SINGAPORE — “It won’t be helpful or meaningful to” provide the breakdown of the development cost for flats built by the Housing Development Board (HDB), said Ms Indranee Rajah.

This was said by the Minister in the Prime Minister’s Office and Second Minister for Finance in response to a Parliamentary Question filed by the Leader of the Opposition, Pritam Singh on Monday (7 Nov).

The Workers’ Party Secretary-General had asked if HDB would provide a clear breakdown of the total development cost of all new flats and the value of the “generous subsidies” applied to the assessed market price of these new flats, in light of the POFMA Correction Directions issued on 14 October 2022 to an individual for his Facebook posts dated 4 October 2022.

Ms Indranee noted, “So Mr Singh’s question was, would we give a breakdown for all new flats henceforth.”

“It’s not meaningful because you will be just comparing this one with this one. And, you know, prices in one area may not be the same as the other. So that is the answer. My straightforward answer is it won’t be helpful or meaningful to do so.” said Ms Indranee.

Explaining to Ms Indranee why it would be meaningful to do so, Mr Singh said:

“So since the introduction of the prime location housing (PLH) of bleached flats last year, it suggests to me at least or provides an example why a detailed publication of HDB subsidies actually warranted. A HDB PLH flat buyer upon selling his PLH flat after ten-year MOP (Minimum Occupancy Period), will have to return the quantum of additional subsidies provided as a percentage of the original assessed market value of the flat and the subsidy recovery will apply to the resale price.”

He added, “That is a reflection of the prevailing market value regardless if the flat is sold at a gain or loss. Another reason I would suggest to the Minister to publish the dollar value of the subsidy is to scrutinise and track the amount of subsidies being diverted for homeownership purposes.”

“This is particularly in view of the Ministry of National Development’s 2011 decision to delink BTO prices from the rising resale market than the median price of a 4 room and larger HDB resale flats has increased 26% between 2017 and 2022, with resale prices reaching record highs today and therefore pushing up the market price of land. Increasing the size of the subsidies under the current HDB policy would appear to be the main way through which BTO prices will be kept affordable.”

In view of these new reasons, Mr Singh asked what is preventing HDB from publishing the dollar value of HDB subsidies for new BTO flats.

Ms Indranee retorted saying, “With respect to prime location housing. It actually doesn’t really change my answer because at the end of the day, the question is what is affordable to the person who’s buying? And in that, we have made no secret of the fact that for prime location housing, you will have to have a greater subsidy.”

“So that’s the key thing. So it comes back to the same question, why would you have to disclose or put out the development costs of every single project? It’s just not meaningful.”

“The key thing is to the buyer, is this affordable? And that’s what HDB does.”

Ms Indranee Cannot See Correlation Between POFMA Correction Directions And HDB’s Need To Disclose Breakdown Of Development Cost

Ms Indranee asked a question in return to Mr Singh on what is the correlation between the POFMA correction notice he is referring to and the question that he is asking about HDB’s disclosure of cost.

“I’m just trying to understand how it’s correlated because the fact that we provided subsidies has always been known long before the POFMA correction notice. So I just want to know the connection,” asked Ms Indranee.

In response, Mr Singh said that it is the government’s point that flats are generously subsidized before they are sold. So a subsidy is applied by HDB and that’s why flats can be sold at an affordable price. So that’s the correlation.

When pressed further for another explanation of the correlation between the POFMA correction direction and his questions, Mr Singh noted that the individual who was issued the Pofma correction direction was the Chief Economist of the Government of Singapore Investment Corporation (GIC).

“So if the Minister sees that this has been known for a long time, one would expect some of that stature to also not fall foul of Pofma and be POFMAed. But I think Minister has said that she will answer the question. So I hope the Minister can answer the question whether HDB will provide a breakdown of the subsidies again” said Mr Singh.

Ms Indranee said, “I don’t think there is any room in the law books which says that economists and ex-economists of GIC cannot be POFMAed. What the law says is that if you say something which is factually incorrect, then you are required to post a direction pointing out to it.”

She added, “the POFMAed post alleged that there was a disingenuous and misleading analysis of the $270 million loss made by HDB…The POFMAed post said it was an accounting sleight of hand being an omission that the government acquired most of its land at minimal or much lower cost by compulsory acquisition, and that the true cost price should be the original book value.”

“Those were the key things. And in response, the POFMA clarification pointed out that actually there is a real loss. And the fact that when we built HDB flats under the housing program, the fact that the government incurred losses.”

POFMA Correction Directions On Facebook Posts

Without a doubt, the individual whom Mr Singh is referring to in his question is Mr Yeoh Lam Keong, former Chief Economist of GIC.

Mr Yeoh had earlier published two Facebook posts on 4 October, which commented on a reply made by Minister Lee to Constituency Member of Parliament, Mr Leong Mun Wai’s Parliamentary Question.

Mr Leong had asked for the HDB’s net loss for the Central Weave BTO project at Ang Mo Kio; the cost of land paid by HDB to the Singapore Land Authority (SLA) for this project; and the net profit and loss position for the Singapore Government, including HDB and SLA, for this project.

In response, Mr Lee said that the estimated development loss of about S$250 million for the project would increase to about S$270 million after considering the Central Provident Fund (CPF) housing grants given to eligible buyers.

Mr Lee’s reported reply to Mr Leong spurred Mr Yeoh to write on his 4 Oct Facebook post, “A rather disingenuous and misleading analysis of the supposed $270mn loss made by HDB and by inference the government in developing BTO flats in AMK imho.”

Subsequently, on 14 October, Mr Lee directed the POFMA Office to issue Correction Directions to Yeoh Lam Keong and The Online Citizen Asia (TOC) over alleged false and misleading statements regarding Housing Development Board (HDB)’s deficits and Singapore’s Past Reserves.

The Minister claims that Mr Yeoh’s Facebook posts had falsely conveyed the message of HDB not incurring a loss of about $270 million from the Central Weave @ AMK Build-To-Order (BTO) Project and that the Government is free to sell State land at nominal or much lower cost than its fair market value.

In regards to the HDB’s loss, the Minister in his correction directions states that the losses incurred by HDB are accurate and real.

He states that for the Central Weave @ AMK project, HDB will incur an estimated development loss of about $250 million, or about $270 million after taking into account housing grants.

It is also stated that HDB’s deficits are covered using funding from the annual Budget, which is raised from taxes and other revenue streams.

As for the sale of State land, Mr Lee wrote that the State land is part of Singapore’s Past Reserves.

The Government cannot sell State land at nominal or much lower cost than its fair market value without the President’s approval, as doing so would constitute a draw on Past Reserves, claims the Minister.

“Past Reserves are protected by the Constitution for the benefit of future generations and use during crisis. The President’s concurrence is needed before the Government can draw on Past Reserves.”

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