TR EMERITUS

Written by Our Correspondent Deputy Prime Minister Teo Chee Hean became the latest PAP leader to urge Singapore workers and companies alike to boost their productivity. The sudden change in tune is stunning given that his colleage Minister without portfolio Lim Swee Say had been exhorting Singaporeans to be "cheaper, faster and better" since last year. DPM Teo chairs the newly-formed National Productivity and Continuing Education Council and as expected, he heaped praises on the "progress" made by previous productivity drives without substantiating his statements, made during a community event: "We have made good progress in the past in our productivity drive and that is why we have been able to move our economy forward and have good jobs for many Singaporeans. But this is a constant effort and we have to renew and re-double our efforts," he was quoted as saying in Channel News Asia. According to a press release by the Reform Party last week, Singapore's labor productivity lags far behind that of other advanced economies: "In manufacturing alone our productivity grew by an average of 0.7% p.a. over the period 2000-08 whereas South Korea, Taiwan, Sweden and the US managed 7.4%, 5.2%, 4.8% and 4.6% respectively over the same period. Out of a group of 17 economies we were second from bottom." [Source: Reform Party] It is strange that DPM Teo would consider such a shocking figure of 0.7 per cent as "good progress". Perhaps he is not aware of the Reform Party article as he has been depending only on the state media, described as a "trusted" source of news in Singapore by Minister Lui Tuck Yew for news only. While all the PAP MPs have nothing but good words for the government's renewed productivity drive so far, Kenneth Jeyaretnam of the Reform Party casts doubts on the target 2 to 3 per cent productivity growth rate set by PM Lee which had shocked even Minister Lim Swee Say himself: "The Honourable Minister talks about the need to raise our productivity growth rate to 2 to 3% per annum from its current level of less than 1% p.a. However, given that productivity fell by 1.1% in 2007, by 7.8% in 2008 and by 4.7% in 2009 (for a cumulative fall of 14%), we require at least six years of productivity growth at 2% p.a. to get back to where we were in 2006." DPM Teo added that there are "many things" that need to be done again without elaborating: "Our economy has changed and our workforce has moved up in terms of skills and productivity levels. And so we have to see how we can move even further up. While we have moved on, I must say the countries which are ahead of us have also moved on, and those countries behind us have also moved up. There are many things that need to be done. Companies need to take the lead. Workers also need to take ownership for their own upgrading and the government has a lot of work to do in the facilitation. It requires the companies, unions and government to work together." Under Singapore's unique "tripartite" system, a government organization NTUC is charged with dealing with all matters pertaining to Singapore workers on their behalfs. But NTUC has been harping on the productivity issue for the past decade with no results to show. DPM Teo should consider consulting Mr Kenneth Jeyaretnam, a double first-class economics graduate from Cambridge University with a wealth of experience in the finance industry. With due respect to DPM Teo, he spent his entire career in the navy and government and is hardly the best person to take charge of Singapore's productivity drive. As a matter of fact, he should walk his talk by boosting the productivity of his cabinet by cutting their pay. Despite a lackluster performance, Singapore's ministers are expected to receive a hefty 8.8 per cent pay rise this year.  Read More →

Written by Our Correspondent After months of denying that the prices of HDB flats have spiralled out of control, National Development Minister Mah Bow Tan finally relented and said last week "the Government is looking into 'something' regarding measures for the HDB market." Though he did not reveal the details, property experts interviewed by the Straits Times "reckoned the Government could extend the minimum occupation period for those who bought their flats with bank loans as well as make checks to ensure owners are not flouting the rules." Mr Mah has received alot of flak lately over his inept handling of the matter which has caused considerable distress and anguish to ordinary Singaporeans who are increasingly priced out of the public housing market, especially the resale one. The prices of HDB flats have almost doubled in the last few years, with that of resale flats hitting a record high in June 2009 when the economy was mired in recession. The abnormal situation is caused largely by the lack of foresight of HDB to plan well ahead to build more flats to meet the expected increase in demand for housing fueled by uncontrolled immigration. Recent launches of BTO flats are more than 5 to 10 times subscribed even in less popular areas like Choa Chua Kang, an indication of how serious the housing shortage has become. Only slightly more than 11,000 new flats were built between the years 2006 – 2008 when there were over 90,000 PRs and 20,000 new citizens alone in 2008:   [Source: HDB Financial Report 2008/2009] Below is a graph illustrating how the rise in the prices of resale flats coincides with the rise in the number of foreigners in Singapore between the years 2000 and 2008, courtesy of Kojakbt, the moderator of 3in1kopitiam: Due to the ruling party’s liberal immigration policy, foreigners now made up 36 per cent of Singapore’s population, up from 14 per cent in 1990. The prices of HDB flats are kept artificially high by building less flats than needed to meet the demand and increasing the population via immigration. Unlike in other countries, PRs are allowed to purchase public housing in Singapore from the open market with few restrictions. Some PRs have "spoilt" the market by over-paying for the flats. An Indonesian PR was reported in the media to pay $653,000 for a 4-room resale flat in Queenstown when he could well afford a condominium. According to official figures, PRs form 20 per cent of the buyers in the resale market though some real estate agencies like ERA put the figure higher at 40 per cent. The state media has been trying to deflect public anger from the government and PRs by pointing the fingers at private property owners for snapping up the resale flats when they constitute only about 5 - 7 per cent of the buyers. With elections around the corner and public sentiments fast turning against the ruling party, HDB has to be seen as "doing something" to placate angry Singaporeans. Mr Mah has to act quickly so that he will not be "caught offguard" again. As for Singaporeans who bought the flats as such obscene prices, they will have to pray that hard that prices will continue to rise and not drop in the next few years with more flats being released into the market.   Related articles: >> Why HDB is unable to reveal break down costs of new flats now >> HDB blames Singaporeans for not selecting flats when given the chance >> Singaporeans worried about retirement after depleting CPF to pay for over-priced HDB flats >> Mah Bow Tan acknowledged that rising HDB flat prices has sparked “fresh concerns” >> PM Lee: Govt does not have control over prices of resale flats” >> COVs of resale flats shooting through the roof >> HDB resale price index hit record high in 2009 >> Singaporean wants PRs to live in rented flats instead of buying resale flats >> Singaporeans wants PRs to be banned from selling HDB flats at a profit >> Shanmugam: Singaporeans likely culprits for driving up HDB flat prices >> Mah Bow Tan: HDB flats remain affordable >> Means testing for PRs to buy resale flats >> Immigration and public housing: should the govt or people plan ahead? >> Grace Fu: hard to predict demand for housing >> Indonesian PR bought 4-room flat at $653,000 >> Mah Bow Tan asks home buyers to be realistic >> PAP MP blames young couples who cannot get a flat for not planning ahead >> Home affordability: HDB versus the public >> Demand vs supply: so many applicants, so few flats >> Number of applicants exceed number of flats >> HDB to increase supply of flats >> Mah: don’t compare with prices in the past >> ERA: 40 per cent of HDB flat buyers are PRs  Read More →

