By Bryna Sim and Danson Cheong

HIS advertisement in the local papers raves: Why wait for a further price increase? Get your COE today! Open category COE available for immediate transfer. Price negotiable!

He's 57 and has been doing this for the last 15 years.

Meet Mr Lim, a speculator who buys COEs, for example, at $27,000 and sells them off at $38,000 when COE prices rise.

It's risky, says Mr Lim, but exciting.

Apart from individuals like himself, speculators can also come in the form of motor dealers.

They enter the car industry for the purpose of bidding for a COE, and then hold on to it, hoping to sell it off for a profit.

These speculators once had so much muscle that they - together with high buyers' demands - helped drive Certificate of Entitlement (COE) premiums up past $100,000 in 1994.

Although their influence has been tempered by subsequent government measures in the years that followed, the recent cut in COE supply which sent prices climbing steadily might just be ushering in a new bout of speculative frenzy.

For example, Wednesday's COE bidding exercise saw bidding prices for Category B vehicles (cars 1,601cc and above) close at $45,501.

Last month, COE prices for this same category was about $10,000 less, at $36,089.

But are speculators like Mr Lim responsible for driving the prices up?

Industry experts, observers and car dealers that The New Paper spoke to agree that speculators are players in the industry.

However, they are divided over the extent of influence these speculators have over the market.

Not main cause

According to Ms Tan Kheng Hwee, president of Motor Traders Association, speculators are 'not the main cause of rising COE prices'.

Rather, Ms Tan suggested that rising prices are simply a result of the supply being 'drastically cut' by the Transport Ministry.

She said the number of COEs supplied is expected to fall to as low as 30,000 this year, in comparison to 120,000 COEs supplied in 2006.

She also felt that the clout of speculators was limited by the non-transferability of licences.

Currently, the only transferable categories are Categories C (goods, vehicles and buses) and E (open category).

"Categories A and B are non-transferable, and behind each (of those) COE bids is a genuine buyer," she said.

Category A is for cars (1,600cc and below) and taxis.

Therefore, Ms Tan feels that factors of supply and demand are much more crucial than the presence of speculators.