Leong Sze Hian >> TOC Columnists
ACCORDING TO the Housing Development Board’s annual report, the deficit for FY2008/2009 has almost doubled to $2.12 billion from $1.08 billion in FY2007/2008 – due mainly to an increase in Expenditure from $4.25 billion in FY2007/2008 to $5.23 billion in FY2008/2009.
I am puzzled by the Income Breakdown chart and table on page 4 of the financial report as there appears to be no item that reflects the sales proceeds of flats – shouldn’t this possibly be the largest item of income?
What does the Sale Proceeds figure on page 14 amounting to $1.2 billion represent? The segmental information on page 57 ‘explains’ this as being made up of Home Ownership ($1.06 billion), Residential Ancillary Functions ($149 million) and Agency and Others ($8 million). This figure appears to be quite small though, considering the number of flats and commercial properties that the HDB sells.
What is the Cost of Sales (page 14) amounting to $1.15 billion made up of? Is it the cost of construction, land and so on? Again, the segmental information on page 57 only offers the breakdown as Home Ownership ($993 million), Residential Ancillary Functions ($194 million) and Agency and Others ($8 million) – with a recovery of $43 million in Eliminations.
Page 57 of HDB’s Annual Report
The item with the largest increase in expenditure according to the report (page 5) was the cryptic ‘Provision for foreseeable/unrealised loss for properties under development/for sale’ which increased from $784 million in FY2007/2008 to $1.24 billion in FY2008/2009.
How is it possible for the HDB to suffer losses when it develops properties (flats) expressly for sale?
It is interesting that on page 7 it says, “The Mortgage financing segment reported a deficit of $18 million this year, as compared with a surplus of $37 million last year. The change from a surplus last year to a deficit this year was mainly due to the increase in allowance for impairment losses made in respect of non-performing mortgage loans.“
So what exactly does this mean? Has the number of people who could not pay their HDB mortgages sky-rocketed? So then how many are in arrears? How many have defaulted and have either had their flats repossessed or been forced to sell in the open market?
It would appear that the HDB does not account for the proceeds of flat sales as income, like say a commercial developer, but instead only considers the interest of 0.1 percent on the loans given to flat buyers – i.e. 2.6% HDB concessionary loan minus the 2.5% CPF Ordinary Account interest rate that at which it borrows from the Government (as well as other loans from the Government).
Is this one of the reasons possibly why the HDB is perpetually in deficit? Grants to home buyers are shown as expenditures, but if the price of flats increases more than the grant amount, is it really a grant or subsidy?
The Government gives grants to HDB in order to fully offset its deficits. However, without the specific breakdown of the cost of building flats, the cost of land, and other additional costs, it may be impossible to determine how much profit, if any, the HDB makes from the sale of flats.
Similarly, under Capital Expenditure (page 6), the largest amount incurred was for the purchase of Land at $1.72 billion. However, without the benefit of matching actual land costs to construction costs, other costs, and the actual sales proceeds it provides hardly any meaningful information. For illustrative purposes – if the $1.72 billion for the purchase of land in FY2008/2009 actually refers to land costs to build flats, with estimated flat sales in the billions of dollars a year, is the HDB actually taking ‘profit’ under the guise of its so called ‘market subsidy’ pricing policy?
On page 47, it says that the ‘Cost of Flats’ was $539 million – does this mean that the construction cost of flats was only this much? If so, then relative to the purchase of land at just $1.72 billion, does it mean that the HDB, in a sense, takes a ‘profit’ from the sale of flats in this regard? In this connection, the land costs may very well be an arbitrary figure dependent on how much the government decides to price the land that it sells to the HDB for public housing.
Page 47 of HDB’s Annual Report
The ‘Late payment charges for mortgage loans’ on page 41 of about $44 million in FY2008/2009 is also noteworthy. What does this mean? Either there are a lot of people who make their payments late or the late payment charges may be quite high. Shouldn’t we have the breakdown as well for more details?
