Is the HDB making losses because it pays for land at market prices to the Singapore Land Authority (SLA)?
I refer to the article “Bank Negara’s land buy sparks talk of 1MDB bailout” (Straits Times, Feb 9).
The article states that “Questions are growing around the Malaysian central bank’s recent purchase of government land for RM2 billion (S$678 million), with observers saying it is unusual for the institution to pay market price for state land.”
The hefty price tag has also sparked claims that the government is raiding Bank Negara Malaysia’s (BNM) coffers to bail out troubled state fund 1Malaysia Development Berhad (1MDB), which last December forked out US$602.7 million (S$802 million) to settle a debt with Abu Dhabi’s International Petroleum Investment Company (Ipic).
BNM’s response this week that the buy was an “arm’s length transaction” only fuelled further disquiet over whether the financial regulator should be making such deals at commercial prices.”
Since we are on the subject of “land price” – Do you know that HDB charges land at market prices, purchased from the Singapore Land Authority (SLA)?
When Workers’ Party (WP) secretary-general Low Thia Khiang, proposed that the cost of state land be lowered so that homes could be built cheaper and savings could be passed on to first-time home buyers back in April 2011, then-National Development Minister Mah Bow Tan commented that this is akin to raiding from the reserves.
Mr Mah speaking to reporters then, stressed that land in Singapore is part of the country’s national reserves. He said: “When he says that I’m going to finance this by lowering the value of land, basically what he’s doing is taking money from the reserves. “It is not a matter of left pocket to right pocket, it’s a matter of taking, dipping into the reserves.”
Are there any countries that price public housing by charging state land at market prices?
In Hong Kong, all land owned by the government and land is granted to the Housing Authority without any premium even though it is recognised that it is a loss of potential public revenue. (source)
So, when the Housing Department Board says that it has lost billions because the more flats it builds and sells – the more money it loses – does it mean that funds may be simply channelled to the SLA for the land at market prices?