Public Housing In Singapore

For a very long time, the debate and concerns of Singaporeans with regard to public housing has been going on. Despite assurances from the Minister of National Development, Mr Mah Bow Tan, that public housing in Singapore remains “affordable”, many young Singaporeans are facing the possibility of being priced out. Singles have to compete with Permanent Residents in the resale market where prices do not seem to be cooling down in the near future with the recent sale of a 2-rooms resale in a matured estate fetching above $600,000 offered by a Permanent Resident, and a 5-room HDB flat in Marine Parade asking for almost $1 million in the resale market.

The numbers of homeless families that were evicted from their homes for defaulting on their installments and thereafter made public parks, beaches, void decks of public housing which they call “home” are also on the increase. What has the Government done, until recently by increasing the numbers of flats for sales, to keep in check the ever escalating prices of public housing and re-housed those who were evicted by HDB to assure citizens that public housing remains affordable?

Let us not forget the noble objective of public housing – which is to provide ALL CITIZENS with decent low-cost housing. And let no citizen be denied of his rights to establish a family and build a home regardless of his financial ability.

The Home Ownership of HDB flats was introduced in 1964 by the government to enable citizens to have a stake in the country. It also serves as a mean of financial security as well as a hedge against inflation. To assist citizens in Home Ownership, the government, in 1968, allowed the use of the Central Provident Fund (CPF) savings of the the buyer to pay for the “purchase” of the flat.

I am a firm believer that all citizens, regardless of social and financial standing, should be allowed access to public housing unless one chooses to give up his rights. No one citizen, regardless of his ability, should be denied of his rights of access to public housing! If PERMANENT RESIDENTS are allowed to "purchase" public housing in Singapore from the resale market, I do not see the reason why citizens who are financially well-off should be denied of their rights to public housing!

In addition, I believe that HDB flats, being public housing, should remain as public housing since the ultimate ownership still remains with HDB. In this aspect, public housing should not be taken or even be viewed as an investment asset given that they are subsidized by the Government through taxpayers' monies. (I had brought out this point in relation to an INSIGHTS article in the Straits Times dated 17th October 2009. My edited views were as follow:

‘Public housing will be out of reach for future generations of citizens if it is viewed as an investment asset as all investments are expected to appreciate in value. And if we allow permanent residents to purchase public housing, future prices of public housing could become nightmarish.’

- Mr Andrew Michael Teo in an e-mail (Straits Times dated 24th October 2009)

As such, property tax should not even be levied upon these public housing since HDB is the ultimate owner of these public housing, and that sub-letting of public housing should be strongly deterred and discouraged.

The idea of ownership by tenants who "purchased" these public housing, whether through the resale market or newly build public housing, and to consider it as one of their investment assets is one of the main and important factors that causes the ever increasing price of public housing. This situation had been made worsened and far complex with the influx of Permanent Residents who are also given the green light to purchase public housing from the resale market. Coincidentally, it appears that certain category of Permanent Residents have been sub-letting their HDB flats for rental income. This being the case, what actions have been taken by HDB to prevent these Permanent Residents from capitalizing at the expense of citizens ?

Contrary to most Singaporeans who believe that they do legally own the HDB flat, do Singaporeans really own these HDB properties even after having paid up the long-term tenancy rent or so-called "purchased" price in full? Is it morally right for HDB to peg the "price" of public housing the way leasehold private property are priced? Is the HDB Home Ownership Scheme a scheme to hold “owners” as political hostage?

In the following Straits Times article dated 28th January 2010, Minister Mentor Lee Kwan Yew clearly spelt out the objective behind HDB Home Ownership Scheme:

Don't cast protest vote : MM
by Sue-Ann Chia, Senior Political Correspondent

“THE current contentious issue on the affordability of public housing was given another airing by Minister Mentor Lee Kuan Yew who cautioned Singaporeans not to cast a protest vote against the ruling party over this.

As Singaporeans lament rising flat prices, he said they ought to understand that the Government sells them at a subsidised price, below market rate, so that they can own an asset that will appreciate in value over the years.

It adds to their wealth and this is an asset-enhancing policy Mr Lee believes citizens should not find fault with.

If they do, they must be 'daft', he said, at a dialogue during a housing conference as part of a series of events to mark the Housing and Development Board's 50th anniversary.

