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Reflecting on “Reflections” – A review of Mah Bow Tan’s book (Part 1 of 9)

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Leong Sze Hian/

This is a review from a statistical perspective, wherever possible, of the book “Reflections on housing a nation”, launched on 22 March. (You can read it here for free and save yourself ten dollars. – Editor)

In part one of the book, which has nine parts, it states that HDB’s core commitments is:

“Homes for ownership: First, home ownership has been the hallmark of our public housing system.  Today, nine in 10 people staying in public housing own their flats, the highest rate in the world”

Have flat, but no money to retire?

Whilst we have the highest public housing ownership rate in the world, on the flip side, practically every study on retirement, indicates that Singaporeans have one of the lowest retirement income replacement rates in the world, despite having the highest pension (CPF) contribution rates in the world.

So, what’s the point of having home ownership, when many Singaporeans end up being in financial stress in your retirement years?

In this connection, I would like to refer to the recent Committee of Supply debate on the Ministry of Manpower in Parliament.

The Manpower Minister said that:

“For the cohort turning 55 in 2010, over 40% of active CPF members attained their cohort MS (Minimum Sum) set at $123,000.  Of these members, more than half have set aside the full cohort MS in cash.  If we were to add back the amounts withdrawn for housing, the average savings of active members turning  55 in 2010 would be $226,000, with the MS attainment rising to about 60%”

If a Singaporean worker starts work at age 21, with a starting salary of $1,100 a month and his or her salary increase at 2 per cent per annum, at the CPF contribution rate of 36 per cent, if the return is 5 per cent, the accumulated sum at age 65 would be $1,001,290.

So, every Singaporean should be a millionaire when they retire at age 65.

So, why is it that only about 20 per cent of active CPF members can meet the current MS of $123,000 at age 55 fully in cash, about 40 per cent including their property pledge, and about 60 per cent if all the amounts withdrawn from housing are added back?

By the way, there are also 1,646,700 inactive CPF members, out of the total CPF members of 3,291,300 in 2009, (Department of Statistics Labour and Productivity Report) who may have very little in their CPF, when they retire.

Good debt?

Mr Mah also wrote:

“Rather than making people pay “dead rent” with no returns for a roof over their heads, the Government decided early on that prudent mortgages can be a “good debt” that allows every citizen, every family, to have a concrete stake in this country”

Since the HDB does not give regular statistics of HDB loan and bank loan mortgages in arrears, I estimate from the last available statistics that about 40,000 households may be in arrears over three months.

We also do not have statistics on how many households have sold their HDB flats in the open market because they could not pay their mortgages, were foreclosed by banks, compulsorily acquired by the HDB, etc

So, how do we evaluate whether it has been a “good debt”, when we do not have the above-mentioned statistics?

Unlock your flat value?

The minister added:

“In the golden years, we help you unlock the value of your flat if necessary, with schemes such as the Lease Buyback, which allows you to stay in the flat while getting a regular income”

Let me illustrate the issue of Lease Buyback with an example.

In the example cited by the Today newspaper of 2 March, 2009 (“I can’t take the flat with me when I die”)

, a 62 year old male with a 3-room HDB flat, will get $5,000 cash and $5,000 to his CPF, followed by a lifelong monthly income of $530.

In a normal reverse mortgage, the home-owner draws income and is charged interest. On death, the market value of the property is offset against the amounts withdrawn plus interest owing to the financial institution.

Assuming an interest rate charge of five per cent, the sum owing after 30 years is $465,274.

If the value of the flat appreciates at 5 per cent, the market value after 30 years is $1.02 million. So, does it mean that in a sense, the flat-owner may lose $554,726 ($1.02 million minus $465,274)?

Wouldn’t the flat-owner be better off renting out one room for about $450, and retain the equity on the flat?

Historically, I understand that HDB flats have always increased in value as there has always been upgrading to new flats under the Selective En-bloc Resettlement Scheme (SERS), for older HDB flats that reach around 40 years old or lesser.

