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?
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Hi,
I saw this HDB loss news on the news on tv yesterday evening. However, I can’t seems to find the article on it in online ST & Lianhe Zaobao.
And I don’t seems to saw it on today newspaper(hardcopy too). Can someone advise if you manage to find it? Or they took out this news?
So why isn’t the entire management team sacked for poor management? Hmm?
52) tan on November 3rd, 2009 5.56 pm
why bother to read news from the Singapore MSM? It has no credibility at all!
A recent classic example is the letter from Potong Pasir Town Council rebutting a ST report. The letter was published here on TOC but not publish at Straits Times which the letter was sent to.
Look at the ST like the Squid (Sotong);
to escape, squirt black ink & disappear…
My neighbourhood roti prata seller made a huge multi-million dollar loss this year.
He used the same accounting system as the HDB and realised that he was offering a large market subsidy to buyers of his roti prata – at the Shangri-La, the roti prata was $15 a plate and only had two prata kosong with a piece of chicken in the curry gravy. He on the other hand, provided a $12 subsidy for each customer buying from him. With the several hundred thousand plates of roti prata he sold last year, he incurred a massive loss in the millions.
Thank goodness for the generosity of hawkers like him – otherwise how would Singaporeans survive!
54) FriedKwayTiaoWithHum on November 3rd, 2009 6.07 pm
Because i want detail information on how HDB come about with the loss. …and It’ll be clearer and easier for people to spot error? :p
Notice that when headline of tv news don’t appear, even as normal news in hardcopy, i’m just wondering if it means something is ‘wrong’ with the news, thus they don’t want people to have ‘hardcopy’ of it…?
Look under Expenditure :
“Provision for foreseeable/unrealised loss for properties under development/for sale.” is S$1,237m (S$1.237b). Can someone explain this?
Previous year was S$784m.
Loss under sales? I doubt so. Each unit price at Pinnacle has increased S$200k, since it was launched in 2004. What about all the S$10 application fee collected?
If they had tried their very best to reduce the “foreseeable” losses, I think they have not put in their “world class” effort.
Time for “Haven’t pay Don’t Build” (HDB) to explain.
Yet another piece of bogus news purposefully presented in a convoluted manner so your average heartlander (i.e uncles and aunties) are never going to understand it. Sadly, this bogus ‘deficit’ is going to be announced on the news, convincing the majority that we are indeed getting a ‘steal’ for government-subsidised housing.
However, unlike a bigger country like China or even the USA where there are simply too many people to ensure the majority get the truth, Singapore is a relatively small country where even word by mouth can spread relatively quickly.
As naive as this might sound, I would suggest starting from family members, correct them if they are misinformed. The reason why the PAP has been able to operate without accounting to the people for so long is because of this information asymmetry. Correct that and they won’t be able to stand for much longer.
Folks these are the tell tale signs that Singapore is bleeding and its not because of grants or meger handouts, its because of poor leadership….. I hope the elections come soon so that evey Singaporean who wants a govt that works for its people and is will serve the people without million dollar salary will exercise your vote for a better govt.
I just hope that there is enough money in the kitty left for us…..may we all live to see a better govt. Singaporeans have come a long way, lets not let all our hardwork go to waste because of poor leadership……..
They have tried everthing at the expense of the people and soon the system will turn on itself…….
In summary we get depressed wages with no welfare and no minimum wage, Poor policy that opened up the flood gates for cheap labour,,,,,,, lease a house for 99 years and pay till you drop dead……don’t get married or don’t want to have children because of unstable economic conditions on wages and jobs….. cost of medical goes up and up …….and last but not least we have million dollar mouth piece that ask you to take a cheaper salary and work harder……..
This is the Singapore i know sadly…….serve my nation in the Army to find jobs being taken up by foreigners, and what are we defending here again ?
As a citizen and tax payer, I am very upset that HDB incurred a deficit of $2 billion when the majority of the population thinks that HDB is making thousands of dollars for each flat sold.
