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Yeo Kheng Meng

Maker, Coder, Private Pilot, Retrocomputing Enthusiast

13 minutes read

(This post was originally posted here).

Here is the series of articles so far  in case you have missed them.

1. Jack’s start

2. My reply

3. His counter reply

4. My counter reply which is this post

Do go through the entire series if not you’ll not be able to follow the arguments and counter arguments.

1. Housing (yet another long section)

2. Foreign talents/workers

3. Grow and share

4. Transport

5. The electoral situation

There are only 4+1 sections this time as the issues of least contention (I assume) have been already removed. Since he has not contested my views on Workfare enhancements, I assume he is ok with me not bringing it up again. The IR issue bears no contention between us.

1. Housing

The first issue is the supply of flats. I agree with Jack that its not within the reasonable capabilities of a government to push HDB architects to their engineering limits. That was just a minor point that deserves mention but not expansion as I’m aware of the limitations.

But what about the point of smaller flats <4room flats whose building has been stopped years ago? Shoebox condo apartments about 4 room flat sizes or smaller have sold well. Since we are facing a shortage, smaller flat sizes could be a way to make the most out of limited land remaining and offer a lower cost alternative for those who want it.

The next issue of manipulating housing prices has naturally progressed to land prices as its value is one of the chief components. Before I carry on, let me correct one misrepresentation of Jack’s. He said most of the opposition suggests giving land discounts. I’ve looked through most of the proposals from the opposition parties. Only WP and SDP’s proposals suggests indirectly about adjusting land costs.  Nobody has used the words discount or similar. Pricing land at a lower cost is not the same as pricing it high and and then somebody (HDB in this case) absorbing a portion of the costs. Since I’m in support of SDP’s ideas on housing, I will discuss this anyway.

Minister for National Development Mah Bow Tan says the land price is set by the Chief Valuer. That begs another question on the process the Chief Valuer uses to cough out the value of the land. The last time land cost was revealed was in 1975.* Since there is a lack of transparency regarding cost breakdown of land and construction costs, with 2 variables here, it is difficult to gauge exactly how much is the cost of land set by the valuer.

* (From a blogger. I know we shouldn’t rely on bloggers so much. But its one case where there is no other source of info)

One way to gauge the cost of land is the cost it was acquired. Here is when the Compulsory Land Acquisition act comes in. From horror stories over the years, one can tell that this act was forcefully used to acquire land at ridiculously low prices. Then it was sold to the HDB assuming, at very much higher levels (inferred from HDB making huge paper losses), even before building commences. So this shows the double standard that the government uses in land pricing. It is making a not insignificant profit on the sale of land.

Given the lack of transparency, how do we know whether the land has been priced fairly to ensure affordability or in a way to generate most inflow in our reserves? Let me emphasise, the HDB’s goal is to provide affordable housing. Although SLA is not part of the HDB, both being govt statutory boards with deep connection means that HDB’s goals are that of the govt’s and SLA’s as well. SLA like the HDB, is not a private firm and should not be run with a profit motive. Whatever discount that Jack’s speaks of, is just a reduction in the rate of reserve accumulation by SLA. HDB will not be making losses if the land is priced properly.

Regarding this issue, I forgot to add that the rules in my previous post only apply to new flats (not resale) purchased by first time buyers (who have never owned any property). Not adding the bold words may have caused the confusion. Upgraders currently get much lower priority than first time buyers on new flats and I would like to keep it that way. Thats why this won’t affect the resale flat market since they essentially different markets.

Minimum occupancy period has been around for decades. Short term policy or not, it seems to be a very long one on the short scale. In fact, the MOP for resale flats was recently increased from 3 to 5 years showing that there is some merit to this. MOP locks you to your house, this I agree. But this the only way to filter out genuinely who wants to live there and those who use the flat as short-term investment. For those who want to upgrade to another HDB flat during the MOP, I additionally propose that, return the old flat back to HDB, but you’ll have to pay the full loan amount back to HDB in full immediately. This is to discourage speculators from flipping early. At the current 2o-30 year loan period, the remaining unpaid loan at the point of return can serve as an effective deterrent.

