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The Great HDB Scam - Is HDB Taking You For A Ride?

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  • MellanieHewlitt
    By: Leong Sze Hian TODAY 27 Jan 2005 DIFFICULT FOR OLD TO COPE WITH RATE INCREASES ... Disproportionate hikes in 1-room flat rentals, service charges In
    Message 1 of 2 , Jan 26, 2005
      By: Leong Sze Hian
      27 Jan 2005

      Disproportionate hikes in 1-room flat rentals, service charges

      In connection with the Social Development feedback group's report (see
      Page 1), I would like to bring up the problem of the disproportionately
      high increase in the costs of renting one-room HDB flats over the last

      An old friend gave me two letters he had received from the HDB and the
      Ministry for National Development (MND).

      The HDB informed him that since the GST-offset monthly rental rebate on
      his 1-room rental flat would cease, his rental per month would increase in
      April from $20 to $26 - an increase of 30 per cent.

      The MND letter likewise informed him that his service and conservancy
      charges (S&CC) rebate would cease, increasing his charges by 28 per cent,
      from $14.50 to $18.50.

      I have checked with HDB flat-owners and found the S&CC for a 5-room flat
      in Yishun is going up from $59 to $60.50; for a 4-room flat in Bukit
      Batok, from $48 to $49.50; and for a 3-room flat in Jurong West, from
      $33.50 to $36.50.

      These represent increases of 3, 3 and 9 per cent respectively.

      As those who live in one-room flats are among the poorest, why is it that
      their rentals and S&CC are going up by a bigger percentage?

      Even the absolute dollar increase of $4 is more than for other flats.

      For someone like my friend who is 57 years old, unemployed and has been
      renting his flat for 15 years, the combined increase would be difficult to

      My friend's rental has increased gradually from $10 in 1994 to $26 this
      year - a hike of 160 per cent over 11 years. His S&CC went up from $3.50
      to $18.50 - about 428 per cent.

      How do these increases compare with those for the other HDB flats and for
      private property in the same period?

      Annual inflation in the last 11 years has been about 2 per cent. How is it
      that the 1-room S&CC works out to an annual compound rate of increase of
      about 16 per cent per annum?

      S&CC rates were increased last September. Why is there another increase
      after less than 6 months?

      I would like to suggest that some of the billion-dollar packages unveiled
      to help older workers, the elderly and the jobless be used to reverse the
      disproportionately high increase in the costs of renting 1-room HDB flats.

      Leong Sze Hian

      --- In Sg_Review@yahoogroups.com, MellanieHewlitt@c... wrote:

      Comments: Mellanie Hewlitt
      18 Jan 2005
      Singapore Review

      1) First they (HDB) artificially inflate the price of HDB flats well
      above the original construction costs.
      2) Then, they built too many pigeon holes which remain unsold.
      3) Finally they worsen the current glut in HDB flats by building even
      more units.

      Singapore's Housing Development Board (HDB) is supposed to oversee
      provision of cheap subsidised housing for the masses. It's mandate
      implies that it should not be runned as a profit earning enterprise.
      However, in HDB we see the worst of both world; the cut throat
      pricing of private sector profit earning enterprises plus the laid
      back burecucratic bunglings of a typical government civil service
      type organisation.

      Read on and discover the great HDB Scam.

      ST Forums
      Jan 17, 2005
      Why build more flats when many are unoccupied?

      I REFER to media reports that the Housing Board has extended by a
      week, to Jan 23, the application period for two build-to-order
      housing projects in Punggol and Sengkang.

      This was to allow time for any rethink after the announcement about
      the opening of the light rail transit system near the proposed
      estates later this month.

      The sceptic in me wonders whether the extension was given because the
      demand was low or is HDB really being nice. Would it reveal what the
      level of demand was at the point of original deadline?

      Even if this exercise did see fair demand, I take issue with the
      building of more units in the first place.

      I live in Jurong West, among hundreds of unoccupied HDB flats,
      including fenced-up blocks which have been empty for more than a year
      after completion. The block that I live in is only 30 to 50 per cent
      occupied, though it was completed six years ago.

      Is HDB just building more flats to justify its own existence? Why
      not suspend the build-to-order programme until the massive overhang
      has been cleared.

      As Singapore's developer of public housing, does it not have a
      responsibility to spend money wisely and adopt policies that will at
      least preserve the value of public property already sold?