And if National Development Minister Mah Bow Tan is unable to defend this policy, 'he deserves to lose' at the next general election, he quipped, to laughter from the participants, including a chuckling Mr Mah.

But if Mr Mah loses to the opposition, he warned that Singaporeans better sell their flats fast as they would no longer be of any value.”

The above article speaks for itself. Public housing will be made out of reach for future generation citizens if it is viewed as an investment asset since all investments are expected to appreciate in value. And with the permanent residents being allowed to "purchase" these public housing, future prices of public housing will certainly become a nightmare.

The Impact of Mass Influx of Foreign Workers on Employment & Public Housing In Singapore

There has been a lot of hot debates and discussion recently regarding the escalating prices of HDB flats, which is basic public housing, and the influx of foreign workers, especially those on S-Pass and Employment Passes, into Singapore that have caused many employers and recruitment agencies alike to "abuse or manipulated" the system citing lower operating costs and "lack of skills" My immediate questions pertaining to these issues are :

PUBLIC HOUSING

1) Since public housing is to provide a basic decent roof over the head for all CITIZENS, what, then, (was) is the real objective for encouraging citizens towards HDB Home Ownership besides allowing citizens to "have a stake in Singapore" when in reality, the real ownership of the HDB flat still rests with HDB, ultimately the government, and not the "buyer"? In this regard, why then are "buyers" of HDB flats paying property taxes for properties which they do not own? Also, are there not any other way of allowing Singaporeans in have a stake in this country other than through "HDB Ownership" ???

(Bear in mind that the encouragement towards HDB Home Ownership began in the late 1960s and early 1970s when the literacy rate in Singapore was much lower, and that those then "buyers" were mostly illiterate.)

2) Since public housing are meant to house citizens, and with the financially well-off citizens being "deprived" of their rights to public housing, why, then, are non-citizens allowed access to public housing and to profit at the expense of Singaporeans?

3) What about those low income families residing in rented public housing directly from HDB and receiving public subsidies? Don't these low-income citizens also have a stake in this country too? What other kind of assistance are given to them to assure them of their stakes in this country? Did these low-income families also not contribute towards the development of this country? If these PRs, who are non-citizens, are eligible to gain access to housing loans, then why aren't these lower-income citizen families given the same access to housing loans? If we are going to use the risk payment default by these low income families as an argument, does it mean that those PRs will not default in repaying their loans? In fact, in my opinion, PRs' access to housing loans poses a greater risk of default than allowing the low income families to gain access to housing loans.

If the objective of the HDB Home Ownership, introduced in 1964 by the government is “to enable citizens to have a stake in the country”, are we saying that Permanent Residents who bought HDB flats have more rights to a stake in this country than low-income families citizens who live in rented HDB flats?

THE MASS INFLUX OF FOREIGNERS AND EMPLOYMENT

Generally, and across the board, Singaporeans do understand the need for Singapore to attract and welcome TALENTED foreigners who can contribute positively to the economy. However, the problem arises when too many of these "talented" foreigners are bringing in with them to Singapore various kind vices and criminal activities that have contributed to our local crime rate.

In addition, Singaporeans, who have been building up their careers throughout the years in their own specialty, suddenly found themselves being replaced by cheaper foreigners whose skills and knowledge are no where comparable to the average Singaporean employee. There were also reports of faked qualifications used by these foreigners to qualify for these jobs, thus depriving Singaporeans of such jobs opportunities and resulting in most Singaporeans, mostly the baby-boomers, who are in the late 30s to mid-40s, being MISPLACED and DISPLACED.

The government's move to re-train these misplaced and displaced PMETs has resulted in more of those jobs previously performed by our local PMETs being undertaken by foreigners. Hence, most of these PMETs would eventually found themselves in an entirely different industry and having to start their careers all over from scratch again. However, when jobs opportunities in their previous industry where they had spent most of their lives building up their careers arise, they were either "cast aside" by prospective employers or recruitment agencies in favour of foreigners due to "cheap operating costs".