As to why 10 years and not some other magic number, this is meant as a suggestion to extend the MOP. In hindsight, I should have just said extend the MOP and not provided a figure. The argument of what the magic number should be left to the experts.

Actually a HDB owner can purchase another private property and continue to stay in the HDB flat after the MOP has been achieved. Not really true you can only own one property.

The PR issue. I never said lock them out of public housing. I said to control the number of new flats available to them in light of our liberal PR policies. You can ballot or whatever thats up to the govt. Of course, there will be no need to do this if there aren’t so many PRs entering our shores. As to where to stay, they can either choose to buy a resale flat/private property or rent. PR means they will be here for long but not forever. If I want to be blunt, I would not be wrong to say they are second class citizens. Want more privileges? Convert to Singapore citizenship then.

Danger of losing CPF money. I have no issue with Jack’s description of the entire CPF money situation. The problem of negative equity or losing CPF money is real. Why would this happen? The most likely cause of this is when the property bubble bursts. The current property market seems to be headed that way at the rate of increase in housing prices. Housing prices will collapse eventually when they rise faster then income as its currently the case. The way to prevent that is to slow the rate of increase or raise incomes which is difficult.

The other related issue is that high housing prices results in a greater proportion of a CPF money be tied down to your property. If too much goes to your house, the house’s value becomes an even bigger variable in your retirement savings plan should you decide to encash by downgrading or reverse mortgage. Your retirement becomes more “beholden” to the housing market which is best to avoid. The original goal of CPF is for retirement, when the govt liberalised it for housing, it was supposed to supplement cash payments. Now it becomes the main payment mode as everyone is doing it. Housing prices goes up and everyone is worst of except SLA.

Jack suggests reverse mortgage. The takeup rate is low then (probably due to awareness) and there are strict rules regarding this. Besides, the only reverse mortgage lender NTUC Income has stopped this in 2008. HDB continues to issue it but only for three room flats, which are very few this days anyway. Jack, please check as I cannot find any other information on this.

Assuming if such a policy is enacted and used, the flat cannot be passed to your offspring. This idea is good for retirees whose children already own property. What about those who wish to pass down their flat instead? There are valid reasons for this, one of which is to enable them to avoid the struggle of paying for their flat like them.

Reverse mortgage becomes the cure instead of prevention of the rise in housing prices. I’m ok with this in principle but its existence should not be an excuse to leave housing prices at a current state.

2. Foreign talents/workers

Our world is never fair, but that is no excuse to make things even more unfair on not do anything about it. Thats my stand.

1. CPF. I said I’m in support for it. So no point arguing about a point we both agree upon in principle and implementation.

2. NS. Huh? Just a quote from a dead American President?  If only every country had NS and Singapore imposes it on every foreigner which is unlikely. This is a very real problem. Stories abound of lost employment opportunities and deals because of reservist.

3. Think Jack has misunderstood this cost of living point. It has nothing to do with buying imported necessities. Its about foreigners ability to ask for lower wages since their families’ living costs are lower.

The purpose I raised these points is to show why the competition isn’t fair in the first place. This is in reply to his statement “The only proper way to chase away foreigners is by fair competition. That is to win the competition and to take that job away from the FT who may otherwise be in it.” I do not have direct methods to mitigate the first and third point.

On the laziness and incompetence of Singaporeans, this is difficult to access. Besides, I said I will allow foreigners taking in such jobs on a needs basis. This means if there is a shortage of jobs even Singaporeans want, we can take in foreigners to make up for the shortfall. The statement also assumes Singaporeans don’t compete among ourselves in the first place. On the jobs Singaporeans want, I’m sure there would be intense competition among many for those few coveted  jobs. We compete in school comprised of largely Singaporeans for limited places in the next higher level. I don’t see how this can’t be the case in the working world even with lesser foreigners in our midst.

