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The Mystery of Why the Government Wants HDB To Make a Loss Solved

Recently the PAP have made use yet again, in a typically arbitrary high-handed and arrogant manner of their authoritarian POFMA law. LHL and his Government find this a brilliant tool to intimidate Singaporeans and stop them from questioning obvious discrepancies or piercing the veil of secrecy that shrouds the reserves and the Budget. Despite my relentless questioning of Government fabrications and accounting tricks to hide money and the true state of the finances, I have never been POFMA’ed which would suggest that I am getting close to the truth and that answering me might open a can of worms since they would be obliged to provide more information. Instead they ignore me because they know I will not be intimidated and nothing will induce me to shut up. I will keep on asking questions until I get answers.

This time the POFMAs were issued because the individuals (including the ex-chief economist at GIC) had asked why HDB BTO flats are not priced using the original acquisition cost of the land plus the construction costs. Since the majority of this land was “acquired”, a euphemism if there was ever one, by the Government for a tiny fraction of its true value back in the 1960s and 1970s, the true cost of new BTO flats (most of which constitutes land cost) is much lower than the supposedly “market” price the HDB sells the flats for. Some of the individuals from whom the land was expropriated were extremely wealthy but many were not, including small holders who lost their farms and were forced to live in relative poverty. Many in the Opposition have asked going back at least a couple of decades why the Government does not simply price the cost of BTO flats at the original book value of the land plus the cost of construction.

The Government’s standard retort, most recently by Sim Ann and in the form of the message that those POFMA’ed were forced to carry as well as on the Government website (Un)Factually.sg, is that for the Government to charge anything less than market price for the land would be deplete the reserves and thus shortchange future generations. I have always found this argument to be disingenuous since if the Government was concerned about future generations of Singaporeans it would do a lot more to provide support to families and make education free up to tertiary level so that younger generations had the best possible start in life. Rather than help disadvantaged Singaporeans the PAP have always preferred to offer scholarships to talented foreigners who are then invited to work here and become citizens without having to do NS, and to welcome FTs with mediocre degrees who similarly enjoy low taxes and no NS obligations.

But in any case talking about a “market” price is nonsense when the Government owns nearly 90% of the land and a similar proportion of Singaporeans live in public housing. With a nearly complete monopoly the “market” price is wherever the Government chooses to set it.

So why does the Government not set the price of land lower or at least set it at a level that would mean that HDB would not make a loss every year? HDB’s loss is This necessitates the Government, or to be precise the Ministry of National Development (MND,) providing a grant every year ($4,4 billion in 2022) to HDB. Why artificially make a loss by requiring HDB to pay the “market” price for land which it purchases from the Government and which the Government paid next to nothing for in the first place.

The answer came to me after I spent some time pondering this question. As usual the PAP put up a smoke and mirrors misdirection to confuse and bamboozle Singaporeans. Having HDB overpay for the land. using a market price that is meaningless when the Government controls the supply, and then having the MND reimburse HDB for its loss through the Budget, provides a conduit by which revenues from taxes like GST and income tax is “spent” buying the land for a second time after it was originally bought when the land was acquired, or rather expropriated, from its original owners. The money thus spent represents part of the Past Reserves and can then be channelled to Temasek and GIC, which are controlled by the PM and, at least until recently, his wife, and which are not accountable to Parliament for their performance.

This sleight of hand just represents one among the many fake accounting tricks and potentially outright fraud that the Government to keep resources out of the hands of what it regards as undeserving Singaporeans and to argue constantly for the need for taxes to rise. I have highlighted several of them in the past including the Net Investment Reserves Contribution which in many years has gone straight into long term funds of which only a small fraction is spent every year, contributions from long term funds and endowments that mysteriously appear again under current expenditures to be set against current revenues and mysteriously exponentially rising healthcare (and also education) expenditures which also are set against current revenues in the Budget while at the same time fees collected from Singaporeans by the privatised MOH Holdings are not shown and may also be channelled directly to Temasek and GIC. This, along with overpayment for land, may be one way the Government disguises losses by our sovereign wealth funds and keeps up the facade that they are making if not great at least acceptable returns.

I admit it always puzzled me when Tharman and then my old Cambridge colleague, Heng Swee Keat (of the East Coast Plan), waxed lyrical about the generous subsidies given to Singaporeans for housing, healthcare and education and contrasting this with democratic countries with proper social safety nets. There are no real subsidies, just the Government making you overpay or pay twice for what you already own and diverting the money into unaccountable private companies managed by people, including the PM’s wife, PAP connected persons and relatives as well as a whole army of foreign sycophants and brown nosers, whose salaries you as a lower class peasant are not entitled to know, while making it look as though there are no resources available to help you with the problems you face. Singaporeans are perpetually putting money into the but no money ever seems to come out. If that is not the perfect Ponzi scheme, I do not know what is. If I do not get POFMA’ed for this blog then you will know I am right.

 

Kenneth Jeyaretnam

 

I’m a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That’s why I’ve never been sued in any civil or criminal court no matter how hard hitting my criticism. I’m quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don’t work. The Right and the Conservatives hate me because I’m a liberal. I’m not sure what the middle think of me. I don’t think there are more than a handful of people in the middle, here in Singapore. I’m a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I’m not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean.

 

 

yyy
READER COMMENTS BELOW

12 Responses to “The Mystery of Why the Government Wants HDB To Make a Loss Solved”

  • Not ponzi:

    A ponzi scheme, you expect returns.