In good economic condition when the economy experienced growth between 6% to 8%, there was a need to import labour due to shortages. This literally means that our local labour market do have the required skills to perform. However, even before the recent recession occur and during this recession, many local PMETs were retrenched citing costs cutting and most of these PMETs were not re-employed to their former jobs with employers citing "they may not have the right skills". Instead of addressing these issues and rectify the problems faced by these PMETs, Singaporeans are being blamed for being choosy.

As mentioned by the Minister for Law, Mr K. Shanmugam, "foreigners are not to be blamed for retrenched workers being unable to get re-employed at their old pay. That is due to companies still being uncertain about the economy and workers who may not have the right skill." Mr Shanmugam also said that "the modern economy required high skills while those over 40 were of a generation that typically stopped school at secondary level". (Straits Times dated 18th January 2010)

My immediate question is :

What high tech skills does one require to be able to sell advertisement spaces or to be employed in the white collar industry?

I was indeed very surprised to have noted that Mr K. Shanmugam would used the recession as an excuse when the same employment issue has been around even when the economy was achieving between 6% to 7% growth.

In fact, to ascertain the many claims on Singaporeans' lacking of skills and shunning of jobs, the Ministry of Manpower should make an effort to determine if there are really no Singaporeans with the available skills in jobs, especially those within the white collar, which employers and recruitment agencies claimed have to be undertaken by foreigners, or is the system being manipulated by recruitment agencies and employers ? In fact, many reports had revealed the use of Phantom Employees by local employers to qualify for their request for foreign workers.

My suggestion to the Ministry of Manpower is as follows:

1. Set up a Recruitment Center within the Ministry of Manpower.

2. Before allowing any employer or recruitment agency to advertise overseas for foreign workers, the Ministry could request all recruitment agencies and employers to submit in all jobs vacancies which they deem Singaporeans do not possess the necessary skills and that they have no choice but to recruit foreigners.

3. MOM to advertise these jobs (at the expense of the recruitment agencies and employers) and conduct interviews DIRECTLY with prospective candidates (Citizens) for these jobs.

4. Penalize these recruitment agencies and employers should MOM be able to find locals to fill in the available jobs.

I wouldn't be surprise with the number of resumes MOM will be receiving for these jobs. I will be even more astonish with the experiences and the available skills which Singaporeans have to fill up these jobs.

The question is : Is the Ministry of Manpower prepared to undertake this suggestion ?

Regarding public housing, Mr.Mah Bow Tan, during a recent interview with ChannelNews Asia, had proposed the idea of FIXED price - meaning buying and selling, only from and to HDB, at a fixed price. If that is one method of preventing HDB prices from escalating even higher, why not! Afterall, isn't public housing is suppose to remain as public housing - a basic roof over the head ? Besides, there are other ways of ensuring Singaporeans of their stakes in this country.

Will Global Economy Experience A Double-Dip Recession in 2010

In August 2007, the United States triggered what would be known as “Sub-Prime” Crisis then which later evolved into a Global Financial & Economic Crisis.

The crisis saw many renown financial institutions in the United States and across Europe seeking bailouts from their respective Governments using taxpayers’ monies. Financial institutions included in the bailout were Goldman Sachs, Citiigroup, Bank of America , JP Morgan and the worst of all AIG which was on the edge of bankruptcy. Not only were these financial institutions rescued, but there were even some which were left to collapse, notably Lehman Brothers, which incidentally was one of the main causes of the sub-prime lending in properties and real estates.

The crisis, the worst of its kind after the Great Depression of the 1930s, spreaded far across the Asia-Pacific region including Europe. Billions of dollars in rescue packages were dished out to provide liquidity in the banking system so as to prevent these institutions and businesses from collapsing which could resulted in more jobs losses and other societal problems eventually.

While these rescue packages may have withheld or even slowed down the crisis from worsening further, they have, however effectively, created a set of similar problem which is no different to that of the sub-prime. I will call it “super-prime” in this instance. The financial markets, properties and real estates prices have been soaring even way before global economy starts to recover. The speculative rise in properties and real estates prices are obviously due to cheap loans that are made available since financial institutions are already flushed with liquidity but so is the financial markets. This is effectively creating the same bubble that triggered the crisis. Considering the currently still-cloudy economic condition, especially the unemployment rate, and at the same time looking at properties and real estates prices in Taiwan, Hong Kong and Singapore will certainly leave no doubt that there are speculative activities going on in the property and real estates markets. (I have no wish to mention Communist China since most of their economic figures are mostly rigged!!) Were there steps taken to curb these activities? The prices of public housing in Singapore has gone up by more than 3% during the final quarter of 2009. Are these indications of an economic recovery? Well, think again.