      I don't expect HDB to prop up prices, but to build more when there is
      a clear overhang is absurd.

      Would anyone in authority or the relevant government department care
      to comment on why HDB continues to build in this climate of

      Lawrence Ng Wai Chun


      From: Sg Review <sg_review@y...>
      by See Leong Kit
      23 July 2004

      [ Note for Readers: Please circulate this analysis as widely as
      possible, especially to HDB flat owners/buyers --- who have been "taken
      for a
      ride" for all these years!!! If anyone knows Mr Chow, please alert him as

      1 Mon 12 Jul 04 ST Forum Page letter "How does HDB price its flats" by Mr
      Douglas Chow Tuck Kheong.

      Mr Chow had rightly asked the HDB to explain why new four and five-room
      are priced at $200,000 upwards when the construction cost per unit is only
      $50,000 --- i.e. a whopping difference of $150,000.

      2 Fri 23 Jul 04 HDB reply "What goes into pricing of HDB flats" by
      Tay Boon Sun [HDB Snr Public Relations Officer].

      The two main "nonsense" arguments in HDB's mumbo-jumbo reply and my
      compelling rebuttals in brackets:

      (a) The construction cost per unit figure of $50K provided by Mr Chow
      did not take into account other construction-related costs, such as piling
      works, consultancy and project-management fees.

      [ EVEN if the related costs are included, it CANNOT account for the
      whopping difference of $150K!!! We, Singaporeans, Not Stupid! We were not
      yesterday and we are not 3-year old kids. So the HDB had better stop
      our intelligence with such stupid arguments! ]

      (b) HDB sells flats with a "market subsidy" by pricing NEW flats "below"
      price of comparable RESALE flats i.e. since comparable resale flats
      are selling for around $240K (say), the HDB then decides to "pluck from
      the air"
      the round figure of $200K as the selling price of the new flats!!! So that
      beloved PAP Government can then boast to its people and the whole world
      that each
      HDB flat-buyer is getting a big fat $40K so-called "market subsidy"!!!

      [ WOW, since when did the HDB, as a government agency set up to
      help" its citizens own their homes, thought of such a "clever" approach to
      monies" from the people??? ]

      3 In the PRIVATE SECTOR, the selling price of private property is based on
      following cost-plus approach:

      Selling Price = land cost + construction cost + misc costs
      (admin,marketing,financing,etc) + developer's profit margin (anything from
      a few percent to say 20 percent, depending on market conditions)

      To be fair to its flatbuyers, the HDB should thus be following such a
      "cost-recovery" approach. And if the PAP Government is really SINCERE and
      GENUINE in helping our people regard Singapore as HOME (both literally and
      figuratively), it should adopt such an approach to compute the selling
      price of
      HDB flats with the following provisions:

      (i) Impute land cost on a nominal basis rather than market value (which
      then provide a "true subsidy" ). While private developers have to recover
      land costs, the Government [as owner of some 90% of the land in Singapore]
      do this. After all, HDB land are all on just 99-year lease.

      (ii) No developer's profit i.e. sell the HDB flats AT BREAK-EVEN COST.

      THROUGH THE ABOVE APPROACH, the Government is then really "helping" the
      purchase their own homes "at the lowest possible cost" through reaping the
      economies of scale in the large-scale development of HDB estates. The HDB
      flatbuyers will then be getting a "true subsidy" and the HDB will not be
      profits out of the buyers" [In essence, the HDB will be something like a
      housing co-operative, providing a "home building service"]

      HDB reply,

      (i) HDB flatbuyers are not really getting a "TRUE subsidy" but an
      market subsidy"

      (ii) The HDB is also actually making "big fat profits" out of its

      [Taking the example given by Mr Chow,

      actual construction cost $50K + construction-related costs + nominal
      land cost + misc/admin costs = break-even cost (say, $80K?)

      Against selling price of $200K, HDB's "big fat profit" = $120K FOR EACH



      HDB: Taking away your lifelong savings?

      Posted by DEARCHER in the Sintercom Forum:

      HDB leased flats - our personal asset or liability? Provision of a
      home is an asset, the overcharging is a liability that eats away your
      retirement fund and puts you in debt.

      Calculation of HDB's OBSCENE profit - new flats and resale levy:

      There is only one word to describe it - evil!

