A method and apparatus for deriving a scaled MV (motion vector) for a current block based on a candidate MV associated with a candidate block are disclosed. Embodiments according to the present invention increase effective scaling factor of motion vector scaling. In one embodiment, a distance ratio of a first picture distance between a current picture and a target reference picture pointed to by a current motion vector of the current block to a second picture distance between a candidate picture corresponding to the candidate block and a candidate reference picture pointed to by the candidate MV is computed. The scaled MV is then generated based on the candidate MV according to the distance ratio, where the scaled MV has an effective scaling ratio between −m and n, and wherein m and n are positive integers greater than 4. The values of m and n can be 8, 16 or 32.