We are not at the end of this recession. In fact, we are in the middle of it.

This will not be a V-shaped recession and recovery but it is certainly one that is going to be an Inverted-Square root-shaped, meaning we will have to go down deep before things start to really pick up.

And even if the economy stays flat, the stock market will almost surely head back down when financial markets began to realize what a jobless recovery actually looks like.

So, while the statistics may point to an economic recovery this quarter or next, the real world will be feeling recession pains throughout 2010.

Here are some reasons why the economy will stay flat or even decline in 2010.

1. LOSS OF WEALTH

People will not only feel poorer, they are poorer in real terms. Personal wealth will continue to decline in 2010, as inflation soars even further, fueled by a wave jobless and unemployment among local citizens. Strategic defaults in home mortgages will occur for home buyers, who inflated housing and properties prices by rushing to buy houses and properties during the late 2009, which will result in higher foreclosure rates putting downward price pressure in the real estates market

Hence homeowners will experience a commensurate loss of wealth as the value of their homes decline.

2. JOBLESS RECOVERY

Unemployment will put pressure on wages, which will remain stagnant, and longer hours worked. This all adds up to falling national income, which means consumers are afraid to spend money.

3. CUT IN CONSUMERS' SPENDING & CHANGE IN CONSUMERS' ATTITUDE

A fear of a loss of income will continue to squelch consumer spending and change consumers' attitudes. Most people I know are fearful about their futures -- i.e., losing their jobs or seeing a cut in commissions, profits, or wages. This means they will hang on to their pennies in 2010.

Bottom line: Consumers drive 70% of GDP, and a meaningful recovery will not happen without their dollars.

The change in spending habits will not be a passing fad. Frugal will be the norm in 2010 and beyond.

4. CHANGE IN BUSINESS SPENDING

Businesses do not see a turnaround in 2010. Even with public figures talking up the economy (and who can blame them, it's practically in their job description) businesses are not listening. If consumers aren't spending, why should businesses?

As the consumer continues to struggle, we will see businesses rein in spending further and push back hiring plans throughout next year.

5. GOVERNMENT SPENDING

In the past years, the government has increased spending and cut taxes to spur spending during times of economic crisis. However, this is no longer a serious option.

Simply put, the government lacks the tools necessary to significantly increase consumer or business spending in 2010.

What have Asian Leaders learn from the Crisis?

Donald Tsang, Chief Executive of Hong Kong, who had cautioned against the recent rapid rise in the property markets in Taiwan, Singapore and Hong Kong, had made known his fear for a double dip recession in the second-half of 2010. Japan is dishing out a US$ 80billion stimulus package to prevent its economy from falling into a double-dip recession.

With bubbles again started to form in a midst of a recovery especially in Asia, will interest rates be used as a tool to prick these bubbles? Why would happen next if interest rates started to climb?

Federal Reserve Chairman Mr. Ben Bernanke said, "never say never," when asked whether the Fed should instead use higher interest rates to pre-emptively prick future bubbles, and he later said he wouldn't rule it out.

Strategic defaults on mortgages will grow substantially over the this year and next among prime borrowers, and it will be identified as a serious problem. The sense that ‘everyone is doing it’ is already growing, and it will continue to grow amid low interest rates, to the detriment of mortgage holders. It will grow because of a building backlash against the financial sector, growing populist rhetoric and a declining sense of community with the business world. Some mortgagors will take another look at their mortgage contracts, and note that nowhere did they swear under oath that they would repay.

If this happens, then global economy will once again be dragged into another recession which is certainly going to be even worse then the initial one since the tail of the inverted square-root shows no end. However, on the other hand, with commodities prices, especially oil, creeping up again and showing signs of inflation, central bankers will be caught in-between pricking the bubble, which would cause the double-dip recession, and containing inflation.

Either way I look at it, 2010 is certainly going to be a year in which economists, regulators and governments alike will have to embrace a brand new economic model and a new way of thinking about how the modern global economy works.