18 March 2010

“Where laws end, tyranny begins.”

“Where laws end, tyranny begins” – This pithy quote is attributed to William Pitt, 1st Earl of Chatham (1708-1788). More than 2 centuries on, it still resonates resoundingly.

The presumption is that the laws are just. As I quote Dr Martin Luther King, Jr (1929-1968) in my blog banner: “There are two types of laws: Just and unjust”.

Poser: Where unjust laws end, then what???
I can’t pit myself against Pitt. And I am no Kingmaker. So I will leave it to you to find the answer.  Will there be a choral rejoinder about the Emperor's State of Undress (or Dress) - Glass Half-Empty or Half-Full Syndrome, eh? 

In this trilogy:
Part A – President said, I said
Part B – The Generals said
Part C – PM said, I am saying

Why a trilogy? Because the Land Titles (Strata) Act ("LTSA") has triplet objectives.

The House delivered “triplets". But the Executive, the Legislature, the Judiciary and the Civil Service only remembered the “twins (as shown in Part B of this trilogy). The third baby (alive and kicking and glowingly pink - our Singaporean Identity Cards, I mean) was unceremoniously thrown out with the bath water!  Hello, does anyone care? 

Who are the precious triplets? According to the Hansard, the triplet objectives of LTSA are:

1.  “… housing units in prime 999-year leasehold or freehold areas for Singaporeans” (First primary objective – Our citizens). Waaargh .......!

2.  “… creating more housing units” (Second primary objective – Higher land-use intensity). Coo-coooo ...

3.  “a secondary benefit is that these developments, especially the older ones, could have been rejuvenated through the en bloc process” (Third secondary objective – Urban rejuvenation). Babble, babble ...

Trilogy: Part A – President said, I said

How Time flies! Riding the mutant three-hump camel in my Oct 2010 blog entry, I marked the 11th anniversary of en bloc law in Singapore. Sobering thought, eh?
A-1 Yesterday, Today, Another day. Cyber-nostalgically, I recently re-read my old blog entries.

2007: I first invoked the idea of “doing right”, as distinct from “being right”. I re-traced the etymology of “Dào Lǐ“– 道 理 about a month after the LTSA legislative amendments came into effect as per my blog entry in Nov 2007: “I reckon that if Singaporeans see the Gahmen as ‘doing right’, as opposed to ‘being right’, there would be a lesser degree of dissatisfaction and disenchantment. This en bloc phenomenon is a CLASSIC CASE STUDY of how the Gahmen is ‘being right’ but is NOT ‘doing right’!!!”

For the next two years, I repeated this essential distinction ad nauseum (in much the same way that  MinLaw also repeated the 80% (90%) en bloc super-majority ad nauseum - hee, hee ... we all have our respective pet peeves, eh?):

2008: http://singaporeenbloc.blogspot.com/2008/08/en-bloc-why-it-is-not-right-for.html

2009: http://singaporeenbloc.blogspot.com/2009/03/executive-legislative-judiciary-sans.html

Hence, it was with a sense of déjà vu as I read the Los Angeles Times report (16 Mar 2010) about President Barack Obama’s latest spiel on America’s healthcare reform bill: “Obama said. ‘It's been such a long time since we made government on the side of ordinary working folks, … I don't know about the politics, but I know what's the right thing to do, … I want some courage. I want us to do the right thing’.”

Whoa … it is so, so validating to realise the universality of this idea of “Doing right”, “to do the right thing”.

Maybe, just maybe, our Gahmen will “do right” by us condo owners with the dawn of a new day, eh? Hope reigns eternal!

A-2 Looking back. Hindsight is precise science. I lay no claim to prescience and I take no pleasure in hooting: “I told you so”. To date, my three projections have come to fruition (viz, DPS/IAS, Bagel Class, Roti Kahwin fusion syndrome) and my 4th and 5th projections (viz, foreign-ethnic enclaves and reverse engineered en blocs, respectively) are likely to be affirmed unless policy action is taken soon, I reckon:

(a) In my 24 Dec 2007 Christmas Eve blog entry (para 4): I posted a blog entry that drew an analogy between (i) the then withdrawn Deferred Payment Scheme (DPS") and (ii) the morphed Interest Absorption Scheme ("IAS") as being the equivalent of "half cati, eight taels”. Despite highlighting this, it took MND almost two years to ban Interest Absorption Scheme on 14 Sep 2009 after it withdrew the Deferred Payment Scheme on 26 Oct 2007! http://singaporeenbloc.blogspot.com/2007_12_01_archive.html

(b) In my 29 May 2007 blog entry: I projected an evolving “Bagel Class” of Singaporeans because en bloc sales would result in two holes, the first hole is affirmed by URA statistics published in Business Times, 27 Mar 2008, where foreigners are displacing Singaporeans’ share of new property purchases, especially in prime/choice locations. http://singaporeenbloc.blogspot.com/2007/05/in-between-evolving-bagel-class-of.html

(c) In the same 29 May 2007 blog entry: I noted that there would be an unhappy “Roti Kahwin” fusion syndrome. This would arise when the “Sandwich Class” of HUDCers/Exec Condoers (those who did not qualify for HDB flats but who could not afford private property) would need to revert to the "Roti Kaya Class" (bread with local coconut jam) of HDBers. It would not be a happy "Roti Kahwin" (bread with a marriage fusion of butter + coconut jam) when the ex-HUDCers/Exec Condoers start competing with Real McCoy Heartlanders for HDB public flats!

