HDB loses billions: Really?

Photo: www.99.coPhoto: www.99.co

HDB should be transparent!

I refer to the article “Why would the government lose money in sale of HDB flats?” (theonlinecitizen, Oct 24).

It states that “The Housing Development Board (HDB) reported on Mon (22 Oct) that it had incurred an overall deficit of $1.7 billion in the last FY.

In 2013, then National Development Minister Khaw Boon Wan explained that HDB actually has to pay the government for land to build HDB flats. He said the price of land is tied to acquisition costs, reclamation and the building of infrastructure around it.

“You need to acquire a piece of land; you need to reclaim a piece of land. All those costs money to taxpayers and we are just trustees of taxpayers and those costs are to be accounted for. And even when you have got that land prepared, land is only valuable when we invest in infrastructure, roads, MRT… And all those costs billions of dollars,” he said.

“Let us not perpetuate this talk about HDB is making money out of building houses because if it was so simple, life would be straightforward, but that’s not the case,” he added. “The cost of building HDB flats includes the cost of land, design, construction, financing and other project-related costs. It varies from project to project and year to year.”

Govt as a whole does make money from HDB sales

HDB itself may be losing money but in actual fact, the government as a whole does make money.

For example, Bishan HDB estate was built from cemetery land forcefully acquired by the government at around 1980. The cemetery land originally belonged to Kwong Wai Siew Peck San Theng temple. In the end, the government only paid a compensation of $4.95 million to the temple for the 121-hectare (13,024,319 sqf) of cemetery land or about $0.38 psf.

So, with a low land cost incurred by the govt to begin with and later the govt marking up the land for sale at the current market price to the public, why would the government make losses in sale of HDB flats?”

In this regard, the debate continues almost year aftet year about whether the HDB is losing money in the billions, almost every year.

I have a simple suggestion to put an end to this once and for all.

The HDB should disclose every year the amount that it pays to the Singapore Land Authority (SLA) and the breakdown of the HDB BTO flats’ prices into the construction, land and development costs?

Leong Sze Hian

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.