The minister must explain in detail the variance between the citizens’ perception of huge profit and the $2 billion deficit.
$2 billion ($2,000,000,000) divided by 10,000 flats per year = $200,000 defict for each flat sold. This is mind boggling! It is obsence!!
From managing only the HDB carparks I can make $2 BILLION.
What a gold mine!
Provided I am not told to hand any proceed over to the Jinx
Singapore Press Holdings is one of the region’s largest publisher and the premier information and communications company in Singapore and Asia. It …..currently publishes 10 newspapers in 4 languages. In Singapore alone, these reach 3.8 million readers daily with a combined daily circulation of 1.1 million copies……..
Judy Choong
Senior Manager, Advertising & Promotions
Marketing Division
http://www.sph.com.sg/article.display.php?id=20
===============================================================
3.8 millions readers in Singapore daily? What BS? With the population of Singaporeans and PRs being 3.8 million, this claim by SPH means every man, woman, child and even baby, reads one of its newspapers.
Playing with the numbers? Most certainly. That is why I don’t trust anything printed in the Shitty Times.
I wonder if the advertisers are fooled by this.
I’m shocked by the news. I couldn’t believe my ears when I heard on the radio news that the HDB made such a big loss. Heads must roll!
All Singapore citizen, it is time to vote and support opposition party, we paid world class salary to minister (whole cabinet), then they can tell you HDB made $2 Billion loss. They think we are stupid ?
Im really flabbergasted by that announcement.
How can the ONLY authorised person to sell flats in Singapore be making losses? And at this astonishing level? This is an obvious firing offence.
For failing check and balances at this magnificent magnitude, the whole management should resign in shame. I can put my pet worm in their place and i bet it cant get any worst.
Im utterly disappointed that the best and brightest brains the incumbent are bragging about are screwing with Singaporeans future. Lets pray hard.
Trust me when I say that government will announce more superficial and creatively-manipulated losses which they will happily blame on the citizens in order to justify for GST rise from current 7% to 10%. Yes, this time increase GST to help the SIN CITY, not the poor anymore.
I was in utter disbelief when I saw the report. My first instinctive reaction was whether this is a concocted ploy by SPH and HDB to simmer the recent public heat and angst on the ever increasing resale prices.
How could a public institution with escalating asset values so akin to a mega corporation be in the red unless it is a case of investments gone wrong. I am no accounting guru so I am really interested to know if someone can expound in figures terms how the below reasons cited could have really led them to a 2 billion deficit?
- Highly subsidised flats
- Higher construction costs
- Upgrading works for lifts
- Rental flats.
- Lease Buyback Scheme
- Mortgage arrears
They must be paying the minister and everyone at HDB a good salary lah….that is why……
Imagine the way the mint and yet this creative accounting…..all because there is nobody to ask. Well, it about time to decide for our futures.
Just throw the pap out of govt and the hdb pricing would eventually start dropping cos each and every ministry is more concern in answerable to only 1 old man when their ministry is not making any money rather than looking after the well being of the local citizens. Time to kick them all out of office before things get worst, as a matter of fact, we are already doomed.
#32 this must be a joke….
I think you are right, the real reason is to keep HDB flat prices up.
I will go for the next GE rally of the PAP and ask them to migrate. It is too stressful having them in Singapore.
so where did the profits go then? read the SLA 2009 report may shed some light
The funny thing is you cant find the 2009 report on SLA website
but here
http://www.sla.gov.sg/doc/new/SLA_Annual_Report_2009_low_res.pdf
Indeed this is the GREAT Singapore SALE :)
Believed it must be a fool! It must be a big joke HDB making a big loss!
i think we should put pressure on all HDB staff and activities and report any signs of lavish spending
that way, we can help them reduce the deficit….
i’m watching out for their bonuses and office decor
lets help HDB reduce spending and contribute to nation building!
Did HDB buy MiniBomb too ?
cost of flats is the best kept secrets in sg. Sze Hian, is there any other govt boards accounting is as creative as HDB’s?