The Roti Kahwin impact may not be numerically massive in the overall scale of HDB resale transactions, bearing in mind the deluge of foreign immigrant influx in 2008-09. However, it cannot be denied that a few transactions of excessive Cash-over-Valuation (“COV”) would set a new benchmark and thus trigger an upward spiral, eh?

According to Channel News Asia (5 Mar 2010): “Mah said that in 2009 there were 58 cases where COV exceeded $70,000. And only eight cases, or 14 per cent, involved PRs. Another 19 per cent, or 11 cases, involved PPOs (private property owners).”

How the stats are sliced and diced often result in different kaleidoscopic formations, eh? Minister Mah must have good reasons for citing these 2009 statistics. However, I reckon that it would have been more insightful if the good minister used the 2007-08 figures instead. Hmmmm (scratch, scratch - my head, of course; where else?) ... Didn't the last en bloc bout start to stir in 2005 and then became most frenetic in 2006-07 before fizzling out after mid-2007? Ahhhh (stroke, stroke - my chin, lah) ... Wouldn't that mean en bloc pay-outs would most likely span from 2007-08 (bearing in mind that only a handful of estates won their legal battles and most did not pursue their battles beyond Strata Titles Boards’ (STB) level)? Now ... are your eyebrows furrowing? Oh dear, soon you will need Botox - sorry, you won't be able to afford those jabs after your en bloc shot (or shock)!

Maybe ... it's time for us to read "old news"!  After all, it may not be moronic despite being oxymoronic, eh? Elephants, unlike horses, have better memory because elees (especially old matriarchs) have higher EQ than horses. Nah, EQ is not Emotional Quotient in this context. It is Encephalization Quotient (elees' 1.88 score compared to horses' 0.86)! Of course, I am dead serious!!!  Why would I pull your leg?  Or the elees' shapeless clumpy legs? Or the horses' powerful athletic ones!  No fun being elee-trampled or horse-kicked, I tell you. Trampled or kicked, I'd likely end up dead (and not dead serious)!

Here's some pertinent "old news" from two years ago (in case Minister Mah is also interested) – Business Times (27 Mar 2008): “Also, the booming stock market and the spate of collective sales in the private property market have unleashed a group of cash-rich house hunters, many of whom are opting for high-end resale HDB units. This group is willing to pay top dollar for flats that fit their criteria. … Such highly publicised transactions have kept the HDB resale market in a state of euphoria since the middle of last year. Many hopeful sellers hiked asking prices overnight, with some demanding as much as $200,000 COV. … According to HDB's Q4 2007 numbers, the median COV for a five-room HDB resale flat in Sengkang was $23,000; compared to $79,000 for a similar flat in centrally located Queenstown.”

Although HDB web-site only provides median COV as opposed to excessive COV which Minister Mah cut at $70k, it is nonetheless telling. The median COVs for 4-room to Exec Condos (ex-condo owners are not likely to go for low-end 1-3 room HDB flats even as they downgrade to public housing) for nearly two years (3Q 2007 through 4Q2008) consistently exceeded the median COVs for these same categories of flats for nearly the whole of 2009. Now, doesn't that support my assertion that the kaleidoscopic view of 2007-08 numbers would be quite, quite different from Minister Mah's 2009 portrayal? Ooopsie ...

Minister Mah also cited that 19% involved private property owners. It is unknown how these statistics were cut (eg, in some cases, en bloc condo seller may be the patriarch but HDB replacement buyer may be his children upgrading from an existing HDB flat and wanting to benefit from CPF housing grant or some perk).

Perhaps, in line with the Gahmen ethos of “free market forces in a dog-eat-dog world” and “leaving us to the dogs” (after all, we are over 21, we should know what we were doing when we merrily agreed to en bloc and signed Collective Sale Agreement (“CSA”)), I suspect that the Singapore Land Registry ("SLA") did not even bother to gather data on what happened to the en bloc owners as bank mortgages/CPF charges got discharged after SLA registered the collective sale applications/orders.

Although I had suggested to the authorities around mid-2007 to collate such data, it probably fell on deaf ears.  Hence, there probably exists a gaping hole in SLA database in this respect at present.  So, as an alternative, they are using excessive COVs paid in PPOs' purchases of HDB resale flats as a proxy, I guess.

With all the purported “en bloc windfalls” sloshing around in the system, where did the flow-through go? If the Gahmen know, they ain’t saying nothing yet!

Trilogy: Part B – The Generals said

When the Prime Minister of Singapore speaks, we must take his words seriously to heart. More so if the PM is your direct boss, you'd think, eh? Instead of making our dear PM fret over how “to fix the opposition” in future, it may be more worthwhile for the PM to “fix his own ministers and parliamentary secretaries in MinLaw and MND” now. If one can't multi-task, then one must focus on one thing at one time. But focus on the right thing, for goodness sake!

What are we citizens left to think when the PM’s right- and left-hand generals go around undermining his overall direction, contradicting what was said in Parliament, confusing the Judiciary and sending half-true messages via the Civil Service?

Since I don't hob-nob with ministers, what can I do but read the much-trusted Straits Times for PAP ministerial views, right? Here's what I gleaned with my beady two eyes and my wax-cleared twin ears ...