Another alternative may be to downgrade to a studio HDB flat costing say $70,000, to obtain $166,000 to fund one’s retirement. (Existing HDB flat $236,000 – new HDB studio flat $70,000)

Assuming a rate of return of say 4 or 5 per cent, the $166,000 sale proceeds can give a perpetual monthly income of $553 or $692 without consuming any of the $166,000 capital.

The more flats we sell – the more we lose?

Mr Mah then claimed:

“Homes within our budget: Public housing takes up a big chunk of the State’s budget – $1.7 billion in 2010”

On 7 November, 2009, he explained why the HDB had incurred a $2 billion loss  that year, which was twice that of the previous year. (“Ample supply of housing in private market, says Minister Mah”,  Nov 7, 2009, Channel News Asia).

He said:

“It is making a loss and the Government gives it grants every year to cover the losses, mainly because we’re giving subsidies to people to buy flats to make flats affordable to first timers. That is why we’re making a loss.”

The report went on:

“Mr Mah said the HDB makes a loss each time it gives out subsidies to first-timer home buyers, and when it sells flats lower than their cost price. The reason for the high deficit was because more flats were offered for sale last year, compared to the year before”.

Mr Mah’s remarks seem to contradict the statistics  provided in the HDB’s annual report.

According to the annual report, HDB revealed that “the number of flats sold under the home ownership scheme that year was 4,738, which was 7,253 less than the previous year.

According to its section titled “Key statistics”, the “demand for flats” was 9,870 Home Ownership flats for 2008/2009, compared to 12,449 for 2007/2008; and the “Building statistics – Dwelling units” was 3,154 in 2008 compared to 5,063 in 2007.

All these numbers show that the number of flats sold have declined, rather than increased.

The number of flats sold under the home ownership scheme declined by 60 per cent, “Demand for flats” declined by 21 per cent, and “Building statistics – Dwelling units” declined by 38 per cent, for the previous year.

So, how is it possible then that the reason for the high deficit ($2 billion) was because more flats were offered for sale  that year, compared to the year before” when the HDB statistics show that flats’ building, demand and sales, all declined substantially that year compared to the year before?

Can the Minister clarify his statement on the reasons for the doubling of the deficit from $1 billion to $2 billion for that year?

As for Mr Mah’s assurance that HDB “sells flats lower than their cost price”, the HDB has not disclosed the breakdown of the cost of building flats, despite letters to newspaper forums requesting for this information, almost every year.

The last time this information was disclosed was in 1981, when the then National Development Minister Mr Teh Cheang Wan, disclosed the land and construction cost, as well as the subsidy and selling price, of the various flat types in six districts.

For example, a three-room flat in the central core region, cost $53,700 to construct and incurred a land cost of $40,000, and sold for $57,100.

End of Part 1

Mr Leong has beaten Mr Mah by publishing a book in 2008. It has no pictures but at 186 pages (with Chinese translation), is more value for money. You can buy it here!

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Chee Soon Juan questions Shanmugam’s $88 million property sale amid silence from Mainstream Media

Dr Chee Soon Juan of the SDP raised concerns about the S$88 million sale of Mr K Shanmugam’s Good Class Bungalow at Astrid Hill, questioning transparency and the lack of mainstream media coverage. He called for clarity on the buyer, valuation, and potential conflicts of interest.

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On Sunday (22 Sep), Dr Chee Soon Juan, Secretary General of the Singapore Democratic Party (SDP), issued a public statement on Facebook, expressing concerns regarding the sale of Minister for Home Affairs and Law, Mr K Shanmugam’s Good Class Bungalow (GCB) at Astrid Hill.

Dr Chee questioned the transparency of the S$88 million transaction and the absence of mainstream media coverage despite widespread discussion online.