Its simply strange that no one in Singapore has a right to ask and receive a straight forward reply of how much is the total cost of building a flat and the actual selling price.
Just an answer like In Queenstown or Snegkang, the land cost for this BTO project is $XXX and the construction cost is $XXX with misc cost $XXX. These are sold at an average price $XXX resulting in a subsidy of the ($XXX- $XXX) = $XXX
Even if it is a market subsidy, people will still be happy as the the land is at Market price with a real figure.
Don’t 80% of the population have a right to know a simple fact like these? Will it cause riots or is it a state secret we must not let other countries know?
Maybe they were overpaid the Phua Chu Kangs of Singapore for the contracts to build lifts and sheltered walkways.
Or maybe they overpaid the construction workers from India?
Or maybe the cement they used were mixed with gold dust instead of stones.
Or maybe…ugh. who are we kidding??
They usually hold prices down just before the elections. Once they are return to power, the prices go up immediately. This is tragic as the data below shows more suicide in election years after the price increase (sometimes immediately after polling day).
http://theonlinecitizen.com/2007/08/the-relentless-rising-cost-of-living-in-singapore/
http://www.tnp.sg/printfriendly/0,4139,109699,00.html
Wow…a lot of good news coming, HDB losing money, TH making money, LHL says no double dip recession and this morning the Tooth fairy appeared at my door step. All this is a figment of imagination. All I can see is that HDB prices are going up, CPF money going to be stuck for a long time, jobless rate going up and rentals going up…..singaporeans are really in dreamland…..
Just 4 words “Laugh Out Loud” and Unbelievable.
Reverse engineering from the TH/GIC saga, similar ingredients but different dressing?? these are the trciks the highly paid civil servants learned during their expensive cooking trips in France. I seriously think how long these elites can play this cooking up trick for how long?
u know what guys, developers like far east and city dev making millions if not billions and our dear million dollar paid minister lost BILLIONS AND NOT MILLIONS.
Lies, more lies and damn lies!! Lee and horse face Mah thinks that just by publishing an incoherent report will deceive the people and make them stop their criticism!
Big Cheers to Shawn @ 47) Shawn on November 3rd, 2009 5.01 pm.
Yes, cashflow never lies. A firm with a fantastic Balance sheet and great Profit & Loss statement with a negative cashflow is lying through its teeth…which is what we have with the HDB press release. I wonder who decided to make that announcement?
As for any actual inquiry…ohoh…the Auditor General Lim Soo Ping used to be Deputy Secretary (Information and the Arts), Ministry of Information, Communications and the Arts. More merry go rounds for the Preferred Appointed People (PAP). When his office has to report to the President and Parliament, I don’t think we can count him to be giving us any heads up on what’s happening at HDB…IF his office is ever allowed to do anything like that.
another excuse to bring up the cost of HDB. Something is wrong. Mr Mah think we are all stupid.
Oh holy shit! I just brought the HDB 5Billion Bond and it just turned to paper cos they are having a deficit!
I want my money back….damn corrupted body!
Paul at @56 gives the simplest answer to how HDB is faking it better than a Jap AV model, so even uncle and aunties understand.
To summarize, I sell 2 prata for $1.50, kosong, with curry. Shangri La’s prata kosong sells for $10. Therefore every prata I sell I lose $8.50.
1 year I sell 20,000 prata, so in total I lose $170,000.
HDB sell flat for $400,000. Opposite condo sells for $600,000. Therefore every HDB that is sold, HDB loses $200,000
1 year sell 10,000 HDB, so in total lose $2 billion.
#Devoran, you are absolutely right on that kind of the calculation of HDB. They only take into account the subsidies, the upgrading expenses, the buyback money spent etc, etc. Wow! all losing leh!
The market value profit on new flats and the surcharge on buying second flat on citizens, low land cost, minimum development cost. Huge profit on BTO flats.
And MND and Mabok kateh Tan never uttered a word in the ST and clarify their stand. They know that they puledl a too fast one on us all and are now kicking their own arse for their stupidity.