B-1  MND - Left-hand general. When interviewed about en bloc sales, Sunday Times (17 Jun 2007) reported that Minister Mah said: “If you can’t buy an executive flat, buy a 5-room. If you can’t afford central area, go to the suburbs. If you can’t afford Tampines, go to Woodlands or Yishun. … The FUNDAMENTAL REASON behind an en bloc redevelopment is really to make sure that older parts of Singapore have a chance to be rejuvenated and redevelop themselves … if we don't have this, we are going to have a static situation where things are going to run down and there is no opportunity for PEOPLE TO NATURALLY REDEVELOP."] [Capitalization emphasis by The Pariah.]

Contrast the above ministerial comment with the Hansard record of what was said in Parliament for the passing of this law: Singapore Parliamentary Debates, Official Report (31 July 1998), vol 69 at cols 601-607, the Minister of State for Law said: "… As a result, these buildings cannot take advantage of enhanced plot ratios to realise their full development potential, which would have created many more housing units in PRIME 999-year leasehold or freehold AREAS FOR SINGAPOREANS. A SECONDARY BENEFIT is that these developments, especially the older ones, could have been REJUVENATED through the en-bloc process." [Capitalization emphasis by The Pariah.]

The “for Singaporeans” bit totally escaped the conscience and consciousness of Minister Mah! Let's not forget that Mr Mah is obviously very much a "thinker" as he even urged us to do "Three Thinks" before committing to buy real estate (viz, "Think carefully; Think long-term; Think about the unexpected" – Straits Times, 2 Sep 2009). Such deep and thoughtful advice coming from a "thinker" minister to go to Woodlands if you can't afford Tampines after en bloc carry dead serious weight! Or is it dead weight?

Sorry, my two left feet get entangled at times. I recall that Minister Mah happens to be the Tampines MP within that GRC (Group Representation Constituency). So what was Minister Mah saying? Was he trying to get his Tampines constituents to move to Woodlands because that is nearer to Johor Bahru (JB) so that when these constituents grow old and fall ill, it'd be a shorter hop over to the JB nursing homes (that's the "option" as offered by his colleague, Health Minister Khaw Boon Wan)? Hmmmm ... now that I "think" about it more deeply, it probably makes sense because when you are old and sick, you wouldn't want to travel very far. Sheesh ... they do think of everything, don't they?  Worth every bang for the buck we pay them, man! Or should I more accurately describe it as "mega-bang" for the "mega-bucks"?

“For Singaporeans” was purportedly the “primary” benefit, eh? Instead, what was “secondary benefit” morphed into “fundamental reason” and “people to naturally redevelop” ostensibly referred to corporate developers because ordinary citizens do not undertake redevelopment projects!

LTSA is pegged at kindergarten level (eg, "financial loss" formula is beyond the wildest dream of any financial adviser-accountant-economist rolled into one; how Reserve Price and Apportionment Method are set by volunteer laypersons without any substantiated basis by an independent valuer, but with guidance from savvy marketing agents who get no fee for no sale, and locked-in with vacuum-packed legalese crafted by professional lawyers who also get no fee for no sale, etc). Hence, it wouldn't be altogether inappropriate to go back to nursery rhymes that we learned in kindergarten! In line with the spirit of en bloc sales, let's clear our throats for the best collective falsetto that we can manage, eh? Ready? Here goes:

Twinkle, twinkle, little star
Little wonder that you are
Down and out for the owner
Up and away for dev'loper

– Down and out for the owners post-en bloc ... It would be "twice the price; half the price" as extant owners face the Hobson's Choice of being a Squatter, Refugee, Downgrader or Downsizer.

– Up and away for corporate developer-buyers post-en bloc ... Three years after 2006-07 en bloc frenzy, with progressive recognition of project revenue from developmental projects, we are starting to get headline news in Feb-Mar 2010 about developers’ profits at historic best:

- CDL’s 2009 net profit second-highest ever
- UOL net profit triples to $424.2 mil
- SC Global net profit increases 28%
- Koh Brothers’ revenue rose 55% … led by its real estate … divisions
- Heeton net profit up 144% to $17.2 mil
- Roxy-Pacific’s 4Q2009 net profit doubles to $5.9 mil

Do you get the picture now? So, what's your rating for the above picture?
- R(A) rated: Restricted (Artistic)?
- X rated: Artfully obscene?
- XXX rated: Artlessly obscene???

Oh dear, I hope blog readers are above age 21! Won't you get viral with these figures?
There are Fat Cats.
There are Cheshire Cats.
There are also Fat Cheshire Cats ...
in this place of Wonderland called Singapore that is not a country but a city ... not a city but a city in a garden ... not a garden but a hotel ... Hotel Singapore Inc! 

Granted that these developers are buyers in Government Land Sales (“GLS”) and their projects are not limited to only condos. But they are also active en bloc buyers, eh? In property development, the most significant costs are land cost and the consequent financing cost. Oi, don't forget that such “developers' windfalls” were achieved despite the unprecedented financial/economic meltdown in 2008, hor? Hence, I’d leave it to your collective "freefall" imagination as to how much more "sexy" the "windfall" figures would have been without such global meltdown.  Even with the credit "freeze" in varying shades of white, things got matchingly "white-hot" in the bedrooms (I mean, boardrooms after they sold the bedrooms)! Hey, hey, hey - Hold your horses please! Although Singapore is a wannabe Buzz, let's not get too salacious in the sordid sleaze - OK?

Did such situations transpire wittingly? If so, then isn't it Progressive Corporatism at its zenith (viz, unlocking land value for corporate developers), and not Government for the People as it ought to be?