Page 41 of HDB’s Annual Report
In the accompanying document to the financial report, entitled Key Statistics for FY2008/2009, ‘Approved applications for financial assistance measures’ was tallied at 5,236 applications. How many applications were not approved? How many flat dwellers in total (including existing and not just the 5,326 new applications approved in just one year) are under ‘financial assistance measures’?
- Page 6 of Key Statistics of HDB’s Annual Report
Finally, what incentive is there for the HDB to be run more efficiently if its deficits are always offset by Government grants – to the tune of about $20 billion since its inception in 1960?
TOC and Mr Leong, can u guys organize a workshop (with panel experts) to discuss what those numbers mean and what they potentially (mis)represent, with the intention to submit a petition to the imperial gahmen to seek clarification & further investigation.
We have been talking about this subject 10 years ago. At this rate, (where there are more questions than answers), I won’t be surprised if we are still talking about the same thing ten years down the road.
HDB should “EnBloc” its office in Toa Payoh and the old one in Bukit Merah to some private investor.
Home Affordability 101:
If cannot afford to operate in mature estate, move to non-mature estate lah. No money still so choosy, still want to choose good fengshui, near MRT, near Interchange? Mah Bow Tan Gu Gu.
This is getting really interesting…..say for example, if HDB/MDS reports $2B earnings, they will kana public fury, so they decide to instead report $2B loss, anyhow, they still kana public fury……. I love it when the garmen always shoots itself in both feet, hack they should shoot their own ass as well.
We have to thank the MSM for reporting this, now everyone knows the Housing Dam Board is trying pull a fast one on us…….
I still love the classic, mother of all, “Singaporeans are stupid” reason – raising GST to help the poor……..HAHAHA.
Well the thing is we have a lot of ignorant fellow citizens who do not use the internet, believe it or not.
My very own mother indignantly defended HDB over dinner. She said it must have been all that lift upgrading that cost so much money.
At the end of the day, when LKY recently predicted that the next election should not be a problem, I think he knew that a good proportion of the electorate is still internet illiterate.
Yes, in the income chart, there has got to be a sales proceeds of flats, and shouldn’t be missed because it is arguably the most critical element. I like the questions posed by the writer. When you are a minister (+ your fat direct reports) being paid millions for running a housing development function, putting up the numbers and explaining them spontaneously (not with a planned script) one by one is the least you can and should do, because almost all numbers here are material.
Either that or I’ll give the finance minister the opportunity to explain, but don’t give further perception that the numbers cannot be trusted or cannot be interpreted.
So looks like we didn’t have just an accounting problem, we had a RECRUITMENT problem in the first place.
aiyoyo
last time 3room flat $20000, now $250000,
still at a loss? cant figure out…
aiyoyo
If the report is true, then somebody has to beheaded for losing so much money and to cut cost to save itself from going bankrupt. But at the end, it’s still unbelievable that so much money has been lost!
Buyers of HDB are screwed (by the high price), sellers of HDB are screwed (by the losses). Then who gained? Fingers must point to the contractors and material suppliers and middle men/women. So have they overcharged or what? Are there not enough contractors & suppliers to compete for lower prices & better quality? If there are, where is the 3-quote system to get the best deal?
If a business with ready customers from the whole nation queing for you, paying beyond their reach for the price, and you can still make a loss, somewhere something must have gone wrong. Problem is again, no accountability is needed from the boss.
Does the boss of HDB has any links with these contractors & suppliers? He does not need to answer for his big loss in running HDB and on top of that, get subsidised, so who is to say he has not paid the contractors & suppliers anything they ask?
Absurd! Isn’t PUBLIC housing supposed to be NON-PROFIT?
Should be earn less $2 Billion not losses $2 Billion
If and when a housing monopoly loses money(deficit), then it only goes to show that it was/is BADLY managed and the MANAGER?MANAGEMENT must be replaced, if not hanged la…..
patriot.
HDB people create some magical illusions for us to see?
Costs of building a HDB flat
Land- the singapore land, buy from SLA. How much you pay?
Buildings-contracted out to contractors- pay for contruction- lowest bidder gets projects.