    This one, no returns expected. All pour into a bottomless pit with special worms.

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  • opposition dude:

    Nothing lasts forever and with BTOs in mature estates priced beyond the reach of ordinary Singaporeans it’s only a matter of time before PAP says goodbye.

    No need for the wayang explanation about the reserves and what not, we don’t even know how much there is in it in the first place. So naturally it wouldn’t be a surprise if people started thinking that whoever has access to the reserves isn’t siphoning off from it into their own personal bank accounts? Of course they will say no such thing is happening and there are safeguards but who is going to believe them given the lack of transparency?

    It’s this simple lah, as long as PAP is in charge one can only expect housing prices to be sky high and not priced to the median income. Sure, they print the typical graphical illustration to show that a couple pays zero cash monthly for their flat but never the loan tenure and the final amount (with interest) that the homeowner pays. This wayang is the best that PAP can do given that they can’t come up with any new tricks. You know the saying about an old puppy and new tricks after all.

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  • only stupid people vote pap:

    we are jobless OPPO supporters who practically scour the Internet looking for pap IB posts to debunk them.

    maybe it is due to covid. lately, we seem to see deflated posts from obvious pap IBs. and they seem to be less and less of them.

    we are of the opinion the days of pap are numbered. to put it in another way, we are of the opinion the days of sinkies remaining sinkies are numbered. the current sinkies begin to realize brighter days are ahead only if pap is voted out of government. this is a fact.

    with pap gone, new government shall be able to dig into the accounting fraud of current pap government, just as new sph managers are able to dig into accounting fraud of previous sph managers. unlike the current sph saga, the pap folks cannot run road since a new government is in power and shall be able to indict all of them for their lies and wrong doings and put them into jail.

    all current and past pap folks, by omission and by commission, are guilty.

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  • Marquis⩙of⩙Dalhousie:

    Every instrument for the Nicolaitans to subjugate the laity economically is necessary for the posterity of C2.

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  • TheObelisk:

    Welcome to Singapore, the Davos of Asia. We ain’t got no mountains but bukit timah hill and fort canning should suffice, and a swiss standard of costs.

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  • only stupid people vote pap:


    Rather than help disadvantaged Singaporeans the PAP have always preferred to offer scholarships to talented foreigners who are then invited to work here and become citizens without having to do NS, and to welcome FTs with mediocre degrees who similarly enjoy low taxes and no NS obligations.

    we hope every sinkie who can read in English to digest the above line by line, word by word, to discover how stupid sinkies have been in their voting pap.

    1, sinkies pay for their education in pap Us such as nus ntu smu etc. aliens, talented or not we don’t care since if truly talented they would have remained in their own land of birth rather than come here to pap island, get free education in pap Us such as nus ntu smu etc. this is a fact.

    2, sinkies waste 2 years of their youth in NSF NSR providing cheap labor for pap paper generals to get more pips on their shoulders. if sinkies ever get full time employment, they need to waste up to 40 days every year in NSR while the aliens pap allowed in do not. worse, after the NSR, a very high pile of backlog to clear in the office, besides carving out time for parents children spouse friends. sinkies must realize by now this cannot go on.

    3, sinkies forget one important point. sinkies mostly not with much money and so majority in HDB which pap over prices. worse, pap allows the aliens, those so called PRs to buy HDB. pap does this because pap’s sole objective is to drive up the HDB prices. aliens, so called PRs, as soon as they desire, give up their PRs, sell off their HDBs, and balek kampong with their S$ gains. the sinkies go nowhere to balek kampong. so, sinkies must wake up from the pap lie that HDB is an asset. it is NOT. because sinkies can only own one HDB at any one time and since sinkies do not have another passport, selling off HDB to live elsewhere is pipe dream for sinkies. there is a class of citizens, those with money. normally, this class go live anywhere in the world and so mostly they own cars in pap island and they vote OPPO. (are we saying the monied citizens vote OPPO and the without money sinkies vote pap? yes. this is a fact.)

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  • I Know:

    If I’m not wrong, it was Richard Hu who mandated that ministries and stat boards had to operate on a cost recovery basis. This certainly explains why public services like policing (esp by LTA and TP) are understaffed and under-provided — very low profit potential

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  • Thanks kenneth:

    We are privileged to have kj who has integrity and brilliance,I sometimes fear for him ,he goes into areas where others fear to tread,
    Others have been crushed and ruined for lesser things,he has referenced many times to the Royal couple who are untouchable .in olden his a if you criticise the emperor u lose Yr head

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  • Policy change:

    Time to change the policy.
    Many are now asset rich and cash poor.
    Need to change so that more have cash to have a better quality of life,and retirements.
    Bring the cost of HDB flat down…

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  • Trust only myself:

    The liars can never use PORMA on what KJ is saying simply because what he said is true…….only too bad not enough numbers in parliament to ask relevant questions……..

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  • TRex:

    Kenneth Jeyaratnam is a blessing to Singaporeans. If only Sinkies get educated and wake up.

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  • TRex:

    Not ponzi:
    A ponzi scheme, you expect returns.

    This one, no returns expected. All pour into a bottomless pit with special worms.

    Kenneth needs to justify what about the CPF payouts for retirements? Something does come out but the returns are inadequate. PAPigs are baking Kirby out of Sinkies.

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