Sheer madness!! HDB lose 2 billion. The transaction of new and resale flats are fast and furious. Who are they trying to bluff? Maybe LKY’s grandson or granddaughter. HAHAHAHA !
I think we better ask Lee Wei Ling to speak up in the Sunday column and clarify her stand on the fiasco of HDB.
She is a woman of conscience now compared to Mabok kateh Tan.
sorry to say that I find it hard to believe when I first heard of the news, wonder how can it be deficit instead of surplus
There is a term called “creative accounting” Perhaps HDB should disclosure how they arrive the deficits especially for newly built flats which are sold at slightly below market prices? Don’t take things at face value.
I wonder why opposition like WP, RP is not ‘cashing’ on this one BIG lobang to give them a big ‘bang’ to fire them. They could write on their websites.
Shall we take actions and remind them?
“Paul at @56 gives the simplest answer to how HDB is faking it better than a Jap AV model, so even uncle and aunties understand.
To summarize, I sell 2 prata for $1.50, kosong, with curry. Shangri La’s prata kosong sells for $10. Therefore every prata I sell I lose $8.50.
1 year I sell 20,000 prata, so in total I lose $170,000.
HDB sell flat for $400,000. Opposite condo sells for $600,000. Therefore every HDB that is sold, HDB loses $200,000
1 year sell 10,000 HDB, so in total lose $2 billion.”
The greatest con-family and con-government on earth running the SIN CITY. Where else in the world can we have such a illegalised large-scale scam happening ? Fancy using creative accounting and hoodwinking the nation that our accounting is above board and law.
Even if Singaporeans want to shut their eyes , heaven will not. I smell that downfall of PAP is imminent. Long Live PAP !!!!
Good grief, I get Sgd1,500 salary and govt minister get 1 million, means that I’m under paid by 998500! Where can I make a claim for back pay?
If I run a business, I can charge anything I want and people still have to buy from me, I can get subsidy if I make a loss and I can promoted for getting subsidy, is there anything I need to do? I will be taking 5 weeks off to learn French cooking too.
The cost of running HDB and building HDB far outstrip the high selling price* of HDB. *It is reasonable to say that selling price of HDB is high (too high) when we take into consideration average household incomes. This is the biggest inefficiency I have ever witnessed. Mr Mah and the whole ruling party should be fired.
HDB is run by whom PAP. As it should be all the management who has been running HDB should be held responsible and tender in their resignations with immediate effect.
This is the natural process of accountability. But hey, I forgot this is Singapore where everything wrong or mistakes done by PAP managed is normally let off with a mere slap. don’t do it again. Ok let’s move one. It is one of those things!
Then HDB should close down and another be set up in its place cos it’s run by incompetent people payed extreme high wages and said to be the cream ala cream of people specially chosen by the government.
Where’s the transparency in all of this. This and others yet to surface will be good election issues. I look forward to the day of election where ministers will loose and who knows even the PM might even loose. Now that will be an eye opener to all singaporeans and the world to see that Singaporeans have finally woken up and decided that there is a need for CHANGE!
HDB loses money Temasek loses money. You call these elite ?? Pay them top dollar and they can’t perform, should sack the ceo.
I believe we have the only monopoly in the world that loses money.
Or is it the only lying monopoly in the world that ‘loses’ money?
Actually HDB has done a good job, just that no body is aware of it.
It is the greatest machine of contraceptive, out there to sterilize people who cannot make enough money to procreate.
HDB price itself affordable to a certain class. For those below, hell to you if you dare marrying or worse procreating.
Before LKY has his graduate mama scheme, SDU differentiated with SDS. After all these proof to be too eugenics, then we have the “affordable HDB” scheme.
Get it, everyone, HDB is SS einsatzgruppen or gestapo of Nazi PAP, all out to make those poor, stupid unfit barren.
Give them kudos, they are doing fine.
how much money is received by HDB by allowing Starhub and Singtel to earn money from residents in HDB homes?