      Between 1991 - 2001, HDB built 280,826 new flats [see below].
      Assuming each flat average $100k net profit for HDB, they would have
      amassed S$28.0b net profit from sale of new flats. Using statistics
      (1998-2001) showing that for every single new flat sold, 1.7 resale
      flats would have changed hands, the Resale levy would have raked in
      at least S$19.0b (flats built x 1.7 x $40k*) into HDB coffers for
      doing NOTHING. All these billion$ are deducted from our CPF savings
      within PM Goh's first 11 years in office.

      {Total net income to HDB not less that $47b in just 11 years! - where
      does this money come from? Our savings!)

      *S$40k being average 20% levy on a average flat sold for a
      conservative $200k assumption.
      ** Note: Construction cost per 5-room flat is below $80k.
      ** Note: The $28.0b will be the CPF savings you had paid to HDB, plus
      your future *debt* if you are still paying installments.
      ** Mortgage interest not factored into purchase calculation.
      ** Tenancy lease depreciation (99-year lease) not accounted for.

      This explains why we have to work our asses off our lifetime, just to
      pay for the pigeon hole, and why you can never have enough left
      behind in CPF for retirement use. What happened to the $b's in HDB
      profit, as I didn't see it in the HDB surplus account published last


      2001/2 Yearbook - Dwelling Units.

      1991 / 10452 units built
      1992 / 18482 units built
      1993 / 17888 units built
      1994 / 25987 units built
      1995 / 26185 units built
      1996 / 27484 units built
      1997 / 31312 units built
      1998 / 36609 units built, Resale units 60459
      1999 / 34836 units built, Resale units 57955
      2000 / 27678 units built, Resale units 38828
      2001 / 23913 units built, Resale units 41059

      Stats prior to 1991:

      1960-1965 / 53777 units built
      1966-1970 / 63448 units built
      1971-1975 / 110362 units built
      1976-1980 / 130981 units built
      1981-1985 / 189299 units built
      1986-1990 / 119708 units built

      This message was forwarded to you from Straits Times Interactive
      (http://straitstimes.asia1.com.sg) by mellaniehewlitt@y...

      Comments from sender:

      Singapore Govt's idea of "subsidised housing take the form of the
      worlds most expensive pigeon holes.

      By artificially inflating the price of land sold to developers, the
      Singapore Government has also contributed to escalating cost of living.

      New HDB 5-room flats too small for their price

      I DISAGREE that HDB five-room flats are too big ('Why buyers shun 5-
      room, exec flats'; ST, March 18). The new flats in Sengkang and Punggol
      being shunned precisely because they are too small for their price.

      I am the owner of a five-room flat in Punggol that measures a miserly 110
      sq m,
      compared to my parents' flat in Clementi, which is spacious at 130 sqm.

      I live with my parents-in-law and my sister-in-law, which makes the
      living space per person only 22 sq m. Should a baby come along, we would
      to move to a larger flat in a mature housing estate.

      Many friends I know would rather settle for a four-room resale flat than a
      in Punggol, as the size of a four-room flat is about 95 sq m, only
      smaller than a 110 sq m five-room flat. The flats are going for about 60
      cent of the price of a new five-room flat, but are smaller by only 14 per
      And they are often in mature estates with better amenities.

      Another complaint about flats in Punggol and Sengkang is the
      layout. One friend's Sengkang flat has a living room framed by five walls,
      a triangular kitchen.

      As the new five-room flats are so small, they should be sold at a price
      slightly higher than that of four-room flats.



      Mellanie Hewlitt
      The Truth Behind Singapore's Public Policy Administration
      Singapore Review
      21 Jan 2005

      Government led "Family Friendly" benefits and "Flexi-work"
      arrangements often look good only on paper but find very limited
      application outside of the civil service in the real pressure filled
      world of private sector firms and MNCs. This was the bitter lesson
      learnt by Ms Lim Ai Ling when she attempted to cash-in on her "Family
      Friendly Benefits" and instead opened a can of worms. Ms Lim found to
      her horror that a "Flexi-work" public policy does not mean flexi-work
      arrangements in practise.