Development charges
Legal fees
HDB sell the flat ( at inflated prices- market pricing of resale flat less subsidy).
Selling price of flats – Costs= Profit
The resale flats’ prices have skyrocketed (low supply- high demand).
What are the real costs of building flats? HDB cannot give a clear simple answer.
Create smoke and tell you , they are losing money.
They must think , we singaporeans are stupid.
108) aiyoyo on November 5th, 2009 4.44 pm aiyoyo
last time 3room flat $20000, now $250000,
still at a loss? cant figure out…
Who is the biggest LIARS!
CPIB should be keenly interested to find out what the hell is happening at HDB HQ and Ministry of National Development.
How can HDB be losing billions of dollars every year without arousing the suspicion or curiosity of those in authorities for so many years?
I still cannot forget the case of the late Mr Teh Cheng Wan (then Minister for National Development) who committed suicide while there was a CPIB investigation going on against him for corruption.
I just wonder why the authorities are keeping quiet and not responding to such ridiculous unfathomable HDB losses?
Nobody should blame me for thinking like that because the Chief of HDB and the Minister responsible for HDB have not been sacked or at least censured by the PM or the Cabinet. How come? I think this very strange and abnormal, taking into consideration the high standards of accountability and responsibility demanded by our PMs of past and present.
How can a non-corrupt Singapore not be bothered to dig deeper to ascertain the REAL reason for such unprecedented and unfathomable losses suffered by the HDB so that remedial actions can be taken to prevent further losses in subsequent years?
Perhaps, the Opposition Leaders such as Mr Chiam and Mr Low should send an urgent email to the Parliament to demand a Commission of Inquiry to be convened immediately, on an urgent basis. For that matter, any of the 84 Members of Parliament, NCMP or NMP should have the initiative to ask for such Inquiry to be convened immediately.
As HDB has been incurring these losses for years, therefore, in the pubic interests, there should not be any more delays to investigate deeper into such abnormal, strange, suspicious and/or unbelievable happenings in a country that boasts of its extraordinary talents who are paid the world’s highest salaries.
As this has nothing to do with national security, there should be no secrets to hide from the 90% of Singaporeans who live in HDB flats, and who may be blamed for the HDB losses either directly or indirectly.
Since this matter concerns 90% of Singaporeans who live in HDB flats, only a full scale public commission of inquiry can meet the satisfaction of the people.
Action please.
Simple mathematics, buy $1, sells at $10 after minusing $15 to be given back to who we all know, how much left? stupid morons you think singaporeans are all IDIOTS!
Good call Post #117 !
Maybe the Late Teh Cheang Wan is back to haunt HDB, his former baby.
Has he risen from his grave ?
patriot
Yes, very good call at post #117. How can we do it? I don’t think we can rely on the MPs or NMPs anymore on anything. How can we be active citizens to improve our country? Any suggestion?
Dear Kenneth
http://books.google.com/books?id=sIZHRDSGiDMC&pg=PA119&dq=IDF+officer+candidate&lr=#v=onepage&q=IDF%20officer%20candidate&f=false
The above links you to how the best army in the world (our teacher as well) IDF, Israeli Defence Force form its officer.
It took them 5 years to graduate as a PC.
Because IDF believe that only officer can only earn the trust of men and comrade working together that duration of time. Else, it would have an ineffective fighting unit, (maybe a unit full of air-con BGs).
We learn many stuff from IDF and why not follow them on their promotion system as well, since they are a success proven system. Whereas we can only speculate and boast how good our BGs without firing even a shot at enemy.
Mindef knows best what is the reason.
if they lost 2bn, whre then have this money went to?
Losing $2,000,000,000 is a very big sum of money for a statutory board that is producing homes year in and year out. And HDB not only earns from the sales of properties. It also earns from housing loans, legal fees, stamps fees, etc.
Therefore, for HDB to lose $2 billion, it must be a police case. This case must either be reported to the police, the accountant general, the Parliament, or the CPIB for further investigations.
It should not be condoned. Otherwise, next year HDB may lose $4 billions and year after that $8 billions, and so on. Who knows?
