Like most big cities, Singapore is getting over-crowded. It is easy to build highrise apartments and offices for a bigger population but the challenge is in transporting these people between their homes and workplaces and back.
A denser population has led to congested roads, crowded trains and buses and long commuting time. Road traffic is a major contributor to the high energy consumption and increase in oil prices in recent years.
We have to find ways to reduce the need for commuting. People should be encouraged to find work near their homes or to move their homes closer to their places of work. Students should be encouraged to study in a school near their homes too.
Why can’t more people work near their homes? The obvious answer is that too many workplaces are centralised in the central and other business districts. Businesses find it easy to recruit from a bigger talent pool from all over Singapore, if their workplaces are convenient for their employees to travel to.
This means a lot of commuting. Most people have to spend one hour or longer to travel to work. And they have to spend another hour or more to travel home. This has to be multiplied by two million workers.
Imagine a different situation – say, one third of these workers are able to work near their homes. This will reduce the commuting demand by one third. The congestions on the roads, buses and trains will be reduced by one-third. Energy consumption will also be reduced. Traveling time will be shorter.
What is needed to make it possible for people to work near their homes?
First, businesses must find it feasible to locate their big offices and workplaces in the residential towns where their potential workers are.
The businesses may be able to find some of their workers from the residents of the town but they may need to attract workers living in other towns, who do not mind moving their homes to be closer to their places of work.
Social and financial obstacles
There are two main obstacles in getting people to move their homes – social and financial.
The social obstacle is the desire to live near their parents and friends, or familiarity with their current neighbourhood.
The financial obstacle is the high cost of relocating to another place, such as stamp duty, legal and agent fees. This can amount to five per cent of the cost of the property, which is already very high in Singapore.
Another obstacle is the rule on the financing of Housing & Development Board flats. I understand that many people will not quality for the same attractive financing terms, if they changed to a new flat.
It may be difficult to overcome the social obstacle. Perhaps we can deal with the financial one instead.
Reducing the cost of relocation
If the cost of relocation can be reduced to say, 1 percent and the financing obstacle is removed, more people may be willing to consider this option. They can reduce their traveling cost and time and improve their quality of life by living near their places of work.
Another option is to encourage people to rent their property, rather than to buy the property that they live in. This will give them more flexibility in changing their places of residence and to be near their offices.
Under the current taxation system in Singapore, there is an incentive for people to buy their homes, rather than to rent it. This has led to the situation where more people buy their homes, and then get stuck to it. They lose the flexibility to move.
Renting, not buying
If renting is made as attractive as home ownership, more people may be interested to consider renting as an option. For those who wish to have a stake in property, they can invest in real estate investment trusts (REITS). The market will soon set up residential REITs, comprising of private properties or HDB flats, for these people to invest in, while they rent their homes.
I do not expect this new concept of “live near the place of work” to apply to all families. Some families have two income earners who have to work at different locations. Some may have to consider where their children study or where their parents live.
But it may be practical for some families, for example, where the spouse is a homemaker or is interested to do part time work in the neighbourhood.
We should also promote the concept of working from home. Some types of work are suitable to be done at home, such as call center work, design work, data entry and forms processing. These types of work can be done using a personal computer connected to the internet. The workers can receive and submit the completed work through the internet and be paid on a piece rate based on the actual work that is completed.
A coordinated national effort needed
We need a coordinated national effort to implement the “work from home” or “work near home” idea, including incentives for the pioneering businesses to make this possible. Incentives always help to achieve the desired outcomes.
To make this dream possible, and to reduce the commuting demand, we need the following policy actions:
1. Waive the stamp duty and reduce the agency and legal fees on property purchases for people who want to move to be close to their places of work
2. Give the same tax incentives for people to rent their place of residence, as is now extended to home ownership.
3. Encourage businesses to set up their offices and workplaces in the residential towns. Give incentives to cover the relocation costs or to have a lower starting cost.
4. Give incentives to businesses to promote working from home.
I hope that Singapore can take the lead in finding a solution to this challenge which is also faced by big cities all over the world. We can also contribute to the reduction in energy consumption and reduce global warming.