Or did they occur unwittingly? If so, then what is the Gahmen doing about it?

Multiple choice answers:

(a) watch haplessly whilst sitting on its hands (they have already sat on their hands for the past 2.5 years since Oct 2007 legislative amendments; how long more are they gonna make us wait?),

(b) continue to tinker with LTSA when the last tinkering in 2007 created new issues, resolved some old issues and skirted around other crucial old issues, or

(c) significantly reform LTSA (eg, boldly mandate one-for-one ("1-4-1") exchange by calibrating and customizing South Korea's Hapdong Redevelopment model of urban renewal, or find a better solution to outclass the South Korean model and thus honour the "for Singaporeans" objective of LTSA).
B-2  MinLaw - Right-hand general. Two ST Forum replies from MinLaw were pretty revealing. See what I mean about re-reading "old news", eh?

B-2.1 “Viable alternative for owners”. In ST Forum (21 Aug 2009), MinLaw said: “Collective sales also offer a viable alternative for owners to seek new accommodation with new and better facilities.”

Hence, it begs the question as to who are these “owners” who will enjoy such “viable alternative”?

Target population of 6.5mn in 40-50 years’ time was announced at the time when Singapore’s population stood at 4.6mn as at Jun 2007. Population ramped-up to 4.99mn as at Jun 2009. Based on the aforementioned Department of Statistics’ numbers, it would be reasonable to extrapolate that, at same rate of increase over the last two years, target population would be hit in 10 (not 40-50) years’ time! [Geez, would this be another instance where it could not possibly be foreseen with ministerial vision? If people who deservingly earn millions of bucks can't see, then who else can see? You and I? You must be kidding!]

Hence, “owners” with this “viable alternative” must be from part of this foreigner deluge - please read on for the explanation.

This foreigner segment is NOT the S Pass holders and entry level Employment Pass holders who are more likely to partake of the HDB housing pie – much to the heartlanders’ chagrin. Instead, these are the foreigners who can afford to buy at the rates that yield developers the stratospheric profit levels cited above. Some may even be part of “hot money” inflows given the level of investment purchases despite the persistently poor rental yield (please see the graph in Part C-3.4(j) of this trilogy). http://singaporeenbloc.blogspot.com/2010/03/trilogy-part-c-pm-said-i-am-saying.html

It is NOT extant en bloc owners who are more likely Singaporeans before this influx. The alternative for extant owners is anything but “viable” based on (i) the consistent trend of “double the price; half the size” post-en bloc and (ii) URA’s statistical confirmation of the displacement of Singaporeans in new property purchase transactions (please see the tables in Part C-3.4(d) of this trilogy). This is how Singaporeans are displaced from prime/popular areas under the Bagel Effect of en blocs. And they then expect us suckers to happy-happy "integrate" with these foreigners!!! Who's kidding whom, I wonder.

B-2.2 Communism, Counter-Feudalism, Democracy. Nearly a fortnight passes as the moon waxes towards being full, in ST Forum Letter (4 Sep 2009), MinLaw said: “The Government's land acquisition schemes have mostly affected land owners. The general public, on the other hand, have been the primary beneficiaries of such acquisitions, through public housing, building of infrastructure for public benefit and various other developments, including the building of condominiums - the latter allowed condominium owners to enjoy the land which was originally enjoyed by land owners.“

Surely, this is not the full-moon effect? Read MinLaw's reply carefully and you may detect the undertone of MinLaw’s reply - It smacks of Counter-Feudalism to justify en bloc law. From a citizen’s perspective, MinLaw seems to be saying: In the past, had it not been for Land Acquisition Act, condo owners today won't be enjoying their "air space" built over land previously owned by attap hut/shophouse owners.  Likewise for the future, if not for the en bloc law, all these owners with poorly optimised condos that look dated and dowdy will pass them on to their kids. How else can we squish 6.5mn target population to live, work, play and shit on this teeny 700 sq km patch – not in the next 40-50 years by 2047/2057 but in the next 10 years by 2019? So please get real, people - make way for others and share ... sharing is good for your soul!

But isn’t Communism also Counter-Feudalism? So are we Commies now? Have we gone stark raving mad?

Of course not, going by MinLaw’s ad nauseum assertions of the super-majority of 80% (90%) consent obtained in each en bloc sale. Nobody forced the requisite majority to sign the CSA. So it must be Democracy – except that it is over private property. Because strata-title is communal living, the law now empowers (i) your neighbours to sell your share of communal property and (ii) STB to force you to sell your private property. After you hand over your house keys under vacant possession, where do you house your family is your problem solely and wholly.  Why would it concern anybody else since everything is according to the rule of law?  Ahhh ... the rule of law - more or less, as the French would wryly say. It is all seemingly sane and civilized. Excuse me, we are Singaporeans, you know.

B-2.3 “Modernisation, rejuvenation and optimisation”. So, seemingly satisfied by the due process of Democracy, MinLaw continued with bated breath in the same ST Forum Letter (4 Sep 2009): ”In finding the appropriate balance, we also need to take into account the need for modernisation, rejuvenation of estates and optimisation of land use.“

I beg your pardon but what happened to the “for Singaporeans” bit? “Modernisation, rejuvenation, optimisation” – Kind of reminds me of the old Richards song “Congratulations … Celebrations …. Jubiliations” EXCEPT ... that MinLaw is catapulting us over the sheer cliff with their “-tions” in the face of “double the price; half the size” post-en bloc. En bloc owners do not land with "-tions" but with "thuds" as we implode and hit Ground Zero! Adding salt to wound, MinLaw cites "appropriate balance" in that same ST Forum Letter of 4 Sep 2009. Between DOUBLE the price and HALF the size, where exactly would MinLaw pin the point of "appropriate balance", pray?

