A few members of opposition parties have accused former Workers’ Party chief Low Thia Khiang of not being able to see through Housing Development Board’s Asset Enhancement Scheme – a policy that has been called 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 earlier this 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.”
Last week, two secretary-generals claimed that veteran opposition politician Low Thia Khiang remained quiet about asset enhancement despite being informed about the nuances of the issue.
People’s Power Party chief Goh Meng Seng, a former WP member, accused that Low could not see through the scheme and asserted that “lack of a good Economic training” is Low’s “key weakness”.
Reform Party secretary-general Kenneth Jeyaretnam, on the other hand, claimed that he publicly spoke about the dangers of asset enhancement before Goh and accused that Low is a “wily fox” whose “unwillingness to raise the issue publicly reflects his desire not to do anything that would upset the PAP and lead them to do anything that could lead to him losing his seat and the income stream associated with it.”
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.
Read snippets of Low’s remarks on the contentious issue here:
17 March 1998
Low Thia Khiang: “Sir, on 19th February this year in Parliament, I asked the Minister for National Development a few questions relating to the sale price and subsidy of HDB flats. In his written answer, the latest figures for the fourth quarter of 1997 and the first quarter of 1998 show that after deducting the construction cost and land cost, there is a lot of profit to be made from the sale of the Sengkang flats.
In Contract N2C27, there are 795 units. From each unit, the Government makes a profit of $39,221. After the sale of all the flats, the total profit may exceed $31 million. In Contract N3C1, there are 442 units. The Government’s profit on each unit is $29,000, and after selling all the units, the total profit may exceed $12 million. In Contract N2C28, there are 444 units and the profit on each unit is $1,016. After the sale of all the flats, the total profit will amount to $451,000.
So, after selling all these flats in the Sengkang area, the Government can make a profit of more than $44 million. I would like to ask whether the Government is subsidizing the flats in Sengkang or making a profit from there.”
18 March 1998
Low Thia Khiang: “Clarification, Sir. Is it correct that, based on my calculation, HDB makes a gross profit of more than $44 million from selling of those flats that I cited in my speech in Sengkang? I think it is better to get these things clear here. I am talking about Government subsidy. I am not talking about market subsidy. For instance, Carrefour sells some goods which are below market price. Then you can call it market subsidy, if you want to. I am talking about Government subsidy. Would the Minister enlighten this House what is his definition of “subsidy” and whether those flats in Sengkang that I cited in my speech yesterday under the various contracts are subsidised by the Government?”
Then-Minister for National Development Lim Hng Kiang: “Since 1988, Mr S. Dhanabalan has been trying to explain to Members the meaning of “subsidy”. “Subsidy” means what the commodity can fetch on the market and what you are paying for it. That is a subsidy.”
Low Thia Khiang: “Government subsidy?”
Lim Hng Kiang: “Call it what you like, that is what Singaporeans benefit from buying an HDB flat directly from us. Mr Low has his point. You can go round. In fact, I encourage him to publicise those numbers that he has and draw the conclusions from there to both the Workers’ Party as well as to all his constituents in Hougang. In fact, I will help him with the direct mailing list. Tell them that this is his calculations, that in the Sengkang flats, the number which I gave him, Government made X dollars of development gain and therefore HDB flats are not subsidised. Therefore, as their leader and elected representative, he will advise them to quickly withdraw from the North-East queue because HDB flats are not subsidised. Please do that.”
Low Thia Khiang: “Clarification, Sir. I do not know where the Minister has got the definition of “subsidy” from. Maybe it is a mixed definition. What I understand from the Oxford Universal Dictionary, the definition of “subsidy” is a grant or contribution of money. But in this particular case, I stated that for the Sengkang flats, the Government makes a profit. It does not contribute any money in the development of the new flats. And I asked him just now whether the selling price of flats in the north zone will increase if there are more applicants.”
Lim Hng Kiang: “As I have explained in my speech earlier, the Government’s pricing policy goes on certain principles. First, we will price 3-room flats such that 90% of first-time households would be able to afford it. We buy these flats from the market and we subsidise it to the level that 90% of Singaporeans can afford a 3-room flat. Today, that direct grant is $50,000 per flat. Similarly, when you buy a new flat from Government, you are enjoying a market subsidy, what you pay for the flat and what the flat is worth in the open market, and that subsidy is $103,000 in Sengkang. If you say that this is inequitable, I agree with you. In which case, we should raise the prices of flats in Sengkang.”
Low Thia Khiang: “Sir, I do not think the Minister has answered my questions. I have raised two questions. First, what is the Minister’s definition of “subsidy”, and not market subsidy? I am talking about subsidy. Second, will the selling price of the new HDB flats in the north zone be increased further if, let us say, they are more popular, as the Minister’s answer is that the price is based on popularity?”
Lim Hng Kiang: “Subsidy, as I have explained many times, is the difference between what you pay in the market and what you are paying today. That is subsidy. For the north zone flats, the principle which I enunciated is that the Government will subsidise the less popular areas more than the more popular areas. Why? Because we have a building programme and we want to encourage Singaporeans to buy into the building programme. Today, we have more than 40,000 applicants in the Sengkang queue. Why? Because it is a very popular town. Because the subsidy there is much higher. Otherwise, why would people apply for Sengkang Town? [Mr Low Thia Khiang interrupted.] Precisely. And the more you raise about this issue, the more the prices in Sengkang will go up.”
11 November 1999
Low Thia Khiang: “It was mentioned in the President’s Address that, “All citizens have helped to build Singapore through their hard work and commitment. All deserve to share in the country’s success.” The asset enhancement scheme was cited as an example.
“However, we must not forget that the HDB recently introduced some new regulations to punish those who attempt to realise the profits from their asset enhancement by selling their bigger flats to downgrade to smaller flats. These people will have to pay a higher interest rate for their mortgage loan. For those who sell their flats and re-apply to HDB for another flat, a levy is imposed on them for their profits.
“So, when the market is good, the prices of the flats go up, and your assets, in the form of your flats, are indeed enhanced. However, if you decide to take profit by taking advantage of the enhanced value, the Government immediately moves in and demands a share of your profit. Taking into consideration the higher interest rate you have to pay subsequently, all the expenses and the levy, the actual profit derived from the asset enhancement, the so-called sharing of the country’s success for your commitment to the country, is simply negligible. Much of your profit actually goes back to the Government’s coffers. Moreover, some people are forced to downgrade because of the economic downturn!
“As for the HDB’s upgrading programme, it is actually the Government’s responsibility to keep the housing estates in good and healthy condition, but it has now been used as a means to “bribe” voters, under the guise of enabling them to “share in the country’s success”. Even then, the residents have to share in the cost of upgrading.”