Low Thia Khiang only scratched the surface of “flawed” HDB Asset Enhancement Scheme: opposition sec-gen rebuts

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An opposition politician has alleged that Workers’ Party (WP) parliamentarian Low Thia Khiang only scratched the surface of Housing Development Board’s Asset Enhancement Scheme with his comments in Parliament, instead of getting to the core problems the scheme poses.

In a Facebook post last week, secretary-general of the People’s Power Party, Goh Meng Seng, said that one of his motivations for joining the opposition was because he wanted to fight against the Asset Enhancement Scheme – a policy which has recently been likened to a “ticking time bomb,” “political big bazooka,” and a “scam,” by disgruntled Singaporeans.

The HDB’s Asset Enhancement Scheme has come under fire, especially after HDB chief executive Dr Cheong Koon Hean indicated last week that the value of aging HDB flats will decline over time. Dr Cheong’s comments mirrored National Development Minister Lawrence Wong confirmation last year that the vast majority of flats will be returned to HDB, without any compensation for homeowners, when the 99-year-lease runs out.

The authorities’ comments are contrary to the government’s past promises that HDB flats are “nest-eggs” that grow in value over time. Just before the General Election in 2011, then-National Development Minister Mah Bow Tan told Singaporeans: “We’re proud of the asset enhancement policy. (It) has given almost all Singaporeans a home of their own…that grows in value over time.”

A former member of the Workers’ Party (WP), Goh was reportedly part of the WP’s “A-Team” in the mid-2000s. He had been part of the 5-member WP team that contested Aljunied GRC in the 2006 General Election which lost with a commendable 43.9 per cent of the vote. The team Goh was a part of performed so well that they won a Non-Constituency Member of Parliament seat that team leader Sylvia Lim took.

In his Facebook post last week, Goh had claimed that while he saw through the Asset Enhancement “scam”, he was disappointed that his former leader, veteran opposition figure Low Thia Khiang, couldn’t see the scheme for what it is even though Goh tried to explain the issue to him:

“When I joined WP, on a few occasions. I had raised this issue to LTK and said that this is the most important issue we need to raise. He brushed it off saying that what’s wrong with Asset Enhancement Scheme? It is good what!
“Needless to say, I was completely disappointed that the leader of the opposition party which has one of the two seats in parliament, couldn’t see through such a scam.
“I tried to explain why this AES is wrong but it just couldn’t get through him. Apparently, the lack of a good Economic training is the key weakness of LTK.”

But was Low really silent on Singapore’s public housing profits and asset enhancement in Parliament?

Low spoke up about asset enhancement and the profits the authorities were reaping from public housing as far back as 1998. Between 1998 and 1999, Low spoke up about these issues thrice in Parliament: on 17 March 1998, 18 March 1988, 11 November 1999. His remarks can easily be found in the archive of official reports of parliamentary debates.

Yesterday, The Independent published an article covering the points Low Thia Khiang made 20 years ago in Parliament pertaining to asset enhancement. Today, Goh has hit back, saying that Low did not delve into the core issues the scheme posed to Singaporeans.

Revealing that he was not the only one who was within the WP’s ranks that shared their concerns about the scheme with Low, Goh asserted in a Facebook post:

“Those nitty gritty things raised by LTK would really look like peanuts to the huge problems that Singaporeans will face in the coming decades. And this is not something “out of the sudden” but a time bomb planted by PAP.”

Posting a thorough explanation of the scheme, Goh added:

“…the whole scam is simple. You were made to pay higher HDB prices with the FALSE promise that your HDB will increase in prices forever, in 10, 15 or even 20 times but this will only result in your CPF being transferred to government Reserves. You were allowed to use your CPF to buy properties and told that you could monetize your HDB for retirement, downgrading or otherwise, but the truth is, you will never able to do that meaningfully if your HDB flat is destined to decline in value when it aged!
“But for the mean time, your children, grandchildren and future generations will suffer higher property prices and face the same problem of insufficient retirement funding near the end of their lives.
“That’s what the bloody scam is all about.
“But did LTK raise all these? None.”

Read Goh’s rebuttal here:

Response to Independent's ArticleI refer to the article posted on the Independent entitled "Did Low Thia Khiang really…

Posted by Goh Meng Seng on Monday, 16 April 2018

In case you cannot read the post above:

Response to Independent’s Article

I refer to the article posted on the Independent entitled “Did Low Thia Khiang really turn a blind eye to the HDB Asset Enhancement Scheme “scam”?”.

First of all, as shown by the Independent’s article, nothing was mentioned by LTK in parliament on Asset Enhancement Scam after 1999. I joined WP in 2001 and raised the points against Asset Enhancement Scam several times till 2006.

