TR EMERITUS

I refer to Miss Chua Mui Hong’s article Straits Times Singapore, 20 Apr, 2010, Tuesday titled Property: Do something drastic or do nothing? (http://www.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20100420-211365.html)   Jowett & O'Donnell defines “propaganda” like this: "Propaganda is the deliberate, systematic attempt to shape perceptions, manipulate cognitions, and direct behavior to achieve a response that furthers the desired intent of the propagandist."   Propaganda generally appeals to emotion, not intellect and Miss Chua’s article does just that.  The hypocrisy of the article defies comprehension.  There is a huge outcry over the high HDB prices and Miss Chua says this: “…..in managing the property market…..its handling has been a lot more right than wrong.”   It is amply clear that Mui Hong is justifying errors made by the Government and in particular Mr. Mah Bow Tan.    Much has been written about the inability of Singapore to pay high prices for their HDB flats especially the young and I do not wish to belabour the point.  But here are some facts Temasek Reader may wish to ponder over:   Population of Singapore:   The city state is also the second most crowded country in the world after Monaco.   It is the 4th wealthiest country in the world in terms of GDP (PPP) per capita.    Singapore has the highest percentage of foreigners in the world. (36%) and foreigners make up 50% of the service sector in Singapore   In June 2009, the transient group accounted for about 1.25 million out of a total population in Singapore of about 5 million. -  WKS.   From 2004 to 2009, the non-resident population grew from about 750,000 to 1.25 million. - WKS   Singapore granted 59,500 PRs and 19,900 citizenships for the whole of 2009, as compared with 79,200 PRs and 20,500 citizenships in 2008. - WKS “….. we need 60,000 babies….. But we only have about 37,000 babies per year….. we need about 20,000 new citizens in order to keep our citizen core." - WKS Private Properties   In Singapore, private property serves just 16.5 per cent of the population and many Singaporeans think that should be left relatively free or with minimal government intervention.  The majority of Singaporeans are not in this league meant for foreigners and the super rich.    To give readers an idea of the private housing market in Singapore as compared to other cities, here are the average prices in 4th. Quarter of 2009:   Monaco             S$4,300 – 5,900 per sq ft London             S$3,600 – 4,400 psf Paris                 S$2,400 – 3,300 psf Hong Kong        S$2,000 – 2,500 psf Sydney             S$1,700 – 2,300 psf Tokyo               S$1,600 – 2,200 psf Shanghai           S$500 – 700 psf   About CPF   The CPF is a compulsory social security savings plan which aims to provide working Singaporeans with some security in their old age. It is administered as a statutory board under the Ministry of Manpower.   Home owners were encouraged to use their CPF savings to pay for the apartments. Government encouragement of apartment ownership was both an economic and a "nation building" goal because individual ownership would ultimately pay for the program while giving citizens a "stake in Singapore."   The board also provided estate management services and played an active role in promoting the advancement of construction technology.   As one of the country's major domestic industries, housing construction served as an important economic pump primer.   The surge in property prices was caused by the CPF liberalisation (according to this research paper[Link]. The housing loans to GNP ratio went up from 0.1 in 1980 to a whopping 0.49 in 1997 [Link]- a 500% jump!  So CPF was emptied for purpose of buying homes and households became highly indebted - now housing becomes intertwined with retirement.   About HDB   From 1960 to the early 1970 the HDB provided “low-cost state-built housing” for the squatters and resettlement residents.   From 1974 to 1982, the HDB built and marketed middle-income apartments, an activity which became a function of the board after 1982.   By 1988 the Housing Development Board was providing housing and related facilities for 88 percent of Singaporeans, or some 2.3 million people   Starting with a capital expenditure of S$10 million in 1960, the Housing and Development Board's annual capital expenditures rose to about S$4 billion by 1985.   Some recent developments   In 1999, at the suggestion of Mr. Goh Chok Tong, the HDB started building executive condominiums aimed at Singaporeans who do not want a HDB flat but might find private property too expensive.   The Build To Order of flat allocation that offers flexibility in timing and location for owners buying a new HDB flats was introduced.  Tender for construction will be called only when 65~70% or more have been booked. The waiting time for new flat applicants would likely be 4 years or less.   All BTO projects are designed by Surbana Corporation previously known as HDB Corporation.  Due to the success of BTO projects, the Design, Build and Sell Scheme (DBSS) was launched for private developers to design and build in good locality public housing under HDB rules.  Because of the success of both the BTO and DBSS schemes due to the demand*, HDB stopped building smaller and cheaper flats citing poor demand.    * The success was more demand driven by due to the presence of the large of foreigners.    Mr. Mah Bow Tan has this mistaken notion that public housing should be merged into the private housing and has begun taking steps in this direction.  He intends to transform HDB into a private developer owned by the Government. For this he has set up Subana Corp. and implemented the DBSS scheme.    Mr. Mah (and other Government leaders) has been saying that property prices are still “affordable” is pure baloney. The hypocrisy of this thinking defies comprehension.   