Better to do something now before it is too late.
In the end its same shit different day (SSDD)
A rough guide showing much is paid to subcontracters for building of HDB flats, refer to: http://theonlinecitizen.com/2009/09/cost-of-building-hdb-flats-finally-an-answer/
Accordingly, it seems to suggest that marketing costs, employee salary overheads and rent have eaten up the 143% profit margin from each HDB unit and thus there’re losses.
So now we know how much it cost to maintain the HDB management?
Or are they taking into account the cost of all the roads and facilities built in the neighbourhood and the land cost that it occupied? But shouldnt that be taken into the account of the ministry of developement? Best guess is that money flows from one stat board to another ministry. And who is going to audit this internal flow of finance?
No wonder the cost of HDB is going up.
Imagine if HDB loses money then how are the many upgraded lifts going to be maintained? Expect the following to be raised :
a) HDB Parking Fees.
b) Service & Conservancy Fees
c) HDB Rentals.
Maybe if LSH runs for Presidency and wins it, he can have all his questions answered.
blade @126: “marketing costs, employee salary overheads and rent have eaten up the 143% profit margin…”
Marketing – HDB is a monopoly business, almost every single Sporean family has to buy from HDB. What marketing do they need to do? What marketing cost are they talking about?
Rent – HDB rents what from who? Can HDB rent from anybody else to cut cost? What rental cost are they talking about?
Salary overheads – Either HDB pays too well or the staff are so inefficient they have to hire so many. They should take a leaf from big private developers in big countries overseas. They sell cheaper and make more profit.
Have you guys heard the lame news on Punggol 21 yet? Let me copy and paste. Waaaa costs down, constructions down, but everything also go up and they r making a loss. Hey, they r working hard 2 appease our anger now! But, we r bitterly angry becos, more lies again to cover their previous lies >.<
National Development Minister Mah Bow Tan, said: "New HDB estates look like private condominiums, but don’t cost as much as private condominiums. New innovative construction methods like pre—fabrication reduces cost and construction time. And that’s one of the reasons’ why we are able to keep the cost of construction down."
Ya hor, how can HDB run a deficit??? What’s this?? All our $$ gone into the drain!
I’d say we campaign to get Sze Hian to run HDB. He has given so much thought and anlaysis to this and get him to do a better job! We need affordable housing (pls drive the prices loooow) and we want our government to make money!! Sze Hian, I support you!
I am so so TOUCH and crying while typing this message!!! now I realize how “CARING” our moron govt is!!!! so “happy” to know that our pigeon hole is so so heavily subsidize. This MORON govt is known for their generosity throughout the world wat!!! didn’t hear that TH and GIC donated $Billions to Banks and Companies all over the world meh! aiyoh if don’t have this stupid moron papies in the world, THIS WORLD will collapse!!!hahaha
Well, as long as the people continue to accept. there is nothing more to say.
Of coz you’re deficit has doubled you fool. MILLIONS from your sales has been chanelled to pay your MASTER HOBBIT !
if they can still accept, start the elections now.
Now HDB is also in the dirty business of declaring losses.
That means HDB prices is going up up and away soon.
Why is there no election yet?
Time to vote for accountability.
The Real problem I see is the HDD residents are Apathetic to demand for answers.
Not the other way round.
http://www.youtube.com/watch?v=vZfenD0vyjc
Hello ‘There’s your problem’,
The above video may serve to prove for you residents in this part of sg are apathetic enough to Tolerate and Accept bird shitting all over their cars everyday and Noise they produce everyday at the following times:
1. 6 am
2. 6pm
3. midnight
Its 3 times a day ! HDB residents here in the video can tolerate the very loud noise they produce everyday affecting their sleep and thus their energy level required for work and the shit they pour onto their cars everyday. Residents can call for help but do not do so! dunno what to do ! or BOCHAP to do anything about anything.
Proven beyond reasonable doubts. APATHY Really Exists!!!
So, should they complain ?
Yes, while the problem may or may not be with the system, what is definitely true is that many are Apathetic. They do not want to demand.