Likewise, with such MinLaw public replies, does it mean that Law Minister K Shanmugam has forgotten what his own ministry said in the House?  Without a doubt, Mr Shanmugam is an honourable man and would not even try to justify that he wasn't the Law Minister at the time when the "for Singaporeans" bit was uttered in the august House back then. 

Given MinLaw’s 4 Sep 2009 ST Forum Letter with its commie undertone of Counter-Feudalism, I can’t resist the perfect irony to invoke Vladimir Lenin: “A lie told often enough becomes truth”, EXCEPT that in this case, it is NOT a LIE but a HALF-TRUTH, or - to be precise - a TWO-THIRD-TRUTH (ie, choosing to remember only two out of the triplet objectives and conveniently omitting the primary objective of “for Singaporeans”)!

B-3  Judiciary - On top of it all. Surprisingly (or perhaps not so surprisingly, given the ministerial weight of authority and power), even the sharpest and the best minds on this land (ie, some Supreme Court judges) have been seemingly misled into effecting incomplete parliamentary intentions in their rationes decidendi as they apply the purposive approach in en bloc legal suits, turning the “secondary benefit” recorded in Hansard into “main purpose” of the bill in their grounds of decision. http://singaporeenbloc.blogspot.com/2009/03/executive-legislative-judiciary-sans.html

B-4  Civil Service - Underneath it all. If the Judiciary can be misled, then what more of the Civil Service even though it is another leg of the INSTITUTIONAL CHECK-AND-BALANCE? Will civil servants be allowed to play that institutional role and thus “serve the public”? If yes, do they? If not, is there a deeper and more insidious malaise?

But let us take heart. Today (11 Dec 2009) reported that at the Harvard Club of Singapore’s annual dinner, no less a man than our Law Minister K Shanmugam proclaimed that "all civil servants have to be accountable, as they are 'exercising power on behalf of people'. Accountability is when 'most of your actions have to be accounted for and explained in a public forum', he said." .

And let us not lose our heads too. The man said "MOST" of the Civil Servants' actions have to be accounted for and explained in a public forum. Since LTSA does NOT impinge on national defence, religion, race or triads, can we "lesser mortal" citizens reasonably expect that it will be "accounted for and explained in a public forum" by our Ministers and Civil Servants, you think?

You know, sometimes I just ain't that sure about the "triads" bit - What with en bloc flipper consortia in operation, or the criminal acts being unleashed in some en bloc estates, or the hooliganism exhibited at en bloc EOGMs, or the deals being gagged under private treaties, or the reverse engineering of LTSA, or the purported arm's length deals transacted in the open market around the tipping-point time, etc, etc, etc! I reckon there are likely more "thugs" in the en bloc market than there are triads pan-island ... but the authorities ain't doing much about such "thugs"- so how???

Trilogy: Part C – PM said, I am saying

What did PM Lee Hsien Loong say?
Please do NOT click on the above cartoon!
The birds may fly away if you do ...

C-1  PM's speeches/comments.  In 2007. In 2008. In 2010. Our PM has been talking and talking.

C-1.1 PM Lee Hsien Loong’s 2007 National Day Rally Speech. “I know many older Singaporeans worry about whether they can make ends meet. We are making changes to help you to work longer, earn more and build your retirement savings. We will enhance the value of your HDB homes, which are a nest-egg for old age. We will improve the CPF scheme, so you can enjoy a steady income and peace of mind in your golden years. … Government “cannot solve all the problems alone … "everyone must play a part ... we each must take responsibility for ourselves, make the effort to do well, and provide for our families and our old age ...”.

C-1.2 PM Lee Hsien Loong’s 2009 National Day Rally Speech. "... it’s not just the hardware, but also the heartware, the memories which we are creating, which is what makes Singapore tick”.

C-1.3 PM Lee Hsien Loong on property prices, ST, 23 Feb 2010. “We can try to influence it, but whether it goes up or goes down depends on sentiment, depends on what happens in the region and the world … Property is for people to buy to live in, not for speculating, … Please take good care of it. It’s for you to live in, it’s for you as an investment, and it’s for you for your old age. Don’t think of selling prematurely to make a quick buck”.

C-2  Now say I. I don't know how you all see the following sequence of events but - to me - it doesn’t reflect well ...

- Jul 2009: Ministerial uncertainty about existence of speculation. [Channel News Asia (“CNA”) (30 Jul 2009): Mr Mah said: “It’s a bit early to say whether there is a speculative bubble or property bubble building up. Obviously it is not in everybody’s interest for such a bubble to form because if it does, and when the bubble bursts, which it inevitably must, then a lot of people will get hurt."]

- Sep 2009 (1.5 months later): Gahmen reversed two "speculation facilitation" measures (viz, withdrawing Interest Absorption Scheme and prohibiting Interest-Only-Loans).

- Nov 2009 (about 2 months later): Ministerial perception that speculation is under control. [CNA (24 Nov 2009): Minister Mah said, “We want to curb erratic spikes in prices due to excessive speculation, inaccurate information or market manipulation". Mr Mah added that the measures introduced in September have also helped to control speculative activity."]