OPINION In a speech made last week to Tanjong Pagar residents, Singapore's octogenarian leader Lee Kuan Yew admitted unwittingly that Singapore's housing market is heavily dependent on foreigners. "To continue to grow and prosper while slowing the intake of foreign workers, the same number of Singaporean workers must produce more. Otherwise, there will be a deflating economy, and knock-on effects on jobs and asset values. Instead of many job opportunities and rising asset values, including prices for resale HDB flats, the reverse will happen... fewer jobs, lower salaries, lower asset prices... pay will fall and so will the number of jobs and promotion," he said. The prices of HDB flats have sky-rocketed in recent years due to rising demand fueled by immigration amidst a limited supply of new flats. Only about 3,100 flats were built in the year 2008 when there were more than 70,000 PRs and 20,000 new citizens in the same year alone. Prices of resale flats increased by 8.2 per cent with Cash-Over-Valuation (COVs) doubling the last quarter of 2009, a year which saw Singapore mired in recession. Recently launched Build-to-Order (BTO) flats were oversubscribed by more than 10 times, an indication of how acute the housing shortage crisis has become. Government leaders have remained oblivious to the inherent dangers posed by the rising prices and sing in unison to the official stance that it helps to "generate wealth" for Singaporeans. Common sense will tell us that it is impossible for prices to continue going up and it is only a matter of time before the prices drop. A property bubble in the public housing market has been building for quite some time and Singaporeans will be "caught off guard" when the crunch comes. According to figures obtained from HDB Infoweb, the median prices of resale flats have doubled in the last four years when it took nearly a decade for it to do so. While prices have already reached astronomical levels with some property agents asking nearly a million dollars for 5-room flats in prime districts, the wages of ordinary Singaporeans have lagged far behind the rise in housing prices. At some point, the market will have to crash because there will no buyers for the overpriced flats. So the question on the mind of everybody is: when will Singapore's public housing bubble burst? Probably in the year 2013 or earlier. Stung by criticisms from Singaporeans at its failure to provide adequate housing for first time home buyers, HDB has predictably increase the supply of flats in a classical knee-jerk response to the housing shortage. Four BTO projects have already been launched this year with a projected number of 12,000 new BTO flats being built which will be completed in three to four years time, earliest by 2013. A glut of new private and public housing will be completed in 2013 thereby increasing the supply of flats which will surely cause the prices to drop even at the present rate of immigration. Between now and then, who can guarantee that there will not be another global financial crisis? Singapore's economy is heavily dependent on foreign workers and investments which explains why it became the first Asian country to enter into a recession in 2008. Any slight knock to the global economy will turn back crucial foreign direct investments (FDIs) from Singapore leading to an exodus of foreigners with disastrous consequences for the housing market. About 6o to 70 per cent of buyers of Singapore properties in the private sector are foreigners while they make up about 20 per cent in the HDB resale market. As their values have already been overly inflated, the resultant drop in prices will be equally as much if not more. There is a good chance that prices may be rolled back to the 2006 - 2008 levels meaning a drop by nearly 50 per cent which will plunge many Singaporeans into financial distress. The public housing market had crashed once in 1996 and this time it would be worse as prices had far exceeded the 1996 levels. Singaporeans will have to pray that foreigners continue to buy up properties in Singapore to keep their asset values going up. Unfortunately, with the emergence of China and India as economic powerhouses, the attractiveness of Singapore as magnet for foreign investment will continue to decrease in the next few years. With lower economic growth, declining wages and fewer investment opportunities looming ahead, will Singapore's public housing market continue to soar as before? When the crash finally comes, many Singaporeans will see their entire life savings being wiped out in an instance. Perhaps that is the only way to wake up apathetic Singaporeans from their slumber and revamp the entire system once and for all.  Read More →