According to multiple reports cited by Dr Chee, Mr Shanmugam’s property was transferred in August 2023 to UBS Trustees (Singapore) Pte Ltd, which holds the property in trust under the Jasmine Villa Settlement.

Dr Chee’s statement focused on two primary concerns: the lack of response from Mr Shanmugam regarding the transaction and the silence of major media outlets, including Singapore Press Holdings and Mediacorp.

He argued that, given the ongoing public discourse and the relevance of property prices in Singapore, the sale of a high-value asset by a public official warranted further scrutiny.

In his Facebook post, Dr Chee posed several questions directed at Mr Shanmugam and the government:

  1. Who purchased the property, and is the buyer a Singaporean citizen?
  2. Who owns Jasmine Villa Settlement?
  3. Were former Prime Minister Lee Hsien Loong and current Prime Minister Lawrence Wong informed of the transaction, and what were their responses?
  4. How was it ensured that the funds were not linked to money laundering?
  5. How was the property’s valuation determined, and by whom?

The Astrid Hill property, originally purchased by Mr Shanmugam in 2003 for S$7.95 million, saw a significant increase in value, aligning with the high-end status of District 10, where it is located. The 3,170.7 square-meter property was sold for S$88 million in August 2023.

Dr Chee highlighted that, despite Mr Shanmugam’s detailed responses regarding the Ridout Road property, no such transparency had been offered in relation to the Astrid Hill sale.

He argued that the lack of mainstream media coverage was particularly concerning, as public interest in the sale is high. Dr Chee emphasized that property prices and housing affordability are critical issues in Singapore, and transparency from public officials is essential to maintain trust.

Dr Chee emphasized that the Ministerial Code of Conduct unambiguously states: “A Minister must scrupulously avoid any actual or apparent conflict of interest between his office and his private financial interests.”

He concluded his statement by reiterating the need for Mr Shanmugam to address the questions raised, as the matter involves not only the Minister himself but also the integrity of the government and its responsibility to the public.

The supposed sale of Mr Shamugam’s Astrid Hill property took place just a month after Mr Shanmugam spoke in Parliament over his rental of a state-owned bungalow at Ridout Road via a ministerial statement addressing potential conflicts of interest.

At that time, Mr Shanmugam explained that his decision to sell his home was due to concerns about over-investment in a single asset, noting that his financial planning prompted him to sell the property and move into rental accommodation.

The Ridout Road saga last year centred on concerns about Mr Shanmugam’s rental of a sprawling black-and-white colonial bungalow, occupying a massive plot of land, managed by the Singapore Land Authority (SLA), which he oversees in his capacity as Minister for Law. Minister for Foreign Affairs, Dr Vivian Balakrishnan, also rented a similarly expansive property nearby.

Mr Shanmugam is said to have recused himself from the decision-making process, and a subsequent investigation by the Corrupt Practices Investigation Bureau (CPIB) found no wrongdoing while Senior Minister Teo Chee Hean confirmed in Parliament that Mr Shanmugam had removed himself from any decisions involving the property.

As of now, Mr Shanmugam has not commented publicly on the sale of his Astrid Hill property.

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Redditors question support for PAP over perceived arrogance and authoritarian attitude

Despite Senior Minister Lee Hsien Loong’s warning that slimmer electoral margins would limit the government’s political space “to do the right things”, many Redditors questioned their support for the ruling PAP, criticising its perceived arrogance. They argued that SM Lee’s remarks show the party has ‘lost its ways’ and acts as if it alone can determine what is right. Others noted that the PAP’s supermajority allows for the passage of unfavourable policies without adequate scrutiny.

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In a recent speech, Senior Minister Lee Hsien Loong warned that “if electoral margins get slimmer, the government will have less political space to do the right things.”

Mr Lee, who served as Prime Minister for 20 years, highlighted the risks associated with increasingly competitive politics.

“It will become harder to disregard short-term considerations in decision-making. The political dynamics will become very different,” he stated during his speech at the Annual Public Service Leadership Ceremony 2024 on 17 September.