      Ms Lim's mistake is quite understandable. Many of us assume that
      public policies are more than mere rhetoric and take them at face
      value especially when they are enthusiastically reported in the local
      government owned papers. We mistakingly assume that a "Family
      Friendly" public policy translates into more quality time with our
      loved ones. But the truth is hard to swallow in Singapore. Few
      realise that most of the policies are mere publicity stunts devoid of
      actual substance and one relies on them at his or her own peril.

      To be fair, many firms and Multinational Companies (MNCs) will
      endorse these government led "family friendly" % "flexi-work"
      packages as part of their standard employee welfare program. But they
      are also faced with budget constraints and the constant pressure of
      keeping costs down and achieving a larger workload with the same (or
      even smaller) number of workers.

      Family Friendly = More Time With Family = Less Time in Office
      What the PAP and Singapore's highly paid ministers fail to realize is
      that we cannot eat our cake and have it. For every choice made there
      is an underlying opportunity cost. Most private sector MNCs have
      already optimized workflows and streamlined work protocols so only
      very little room is available for further rationalization exercises.
      In a fast moving work place like this, the opportunity cost of
      implementing a family friendly work environment translates into;

      a) Shorter Work hours;
      b) Lighter work loads;
      c) Employing more staff to do the same amount of work;
      d) Increased labour costs and head-count;
      e) And ultimately a less competitive Singapore work force
      (and infrastructure).

      The logic behind the above is part of Introductory Economics 101;-
      When a company is given fixed (and limited labour resource units), if
      one factor of production is increased while the others remain
      constant, the overall returns will relatively decrease after a
      certain point. http://www.encyclopedia.com/html/d1/diminish.asp

      The bottom line is that many department heads, and employers are
      unwilling to accept the above costs which will ultimately eat into
      the net profit and overall financial performance of a firm. The
      accepted norm in Singapore's MNCs is to "over leverage" on fixed
      labour resources so that the department is actually operating on the
      declining segment of the Total Productivity curve. Needless to say
      this is an inefficient allocation or resources as the mix of resource
      units are not optimized. But this is of no consequence to most
      department heads as their only sole objective (to the exclusion of
      all else including worker welfare) is to keep labour costs down.

      In this flawed strategy, worker welfare (and Family Friendly
      Benefits) are interests that directly conflict with the
      balancesheet / P&L needs of the company (and the state).

      Unfortunately, the same flawed strategy is adopted by the Singapore
      government albeit on a larger scale. On a small island with no
      natural resources, the only "resource" which is saleable in order to
      attract foreign investments is HUMAN LABOUR. But if this is the case
      and the average worker should be of prime importance to the overall
      well being of Singapore Inc, Management should implement more
      friendly work policies. Instead, the average worker is exploited and
      they seem to be intent on killing the goose that lays the golden egg.

      Past examples of the PAP Government's "Family Friendly" policies

      1) Cutting Employer's CPF: Implementing across the board wage
      reductions (in the form of unilateral cuts to employers CPF
      contribution). This was a policy which the PAP government imposed
      harshly with the full knowledge that government census figures showed
      that most Singaporeans workers are still dependent on CPF
      contributions to pay-off their mortgages. See:
      http://groups.yahoo.com/group/Sg_Review/message/618 and also

      2) No CPF Restoration in Good Times: During a subsequent economic
      recovery, this same government did not restore Employers CPF
      contributions. The ministers of cause restored their own salaries
      (though it was highly questionable if they ever took a wage cut in
      the first place. See
      http://groups.yahoo.com/group/Sg_Review/message/1234 But the buck
      literally stopped before it reached the average Singapore worker.

      3) Singapore is a very expensive place to call home. Its ok if you
      are just "passing through" as an expat, but the story is different if
      you try settling here for good. See:

      4) Singapore Workers Over Paid; Inspite of para (3) above, this same
      government also came to the rather far-fetched conclusion that
      Singapore workers were more well paid than their counterparts in the
      US, UK and Australia (see:

      5) Singapore Workers Cannot Retire: Contrary to the assertions of the
      government in para (4) above, it is a fact that Singaporean workers
      will not have enough in their savings to retire on. See:

      6) State Enterprises Live Off Workers: Decades of huge hidden fiscal
      surpluses enrich the Singapore government and state enterprises but
      impoverish the private sector and tax payers. See Far Eastern
      Economic Review:

      7) Its a Crime Not To Top-Up CPF; This same government has made a
      crime if you do not top-up your CPF. Only in Singapore is it possible
      to be taken to court if you owe yourself money. See:

      The list goes on and on but for the sake of brevity we will stop
      here. From the above mix of policies the overall picture is clear.
      Actions speak louder than words. In the grand scheme of things of the
      PAP government, there is no place for workers welfare and "Family
      Friendly Benefits". Of cause it would be political suicide (even in
      Singapore) to publicly admit this truth so in true PAP tradition
      policies are drafted and the government controlled press is enlisted
      to show case to the public that worker's welfare feature prominently
      in the ruling party's priorities.