- Feb 2010 (almost 3 months later): Whole government machinery scrambles almost unbecomingly to roll-out Seller’s Stamp Duty, even having to resort to a Certificate of Urgency in Parliament.

It is all the more perturbing when one contextualizes the ministerial comments in Nov 2009 vis-à-vis the Financial Stability Review released by the Monetary Authority of Singapore (“MAS”) also in Nov 2009 about the "risk of renewed escalation of speculative momentum": “Sub-sale transactions as a share of all transactions, a proxy for speculative activities, averaged 11% over Q2 and Q3 2009, which was below the peaks seen in 1996-1997 but close to the 13% average seen during the buoyant property market in 2007-2008. … As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted."

Then, even as cool-down measures were being announced, ministerial reassurance was made far too readily. CNA (9 Mar 2010): National Development Minister Mah Bow Tan on Monday said the government will not be introducing more measures to cool the market for now. Sometimes, silence is indeed golden, if I may be excused for saying so.
From a citizenry perspective: Such ministerial conduct perhaps points to (i) diffidence in policy-making, (ii) insufficient understanding of lag effects (the 2006-07 en bloc and 2007-08 sub-sale frenzies could have partly underpinned property price upsurge despite continuing 2009 economic doldrums) and (iii) trepidation towards market forces.

Despite statistical exclusion of en bloc prices in computing the Property Price Index (“PPI”), it took a backbencher MP to make an insightful comment in Parliament about the speculative factor in en blocs. CNA (3 Mar 2010): MP Liang Eng Hwa (Holland—Bukit Timah GRC) hoped the Government would pre-empt another emergence of en bloc fever, which he said could distort the property market and cause short-term volatility. To date, I reckon URA is still behind the curve in merely focussing on sub-sale activity as a proxy for speculation and disregarding the resale activity in segmented target areas DESPITE the already entrenched speculative market criterion of “en bloc potential”.

C-3  And I have more to say. Whilst PM Lee’s speeches relate more to the HDB heartlanders, the issues afflict middle and upper middle income Singaporeans who own condo units exposed to en bloc risk. If the MIW ("Men-In-White") won't say it, then the "Men-In-Black" citizenry will have to say it, eh?

C-3.1 No man is an island. LTSA is not just a piece of legislation. The ramifications go far beyond urban planning. It feeds directly into macro-economic and socio-political factors. In fact, the effects are far more outreaching as they ripple out towards the seismic demographic change in population structure and consequent domestic consumption demand.

C-3.2 Convert silver tsunami into golden lake. Indeed, there is likely Opportunity in Adversity. If we don’t get this right, then we’d have missed the opportunity of converting the silver tsunami of senior citizens into a golden lake of sustained domestic consumption by senior citizens as an integral part of our island's economic vibrancy (and not a bunch of grumpy old folks, fearful of spending their last pennies in Singapore, with some being shipped off to JB/Batam nursing homes, worried over their chronic healthcare costs and resentful of the growing social divide in a country which they helped to build from not very much).

Even the middle and upper middle class have their share of nagging worries and quiet desperation as some face the Hobson’s Choice of signing the CSA even if (that’s a Big “IF”) they are fully cognizant of (i) the post-en bloc reality of being a “Squatter, Refugee, Downgrader or Downsizer” and (ii) the too-early monetization of the “crown jewel” in their entire asset portfolio for anyone below age 75 that was supposed to be the inflation hedge in their old age for living costs and likely healthcare needs (what more for those who were forced into sale by STB’s collective sale order).

C-3.3 Inevitable politicisation of housing issue. Housing is basic need. In land-scarce Singapore with No 1 population density in the world, property supply and demand (and hence property prices) are core issues. PAP's housing platform allows CPF retirement savings for residential housing purchases, thus further politicising property ownership. All the more so for private property purchases because not only CPF retirement savings but also private nest-egg savings are now at stake.

C-3.4 Context, my dear, Context. In addition to Behavioural Economics coming into play, the following Additional Factors need to be contextualized into the whole scheme of things, as it were – something that I hope will not be lost on the Executive, the Legislature, the Judiciary, the Civil Service:

(a) Frenetic frenzies. There were distinct bouts of en bloc/sub-sale frenzies in 2006-07 and 2007-08, respectively. Hence, the lag effects of cash pay-out/profit sloshing around, especially from en bloc/sub-sale flippers.

(b) Booms-Busts of Singapore Property Market. Ambling around our little isle is the grotesque mutant 3-hump camel, still in its drunken stupor of booms-busts in URA’s Private Residential Property Price Index over 13 years from 2Q 1996 through 2Q 2009.

(c) Prices and Earnings Mismatch. Singapore’s mismatched rankings in terms of prices versus earnings in UBS Jul 2009 report “Prices and Earnings (a comparison of purchasing power around the globe)” embed financial implications that may be under-estimated by the authorities.

(d) Displacement of Singaporeans by foreigners. There are also political implications when Singaporeans are displaced by foreigners from choice/popular locations or their social aspirations towards private property ownership are thwarted or delayed. Will these elements foster “integration” of foreigners or fester “resentment” within a larger political context?

