ST : Wrong to accuse them of driving up costs: Shanmugam

Jan 18, 2010

ISSUE #1: FOREIGNERS TO BLAME FOR HIGH HDB PRICES?

Wrong to accuse them of driving up costs: Shanmugam

Non-PRs cannot buy HDB flats, and PRs too few to impact prices

By Jeremy Au Yong

MIDWAY through a 11/2-hour dialogue with Law Minister K. Shanmugam yesterday, 58-year-old Wee Kai Fatt stood up and gave voice to the claims of many coffee shop pundits here.

The senior engineer complained about the foreigner-fuelled population boom, saying he was shocked when he heard there were five million people living in Singapore.

This influx of foreigners, he added, had caused HDB home prices to rocket.

Taking it all in, Mr Shanmugam took pains to clarify what he said were several misconceptions in Mr Wee's statement.

The Law Minister's key message: Do not cast foreigners as the villains driving up the prices of HDB flats.

Speaking at the end of his three-hour visit to Yew Tee constituency in Hong Kah GRC, he said: 'The first misconception is that somehow there are five million people and that is putting pressure on all of us. It doesn't.'

Of the five million, 3.2million are citizens, and roughly 500,000 are permanent residents (PRs).

The remaining 1.3million are here on temporary work permits, and they 'impose no burden' on the public housing system, said Mr Shanmugam, who is also the Second Home Affairs Minister.

The reason: These foreigners are not allowed to buy any public housing flats, whether directly from the HDB or in the resale market.

As for the PRs, who can buy resale flats, he said they form too small a number at the moment to have any significant impact on prices.

So, who is supporting the high HDB prices?

Just last week, there were media reports of a two-room HDB flat in Chinatown selling for $245,000, or $45,000 more than the flat's valuation.

Mr Shanmugam's hunch is that Singaporeans are the likely culprits.

Asked by another Yew Tee resident about the high prices, he responded: 'You say maybe foreigners are paying these high valuations. I think if you check, you'll find that the majority are Singaporeans. The foreigners who come here and look at HDB flats generally buy the lower value flats.

'You'll see that they are spread out in the suburban areas, and their salaries tend not to be that high. They don't get the kind of grants we give Singaporeans. And it's not so easy for them. I haven't done an analysis of the statistics, but I'd be prepared to say that it is primarily Singaporeans who are paying these prices.'

He added that it would be difficult for the Government to step in and impose some sort of limit on resale flat prices.

'It requires the Government to intervene and for every one person you want to make happy, you will make another person unhappy,' he said.

The Government's approach instead was to give Singaporeans a leg up with concessionary loans and housing grants which can amount to as much as $40,000 just for young couples seeking to live near their parents.

Mr Shanmugam also noted that eight in 10 Singaporeans pay their HDB monthly mortgages completely with funds from their CPF savings and do not cough up any additional cash. All in, he said, flats remain affordable.

This year, the Government is ready to launch up to 12,000 build-to-order units to keep up with demand. In fact, HDB launched a new project in Yew Tee two weeks ago.

Yesterday's dialogue highlighted again the simmering tension between foreigners and locals here, as the issue dominated the meeting with around 150 residents.

In the past year, the surge in foreigners has been blamed for various ills - from the rise in home prices to a lack of jobs for Singaporeans.

Mr Shanmugam's remarks mark the latest attempt by a political leader to clarify the issue. He noted the Government need to work harder on getting across the message on the role of foreigners.

He said: 'Politics is, in fact, the art of communication, and this question shows how much misconception there is on the ground, and that is one of the problems a Government has and must overcome.'

jeremyau@sph.com.sg


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THE SELF-SERVICE WAY

'Let me pose a question back to you - 'What do you think is the solution if we can't get Singaporeans who all speak English? Then we have to get foreigners. Where do you think we can get them from, and can we educate all of them in English?' Therefore, if you are given a choice, either there is someone there to serve you, which is Singapore's style, or like in many Western countries, you do self-service.

I suspect...most Singaporeans will say 'OK, never mind, even if he can't speak English, I will prefer that to a self-service situation'. '

Mr Shanmugam, on foreign workers in the service sector who cannot speak English well

GOVT WILL PROVIDE OPPORTUNITIES

'What the Government can do is to provide a secure environment, good education, housing and health care. Then it is up to the individual to take advantage of that situation. We are a global city and we have to compete globally...Can the Government ensure the person who is not so well qualified earns the same as the person who can go to (work in) New York or London? We can't do that. If we did, we'll be finished as a city.

But we live together. We can't have some people doing very well and a lot of people suffering. So we have to ensure basic affordable housing, health care and so on. All that the Government will do, and upgrade and give opportunities to our people so that they can have a very high quality of life.'

Mr Shanmugam, on the Government's role in narrowing the widening income gap

BILINGUAL POLICY GIVES AN EDGE

'Our emphasis on second language has put us in good stead because as China is developing, the fact that Singaporeans are well-educated, hard-working, honest and have the ability to speak Mandarin, gives us tremendous advantage. Certainly, our businesses in China tell us that.

So I don't think the bilingual policy is wrong. Maybe requiring you to master it at a very high level, writing as well as speaking, may have to be changed. The policy is not a mistake, but the expectations that were placed, in terms of the proficiency that was expected, may have been too high.'

Mr Shanmugam, answering a student who asked if the Government's bilingual policy, in particular, the teaching of the Chinese language, is a mistake