Wednesday, 4 October 2023

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ABSD Exemption Clause in Singapore’s FTAs: A Challenge to Sovereignty

by Foong Swee Fong

This has to take the cake for stating an unfavourable fact favourably.

The Straits Times reported that Singapore residents (citizens and PRs) bought 99% of units sold at the Reserve Residences.

Of the remaining 1%, “three are foreigners from the United States, who are subject to the same additional buyer’s stamp duty (ABSD) rate as Singapore residents under a free trade agreement (FTA)”.

Did you catch the sleight of hand? The phrase should have been: “Unlike other foreigners, US citizens do not need to pay foreign ABSD”, rather than, “being subject to the same ABSD rate as Singapore residents” – Same same, but different.

Many readers, being too busy making a living and therefore not on top of current affairs, will get the impression that US residents being subjected to the same treatment as Singapore residents, as cleverly phrased by the reporter, as being fair, until they remember or realize that foreigners are subject to a 60% ABSD to put a lid on them chasing up property prices.

Of all the countries with whom we have signed Free Trade Agreements, and we have signed 27 to date, only the US-Singapore FTA (USSFTA) and the European FTA (as distinct from the EU-Singapore FTA), exempts it’s residents from paying ABSD.

Thus residents from the US, Switzerland, Norway, Iceland and Liechtenstein will thus continue to chase up property prices here.

Just US alone will have enough rich residents to nullify our efforts to rein in foreign speculation.

All it needs is a shrewd marketeer to trumpet the 60% exemption that few foreigners enjoy, to have a piece of real estate in growth-at-all-cost-tiny-and-safe Singapore.

In fact, the number of Americans buying property here has been creeping up the ranks. It was way down the list before the signing of the USSFTA in 2003, but has crept up as ABSD was introduced, and subsequently increased, since they are not subject to it, and thus, perversely, enjoys a huge discount.

It is now in 4th place behind China, Malaysia and India.

The fact is that the clause in the two FTAs exempting the payment of ABSD diminishes our sovereignty, among other clauses, which the ST is trying to gloss over.

They put us at a disadvantage and are unfair to the majority of Singaporeans, and once signed, are extremely difficult to extricate.

This opinion piece was first published by Foong Swee Fong on his Facebook page and reproduced with permission.

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