Perhaps the genie is already out of the bottle. Like it or not, we may now already be painted into a corner. "Count on me, Singapore" - Really? Safer to additionally hedge with "Count on me, Foreigners" based on what our venerable MM Lee said at his Tanjong Pagar constituency event in Feb 2010: “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”. Well, as usual, the man is straight-talking. So we'd better cooperate and "happy-happy" integrate with foreigners to avoid deflation and erosion of asset valuations. Know which side your bread is buttered on, ok?

(e) Gini scores. Singapore’s high Gini index scores has been consistently climbing all these years and only went down marginally for the previous two years. According to UN Development Program’s Human Development Report 2009 – At 47.8 in 2009, Singapore is ranked No 2 after Hongkong with the biggest gap between rich and poor amongst advanced economies. Our index score is comparable to Kenya and many Third World countries. http://hdr.undp.org/en/reports/global/hdr2009/

(f) Demographic seismic change. Singapore’s seismic change in demographic profile started in 2000. Our number of senior citizens age 65+ is set to rival Japan soon. By 2030, Singapore is projected to have 873,300 seniors, comprising 18.7% of our resident population (2006 report by the Committee on Ageing Issues). http://www.mcys.gov.sg/successful_ageing/report/CAI_report.pdf

(g) Correlation to CPF retirement planning. For most Singaporeans, our CPF retirement planning has clearly fallen short despite CPF Board’s mission statement: “To enable Singaporeans to have a secure retirement”. [Incidental wondering (or wandering): Hmmm ... Won't "PERSONAL provident fund savings" now become "POOLED risk sharing" under the auspices of CPF LIFE Scheme, if you analyse it more deeply? Uh-oh ... that's another story for another day, eh?]

Committee finding: “60% of active members in the first Lifelong Income cohort are expected to have at least half [of] the full MS in cash (estimated at $67,000) at age 55 and, under the default Refund 80 LI Plan, are expected to receive about $600 or more a month for life in their Retirement Accounts (RA) by age 55” (Nov 2009 report by the National Longevity Insurance Committee). [Note: The 60% figure is pegged to “active members” as opposed to “total members” of that first cohort. Hence, the actual percentage is likely to be more adverse, taking into account women who left the work force to look after children/parents, the structurally unemployed older workers who got retrenched, etc.] http://mycpf.cpf.gov.sg/Members/Gen-Info/CPF_LIFE/NLIC.htm

(h) Correlation to CPF LIFE annuity. Although CPF LIFE Scheme has been streamlined from 12 to 4 plans with pay-out starting from age 65 (instead of the abovementioned Refund 80 LI Plan with pay-out from age 80), the median pay-out using the e-calculator on CPF Board's web-page in 2010 is $550 for women and $600 for men WITHOUT being inflation-indexed.

Given that mortality rate is one of the two factors that affect annuity pay-outs, it is a cruel reality that the only way for effectively higher pay-out is for fellow Singaporeans to die before age 65 (or not long after please), especially those who opted for CPF LIFE Income Plan (no beneficiaries) that would likely be selected by the 40% who are unmarried, widowed or divorced. Another piece of grist for you to chew on - According to CPF: For those aged 65 in 2006, only 67% can expect to be alive at age 80 and 47% at age 85. So what does this mean? One-third of the 65ers will drop dead between ages 65-80. Now, gnawing and gnashing as you chew ... Does that even make you wonder if most of that one-third will "expire" nearer the ages 65-70 bandwidth (bearing in mind that Drawdown Age under CPF LIFE starts from age 65) or at the other end of the age spectrum??? [The other factor that determines annuity pay-out is interest rate but high interest rates may point to inflationary pressures which would be worse for senior citizens because annuity pay-outs are NOT inflation-indexed.]

(i) Correlation to NTUC Incomeshield premiums. As at 2010, the annual premiums for NTUC’s Incomeshield Enhanced Basic Plan (Class B1 ward in Govt/Restructured Hospital) for the following age bands are:

61-65  - $517 (if $550-600 pay-out: starve 25 to 31 days to pay premium!)
66-70  - $711
71-73  - $991
74-75  - $1164
76-78  - $1398
79-80* - $1632
81-83* - $1980
84-85* - $2197 (if $550-600 pay-out: starve 3.7 to 4 months to pay premium!!!)
* Compounding the higher premium rates is the 50% higher deductibles from age 80 onwards - ie, worse for policy holders.

Over the longer term, the rate of increase for healthcare cost may be much steeper than the overall inflation rate. If you think that's bad, then it only gets worse. Why? Because the annuity pay-out is NOT even inflation-indexed. So, there may be a hidden "double-whammy" impact! But please don't let me over-frighten you - Let us find Bliss instead. Where can Bliss be found? Not in your i-phone. But it can be found in i _ _ _ _ _ _ _ e!

(j) Policy disproportion and inconsistency. HDB flats are about 50%-400% cheaper than private condos (excluding the super-deluxe category). Recent HDB announcements deemed it as speculative if non-subsidized HDB flat purchases are sold within three years (subsidized purchases, within 5 years). However, for private condos that require much higher capital outlay, disposal within one year is deemed speculative.

Although purchasing power is significantly different between HDB heartlanders and private property owners, the even greater price variance between these two property types would neutralize this factor. Hence, doesn't it point to a POLICY DISPROPORTION AND INCONSISTENCY when HDB disposal time-bar is 3/5 years whereas private property time-peg for deemed speculation is a mere 1 year?