3. Grow and share

Give a man a fish and he won’t go hungry for a day, teach him to fish, and he won’t go hungry at all for life, Jack quoted. The flaw here is that the man is actually fishing so hard that he hardly has the time to learn better fishing methods.  Why so hard can be attributed to GST and greater relative inflation of basic necessities.  That is the subject for another day.

Investing in the STI is not a bad move. Provided the poor have enough money to invest in such instruments in the first place. When they are living from paycheck to paycheck, I doubt they have enough cash to pour into other areas. The national financial literacy programme that Jack suggested is one I support. But to take advantage of that, why not invest it on their behalf. Use the CPF money to do so, provide better returns than the current meagre interest rate.

4. Transport

The contradiction I was raising was not about the workings of the COE. Its about how he extolled the benefits of a free market without considering that he is in support of other market distorting policies. Land shortage is not imposed by anyone except nature?  A COE supply limit is imposed by the government. Any act of government intervention good or bad, is actually a market distortion. That is the difference.

Anyway, I said already I’m in full support of COE provided all the other frivolous taxes are removed.

ERP discounts for taxis is actually suggested in the Workers Party manifesto. It is not my proposal. My reasons for supporting this are in my previous article. People who want the convenience of traveling by car to the CBD during peak hours can opt for taxis instead. Cars once driven in stay there for the whole day. Taxis don’t necessarily do. Besides, there is no reason they should be staying since most of the traffic is usually one way during peak hours. The taxis can leave during off-peak hours whereas private cars don’t.

As to congestion problems, they may actually alleviate it. People taking taxis means less private cars plying the roads. People drive private cars to work to avoid the hassles of conventional public transport. What ERP discounts does is to give them an alternative by transferring their traffic into the already resident taxi population.

5. The electoral situation

I’m glad Jack agrees with me that its a good idea to give a chance to capable opposition candidates. I believe in merit as well. I don’t support the opposition candidate as only an exit strategy. The current situation is a super-super majority by the PAP. A party with such power is inherently dangerous without even needing to consider the capabilities of the meagre opposition.

It has come to my attention that as of October 2009, Hong Kong passed a constitutional bill allowing Permanent Residents to vote. Not saying this will happen in Singapore. But it is also not in the realm of impossibility either considering the current situation. A PAP desperate enough MAY resort to such measures or more to cling to power. With less than 1/3 of Parliament in the hands of opposition MPs, such actions cannot be easily stopped.

I admit I hold the opposition to the lower of the double standard. For the simple reasons of lack of resources in campaigning, research and attracting the best candidates. The ruling party being the incumbent, has the advantage of the entire civil service machinery behind them to research on policy specifics. They may be privy to information not available to an opposition candidate due to the Official Secrets Act and the lack of the Freedom of Information Act. The opposition candidates are also mostly from the private sector with full time jobs. Politics is like a second burden to them. The PAP ministers and MPs are also exposed to the political situation and electorate everyday. That is their full-time job after all.

The opposition in parliament can offer a different point of view. As much as the PAP says groupthink does not really exist, I don’t believe it. People join a political party because they believe in its ideas and goals. Will you be promoted if you hold views of differing stances from your party leaders?

As to right for votes on the virtue of being the other choice, this sounds like the the opposition candidates has nothing better to do than to put their names on the nomination forms.  I agree there are some candidates which are like that. The “Slipper Man” Tan Lead Shake is one notable example.  But the minority they are. By looking at the depth of the WP’s and SDP’s manifestos, one can tell the extent of research effort put into it although you need not agree with everything they say. WP indeed does talk alot about a First World Parliament containing significant numbers of opposition candidates. But they are backed by clear policies they wish to advance.

That ends this article. I hope to reply once Jack returns from his holiday.

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