Secondly, if we read carefully on what LTK had said in parliament on housing, he had only touched on the surface of the issue… not even close to the CORE problems of Asset Enhancement Scam.

To put it on record, I was not the only one who had raised the issue of Asset Enhancement Scam. Eric Tan was against it right from the beginning when he joined opposition politics. Anyone with a proficiency in Economics (Eric was a private banker, although his learning was in Engineering) would know that it is totally crap to assert that a 99 leasehold property could increase in price forever. And worse still, even if some people benefited from asset inflation back then, like Eric Tan (benefited from the increase of his old private property in Namlee) and LTK (Low sold off his 5 room flat and bought a piece of land and built his own house), the burden of high property prices will be born by your future generations. There is absolutely no way around it and it is basically a ZERO-SUM game. You may gain now, somebody will have to pay the price now and later. That will be your children and grandchildren.

Eric Tan and I were the strong opponents of Asset Enhancement Scam as we understood that it is totally unsustainable and it is basically a scam in the making. People will only realize the ills of this scam decades later, either in depreciating value of their old HDB flats or their children or grandchildren paying high prices for their own flats, suffering from high mortgage loans etc.

The key issue here is not about how PAP government earns money or profited from building HDB flats; or from stamp duties or taking back levies paid to Singaporeans when they upgrade or downgrade etc. The key issue is the whole concept of Asset Enhancement is basically flawed and a scam to begin with.

The idea of transferring retirement financing burden from CPF to your HDB flat is totally flawed because it based on the assumption that your HDB flat will rise in price forever! That could not possibly happen because it is 99 leasehold and worse still, you do not own the land your flat sits on and have no full control on whether you could do Enbloc. Only the government HDB could decide whether your flat could go for enbloc!

The initial enbloc fever initiated in 1990s was a totally misleading ploy to give the impression that your HDB flat will worth alot more when you have SERS. But the truth is, PAP government won’t do SERS for ALL HDB flats because it is not “profitable” at all as the prices of the resale market had increased tremendously. They would have to compensate at market value to Singaporeans in SERS but to keep the price low for new HDB flats. That’s the reason why the enbloc fever was short lived and nowadays, you hardly hear anything about it.

And Minister Lawrence Wong had indicated that only 4% of HDB flats will have SERS, breaking all dreams of many Singaporeans who wanted the opportunity of fetching extraordinary high prices for their flats. Instead, they will be facing a rapid decline in their HDB prices when it has less than 60 years lease.

These are the fundamental issues that LTK failed to raise. He was looking at the micro level on people like him, who had benefited from the initial asset inflation which allowed him to buy land and built his own private house. That’s why the infamous response of “Asset Enhancement Scheme good what!” He wasn’t looking into the long term impact of the whole scam which we are just starting to feel right now. By 2020, more flats will face the problem of declining value or simply unable to be sold and many retirees will feel cheated and stuck in a situation that they suddenly realize they could not sell their HDB flats for retirement financing, as propagaded by PAP. By 2040, if nothing is done to mitigate this problem, the HDB tsunami will kill off a lot more people who had once believe in this Asset Enhancement Scam.

Those nitty gritty things raised by LTK would really look like peanuts to the huge problems that Singaporeans will face in the coming decades. And this is not something “out of the sudden” but a time bomb planted by PAP.

If CPF wasn’t allowed to be used for purchasing HDB, situation won’t be that bad. That may mean that without such huge liquidity, HDB prices won’t surge or inflated so much in the early decades and of course, PAP won’t be able to extract much from Singaporeans’ CPF to allow them to charge higher market prices for their land sales to HDB!

It is basically a scam to transfer more CPF monies via higher HDB prices to Land Sales proceeds so that the Reserves would be bloated. The boast of accumulating huge Reserves back in the 1990s is nothing great but at the expense of Singaporeans who were made to pay higher prices for their HDB prices. The increase in Reserves would be even greater if CPF was not allowed to be used for property purchase but the government will have to bear the burden of giving interests return to these CPF members.

Thus, the whole scam is simple. You were made to pay higher HDB prices with the FALSE promise that your HDB will increase in prices forever, in 10, 15 or even 20 times but this will only result in your CPF being transferred to government Reserves. You were allowed to use your CPF to buy properties and told that you could monetize your HDB for retirement, downgrading or otherwise, but the truth is, you will never able to do that meaningfully if your HDB flat is destined to decline in value when it aged!

But for the mean time, your children, grandchildren and future generations will suffer higher property prices and face the same problem of insufficient retirement funding near the end of their lives.

That’s what the bloody scam is all about.

But did LTK raise all these? None.

Did Low Thia Khiang really turn a blind eye to the HDB Asset Enhancement Scheme “scam”?

Opposition sec-gen accuses Low Thia Khiang of not being able to see through HDB’s Asset Enhancement Scheme “scam”