      Of cause the problem here is that there maybe afew kind unsuspecting
      souls who actually swallow this entire sales pitch, hook line and
      sinker, which brings us back to the sad story of Ms Lim Ai Ling.

      Then again, with Human Labour as Singapore Inc's only available
      product, do you honestly believe that management of Singapore Inc
      will endorse policies which will degrade the quality and standard of
      its sole product (and life line)? This government's unspoken stand on
      bread and butter issues is that the welfare and well being of the
      average worker is subordinated by those of the "larger" and
      more "pressing" concerns of the state. Like the usual Stalin and
      Marxist model, the average Singaporean worker is expected to make
      sacrifices for the "larger good" of the state.

      This perspective also sits well with the government's current anti-
      labour policies which favour labour representation by a sham labour
      union (NTUC). The existence of strong and real labour union
      representation would not agree with a management strategy which has
      the objective of keeping Singapore Inc's sole product price
      competitive (i.e.cheap) and attractive. There is a negative
      correlation between quality of life and attractiveness of Singapore
      Inc's prime product.

      In order to placate workers, what we get from "Management" of
      Singapore Inc are a series of measures which look good on paper but
      were never intended to see real actual application in the real work
      place in the private sector. This also explains the reason why there
      is the very conspicuous absence of any real bona fide labour union
      representation here.
      see: http://groups.yahoo.com/group/Sg_Review/message/1399

      With unemployment rates remaining at 4.5% p.a. (which sit strangely
      beside reports by the local press of a local economic recovery), the
      status quo in the job market is decidedly in favour of the employer.
      Unlike other developed countries like the US, UK, Australia etc,
      Singapore is not a welfare state, so in the absence of real tangible
      labour union representation the employers hold all the cards on the
      negotiation table. In view of the current conditions desperate
      workers with mortgages to pay are willing to accept lower pay, longer
      work hours and more stressful work conditions.

      The Singapore government has never been a strong proponent of human
      rights (and free speech) so this Stalin/Marxist styled mentality in
      public policy administration is also hardly surprising. However,
      this imperfect state of affairs might be easier to accept if
      Singapore's Ruling Elite also led by example. But this was not the
      case as Singapore's current ministers have conveniently exempt
      themselves from the same policies on wage restraint which they
      cavalierly impose for the rest of the population.
      see: http://groups.yahoo.com/group/Sg_Review/message/1373

      What happens if the average unsuspecting worker takes the "Family
      Friendly" and "Flexi-work" policies of the PAP government at face
      value and attempts to actually see these policies through to actual
      implementation? Ask Ms Lim Ai Ling who was finally retrenched for all
      her efforts.

      We circulate below article from Lim Ai Ling which should be read
      keeping in mind the overall larger "labour friendly" policy mix of
      the Singapore Government. There is more than meets the eye in the
      shady world of public policy implementation and there is a lesson to
      be learnt in this for all would-be believers.


      20 Jan 2005
      Lim Ai Ling

      I refer to the report, "Flexi-work arrangements still limited" (Jan

      It's not surprising that the family-friendly benefits did not fare
      well in

      I was in the IT line. I had tried to ask my former employer, a big
      company, for a flexi-work deal so I could spend more time with my son.

      I asked to work from home, but my request was turned down.

      Then I tried asking to work four extended days in a week with one day
      another proposal that was turned down.

      This is unlike in the United States or the United Kingdom, where
      have been able to persuade employers to let them use the Internet to
      from home, as noted in the News Comment, "From home to work with a
      click" (Jan 14).

      Finally, I was asked to accept a retrenchment package while I was
      with my second child.

      My manager told me it was the best arrangement as, with the money, I
      stay home and look after my kids!

      Lim Ai Ling
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