry of Transport will study' but what is more fundamental is to improve the public transport system.
On the Government's roll-out of a $1.1 billion plan for new buses, he said, "Just in the next few years, we can make improvements, particularly through the bus system, significant improvements. And 10 years from now, the MRT system would be quite different from today."