“Singaporeans must understand the dangers this creates, and so must the public service,” SM Lee stressed.

SM Lee pointed out that Singapore faces formidable internal and external challenges in the years ahead, with rising expectations and demands from citizens.

As growth becomes harder to achieve and politics becomes more fiercely contested, he warned, “Things can go wrong for Singapore too.”

He urged vigilance in preparing for an uncertain future, noting, “As the world changes, and as the generations change, we must do our best to renew our system – to ensure that it continues to work well for us, even as things change.”

Critique of PAP’s Arrogance and Disconnect from Singaporeans

The People’s Action Party (PAP) experienced a notable decline in its vote share during the 2020 General Election, securing 61.24% of the votes and winning 83 out of 93 seats, a drop from 69.9% in 2015.

A significant loss was in Sengkang GRC, where the PAP team, led by former Minister Ng Chee Meng, was defeated by the Workers’ Party (WP).

In discussions on Reddit, some users questioned why they should support the ruling PAP, criticising the party’s perceived arrogance.

They pointed out that SM Lee’s recent remarks illustrate that the party has strayed from effectively serving Singaporeans and seems to believe it has the sole authority to decide what is right.

Others highlighted that the PAP’s super-majority in Parliament enables the passage of unfavourable policies without sufficient scrutiny.

One comment acknowledged that while many older Singaporeans remain loyal to the PAP due to its past achievements, younger generations feel the party has failed to deliver similar results.

There is significant frustration that essentials like housing and the cost of living have become less affordable compared to previous generations.

The comment emphasised the importance of the 2011 election results, which they believe compelled the PAP to reassess its policies, especially concerning foreign labor and job security.

He suggested that to retain voter support, the PAP must continue to ensure a good material standard of living.

“Then, I ask you, vote PAP for what? They deserve to lose a supermajority. Or else why would they continue to deliver the same promises they delivered to our parents? What else would get a bunch of clueless bureaucrats to recognise their problems?”

Emphasising Government Accountability to the Public

Another Redditor argued that it is the government’s responsibility to be accountable to the people.

He further challenged SM Lee’s assertion about having less political space to do the right things, questioning his authority to define what is “right” for Singapore.

The comment criticised initiatives like the Founder’s Memorial and the NS Square, suggesting they may serve to boost the egos of a few rather than benefit the broader population. The Redditor also questioned the justification for GST hikes amid rising living costs.

“Policies should always be enacted to the benefit of the people, and it should always be the people who decide what is the best course of action for our country. No one should decide that other than us.”

The comment called for an end to narratives that present the PAP as the only party capable of rescuing Singapore from crises, stating that the country has moved past the existential challenges of its founding era and that innovative ideas can come from beyond a single political party.

Another comment echoed this sentiment, noting that by stating this, SM Lee seemingly expects Singaporeans to accept the PAP’s assumption that they—and by extension, the government and public service—will generally do the “right things.”

“What is conveniently overlooked is that the point of having elections is to have us examine for ourselves if we accept that very premise, and vote accordingly.”

A comment further argued that simply losing a supermajority does not equate to a lack of political space for the government to make the right decisions.

The Redditor express frustration with SM Lee’s rhetoric, suggesting that he is manipulating public perception to justify arbitrary changes to the constitution.

Concerns Over PAP’s Supermajority in Parliament

Another comment pointed out that the PAP’s supermajority in Parliament enables the passage of questionable and controversial policies, bypassing robust debate and discussion.

The comment highlighted the contentious constitutional amendments made in late 2016, which reserved the elected presidency for candidates from a specific racial group if no president from that group had served in the previous five terms.

A comment highlighted the contrast: in the past, the PAP enjoyed a wide electoral margin because citizens believed they governed effectively. Now, the PAP claims that without a substantial electoral margin, they cannot govern well.

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