In any case, such presumption of purchasing power differential between HDBers and private property owners may NOT hold water any more after the 2006-07 en bloc and 2007-008 sub-sale frenzies – Mainstream media reported on 13 Mar 2010 that in the process of checking illegal sub-letting of HDB flats, it was discovered that the perpetrator (a mere housing agent) in fact SIMULTANEOUSLY own 5 more private properties in addition to the HDB flat! Although this may be more an exception than the rule, it may not be that rare for HDBers to own private condos if the authorities are astute enough to slice their statistics based not just on HDB owners but also occupants!

The one-year disposal time-peg seems EVEN MORE DISPROPORTIONATE when taken in the context of new condos that typically require 2.5 years to hit TOP and estates undergoing en bloc attempts that have 12+12=24 month legislated window to apply to STB for a collective sale order.

(k) "Need for space" versus "Demand for units". The jury is still out as to whether Private Property Owners (PPOs) are speculating in HDB resale market or the HDBers are speculating in condo en bloc market AND private property sub-sale/resale market. Hee, hee ... it sure sounds like nobody knows who is doing what to whom how many times over!!!

"Demand for units" is NOT the same as "need for space". In a country as mini-teeny as Singapore, I am NOT at all convinced that "any level of speculation" can be considered "healthy", as suggested by recent ministerial comment (bearing in mind that CPF retirement nest-egg is typically at stake)!

If the "need for space" is genuine, then the property demand is REAL and the Property Rental Index would naturally move in tandem with Property Sale Price Index. If the demand is ARTIFICIAL, then if that is NOT considered as "speculation", then what is? Well, you make the call on the extent of speculation in our Singapore property market based on the following graph [Oh, by the way, ... here's a little test to see how "sharp" you really are - Notice the Blue "rental" line is invariably on top of the Red "sales price" line in the aftermath of BOTH en bloc frenzies in 2000 and 2006-2007 after some lag-time. Go back to the first graph on En Bloc Frenzies in para C-3.4(a) to verify, if you don't believe me. It's NOT rocket science, eh?]:
(l) IRAS quirks. Income Tax Act already provides for gains from property sales to be taxed as "trading gains" or “gains or profits of an income nature” if the party is “deemed to be trading in properties”. Hence, assessment is subjective on a case-by-case basis.

Real estate purchase is inherently long term in nature. Average owner-occupation tenure statistically hovers around 11 years.

Enforcement of present taxation law is SUBJECTIVE and detection may NOT be sufficiently comprehensive as IRAS affirmed in mid-2009 that their audits nabbed only a small number of cases in the past and that pattern was expected to continue. With the incidental “discovery” of 6-property ownership by a mere housing agent, one wonders at the efficacy of IRAS audits and the basis of IRAS’ probably misplaced confidence.

Transparency would be vastly improved by making taxation OBJECTIVE and ASCERTAINABLE UPFRONT (eg, disposal within 5 years of purchase), whereas EXEMPTION could be subjective and determined upon application/review (eg, upon proof of relocation of entire family, or emigration, etc).

Meaningful enforcement of tax laws would lend credence to PM Lee’s words of “Property is for people to buy to live in, not for speculating.”
C-3.5 Wild horses galloping, prancing, roaming. Well, it looks like the wild horses are not just in Singapore. China Daily (27 Feb 2010) reported the comments of Grandpa Wen during his online chat with netizens: “Chinese Premier Wen Jiabao said that he was determined to tame the ‘wild-horse’ housing market and keep property prices at a reasonable level during his term as Premier, He also said the government will use economic and legal means to curb property market speculation, 'We will crack down on illegal activities, including the hoarding of land, the driving up of house prices and the delaying of sales to earn bigger profits’, Wen said.”
C-3.6 Does PM Lee mean what he said about property speculation? The measures over the last couple of years are more in the genre of "reversal of speculation facilitation" as opposed to being "anti-speculation" (eg, withdrawal of Deferred Payment Scheme, Interest Absorption Scheme, banning of Interest-Only-Loans).
Hence, the "anti-speculation" measures are limited to (i) the 3% Seller’s Stamp Duty for disposals within one year of purchase and (ii) reduction of Loan-to-Value (“LTV”) from 90% to 80%. Judging from market reaction to these two purportedly "anti-speculative" measures, they seem to be more like ant bites, not even mossie bites! As commented in para C-3.4(j) above, the one-year holding period is so disproportionate that it is almost ludicrous!

To date, there has NEVER been any deterrent towards EN BLOC SPECULATION. The authorities seem blithely oblivious to this other reality of "en bloc potential" flips because they choose to focus only on sub-sale flips. Maybe URA also cannot multi-task and can focus only on one thing at one time too, ugh?

Or perhaps the authorities reckon that en bloc flippers are CONVENIENT CATALYTS in the national quest towards the 3-tions of “modernisation, rejuvenation and optimisation”? Hence, scant regard (Ooops ... more accurately, no regard) is paid towards the primary LTSA objective of "FOR SINGAPOREANS" notwithstanding that extant owners face the mindnumbing + mindblowing prospect of being a “Squatter, Refugee, Downgrader or Downsizer” post-en bloc WITHOUT cause for “congratulations, celebrations and jubiliations”.

Hmmmm ... what's the phrase they use these days?  Ahhh ..."incidental collateral damage" you might say, eh? Touché, my dear,touché indeed! Hee, hee ... did you click on the bird cartoon at the top of this blog entry because I asked you NOT to? If so, here's a prized feather to add to your cap! Thank you.