3 reasons why Singaporeans feel that they no longer can afford HDB flats   1.   Even though 85% of Singaporeans live in public housing i.e. HDB flats, very few are below the poverty line.   If one refers to the Demographia International Housing Affordability Survey study of the affordability of private housing in first world developed countries, one would soon realize that public housing in Singapore costs more than private housing in the developed countries after currency conversion.  Taking into account the standard of living, Singaporeans are already overpaying for their housing.   2.       The wages are simply too low – as borne out by UBS Bank UBS annual study titled Prices & Earnings. The 2009 publication revealed that Singapore had slipped from a rank of 40 out of 71 cities to 50 out of 73 cities when the average domestic purchasing power parity (PPP) was measured.  With more foreigners competing for jobs, the wages are likely to be depressed further.   3.       Singaporeans have low Average Propensity to Consume (APC) which is the percentage of income people desire to spend. Professor Tilak Abeysinghe of NUS and Asst Prof Keen Meng Choy of NTU performed a regression analysis to determine the causes of falling domestic consumption in Singapore.  The result?  They concluded that rising housing prices in Singapore was a key factor in the rapid decline of the average propensity to consume  in Singapore:   “Even the most affordable public apartments in Singapore could cost 5–10 times the average annual household income while car prices stand as the highest in the world.” Prof. Tilak Abeysinghe of NUS and Asst Prof. Keen Meng Choy of NTU   (Temasek Review readers – please see this very good article by Keith Yip http://keithyip.com/?s=housing+affordability+index&x=0&y=0 for better understanding of the affordability issue).   All three above three reasons are intertwined.  Although Singapore is the 4th wealthiest country in the world in terms of GDP (PPP) per capita, Singaporeans are already so tied up with their housing loans that they have little ability to spend or save.  They are already slaves to their cars and properties and indirectly slaves to the Government.    A reader posted this in the Temasek Review: “My mother bought a 3-room HDB flat in Balam Rd in 1965 at $6,000 during the Lim Kim San era. Today it costs $200,000 in Mah Boh Tan era. Over a period of 45 years, it increased 2,200%. Did our income increased by 2,200%?”   Our public housing is the most expensive in the world and it causes Singaporean households to be deep in debt putting them at risk.  In late 2008, 8% of HDB loans were in default even before the recession started [Link:HDB Mortgage Defaults Up 33,000 in October].   Transparency   The Government has to be transparent about the cost of land, infrastructure cost, construction cost and maintenance cost.  The price increases of HDB flat (especially in the secondary or re-sale market) is far greater rate than the cost of land and construction of new dwellings.   Singaporeans do understand that prices of flat must be continually must adjusted upwards for the following reasons:   As population increases so does the demand for new supply of dwellings.    The problem is further compounded the change in living preferences and with smaller families this has resulted in a fall in household total income.    Fewer people per household means the supply of more housing units are needed.   This can only be brought about through newer developments usually on large pieces of cleared land or estates.  A major requirement is the cost of new infrastructure or upgrading and extension of the existing infrastructure.  Therefore the cost of supplying new land will rise.   Is there a housing bubble? A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets. It is characterized by rapid increases in valuations of real property such as housing until they reach unsustainable levels relative to incomes and other economic elements, followed by a reduction in price levels.   Wiki: “The subprime mortgage crisis is an ongoing real estate crisis and financial crisis triggered by a dramatic rise in mortgage delinquencies and foreclosures in the United States.”   Readers should read this article as well to better understanding of the sub-prime mortgage crisis: http://en.wikipedia.org/wiki/Subprime_mortgage_crisis.   Businessweek 20 April 2010: China Tightens Rules on Uncompleted Homes Sales - China ordered developers not to take deposits for sales of uncompleted apartments without proper approval and barred them from charging “abnormally high” prices, stepping up efforts to prevent a property bubble.   The high prices of the HDB flat will culminate in a property bubble.    The affordability of flats in Singapore   Without going into the Housing Affordability Index and discussing the median income or the “composition-adjusted” median house prices (these indices can be quite complex and difficult to comprehend), we ask ourselves these simple basic questions: ·         Have prices of HDB flats increased and have the increases been too steep?  ·         Have your family incomes increased? ·         Has the family purchasing power increased? ·         Is it now more difficult for the typical family to purchase and finance a HDB property? ·         The interest rate is now at an all time low – about 2%.  Can your family afford to pay the mortgage when it goes up to say 8%?  During the Asian crisis, housing loan interest rates went up to 8% i.e. if you have a housing loan of $500K you will be paying $40K a year or $3.3K a month on interest along without reduction in principal. ·         A public housing program that requires buyers to take up 30 year mortgages to afford the month installments puts Singaporeans at risk and puts a heavy burden on the households.  Do you want to be burdened with a 30 year loan? ·         High HDB prices only mean more revenue to the Government.  Do you agree that the Government should receive additional revenue from the sale of HDB flats to Singaporeans? ·         ERA’s resale transactions show that PR buyers make up some 40 per cent compared to 20 per cent three years ago. They typically buy 3- or 4-room flats and may upgrade to 5-room flats once they obtain their citizenships.  Should PRs be allowed to buy HDB flats even in the re-sale market and cause the high prices?    Over 85% of Singaporeans HDB flats.  Though they are meant to be cheap and affordable to the masses, recent price hikes has priced ordinary Singapore workers out of the market.  In the 1980s, a new four room flat in Bishan cost about $60,000 while the median pay of a fresh graduate was about $1,500. A young couple paying a monthly mortgage of $1,000 will be able to repay the entire housing loan in 5 years time.   Today, a new four room flat under the Design, Built and Order scheme in Bishan cost around $600,000. The median pay of a graduate is only $2,500. How much will a couple need to pay a month in order to service a thirty year loan?   Conclusion   Quoting Mui Hong - “Instead of ‘Doing Nothing’ or ‘Doing Something Drastic’, the best policy……  Stay cool….”   The fire is at Mr. Mah’s tail.  Elections are around the corner.  Yes, Mr. Mah, the quintessential man that you are, please continue to listen to your propagandist as she is appealing to Singaporeans emotion, not intellect.     “So there you have it.  You have an increased number of foreigners all fighting for housing with Singaporeans thanks to the government liberal immigration policies which were designed to compensate for the government’s ill-thought population policy of overly and intrusively restricting births from 1960s to 1980s.  Brilliant isn’t it?”  Read More →

The recent announcement by the Ministry of Education to reduce the weighting of mother tongue in the Primary School Leaving Examination (PSLE) has polarized public opinion in Singapore. While some welcomed the move, others lamented that it will diminish the efforts of schools. to increase the proficiency of Singaporeans in their mother tongue. Officials from the Singapore Chinese Teachers' Union (SCTU) met up with Education Minister Ng Eng Hen yesterday to express their concerns over the possible cut in the weighting. It released a statement calling for the weighting to be preserved "so that it is more in line with the principle of bilingualism and further strengthens the competitive advantage of Singapore in developing bilingual talents." With Singapore developing closer bilateral ties in China, the latest move seems to contradict the government's earlier efforts to nurture a group of "elite" Chinese students with indepth knowledge and understanding of Chinese culture and history. It is highly unlikely that SCTU will have any influence on the outcome. As history has shown, once the PAP has made a decision, it is almost impossible to get them to back down. The PAP is a "strong" government with a "clear majority" in Parliament which permits it to do anything as its whims and fancies without consultation with the people. Singaporeans just have to swallow the "bitter" medicine and accept that whatever the PAP does is for their own "good".   Please join our Facebook page here and invite your friends to do so to create awareness of the current affairs affecting Singaporeans. Please use our online web form to contact us  Read More →

It is more good news for Singapore as more Singaporeans are expected to increase their recruitment in the next few months ahead, according to a Straits Times report today. A survey done by global recruitment firm Hudson shows that 54 percent of 564 top executives at multinational corporations interviewed are expected to hire staff in the face of the improving economy. The sectors most keen to recruit are banking and financial services, health care and life sciences, and manufacturing. The percentage of foreigners who will be recruited to fill up these vacancies remains unknown, but it is unlikely to be far off from the 33 percent they currently occupied in the workforce. Prime Minister Lee Hsien Loong said during his recent May Day Rally that up to 100,000 jobs may be created, a proportion of which will go to foreigners. He called on the understanding of Singaporeans to accept a higher inflow of foreigners as the economy improves which appeared to contradict his earlier statement at the beginning of the year that the government will "moderate" the influx of foreigners. Due to the PAP's liberal immigration and pro-foreigner policies, foreigners now make up 36 percent of Singapore's population, up from 14 percent in 1990. Of the remaining 64 percent who are citizens, an increasing number are born overseas. Unlike other countries, there are no measures put in place to safeguard the interests of native workers who are implored to compete directly with the cheap foreigners as the government is unable to "shield" them from global competition. According to a recent Wall Street Journal editorial, the relentless influx of foreigners has depressed the wages of ordinary Singapore workers, increased the cost of living and led to an overall decline in the standards of living. Singaporeans better brace themselves for another "wave" of mass immigration as the PAP continues to import foreigners to shore up Singapore's flagging birth rates as well as that of its own support base.   Please join our Facebook page here and invite your friends to do so to create awareness of the current affairs affecting Singaporeans. Please use our online web form to contact us  Read More →