Singapore’s reserves substantially profits from $500m land sales in AMK BTO – The Online Citizen Asia

Thanks to a Protection from Online Falsehoods and Manipulation Act (POFMA) correction direction issued by the government against the local social media page, The Alternative View (TAV), we now know that the government would receive S$500 million from the land sales linked to the Central Weave @ Ang Mo Kio Build-to-Order (BTO) project which it then transfers to the Singapore reserves.

TAV was issued the POFMA correction direction last month (3 Sep) after it published a Facebook post suggesting that HDB had profited from the sale of the AMK BTO flats in the Central Weave project.

In the notice, the Ministry of National Development said HDB will not profit from the sale of these flats.

“In fact, it will incur a loss from this project, as the estimated amount to be collected from the sale is lower than the estimated total development cost of the project,” it said. The HDB incurs a deficit every year, MND assured, adding that “the amount HDB collects from the sale of flats in every financial year is less than the costs it incurs, including the total development cost (comprising land cost and construction cost) and CPF housing grants”.

The POFMA incident probably led Non-Constituency Member of Parliament (NCMP) Leong Mun Wai to question the National Development Minister Desmond Lee in Parliament on the questions of HDB’s net loss for the Central Weave BTO project; cost of land paid by HDB to SLA for this project; and net profit and loss position for the Government, including HDB and SLA, for this project.

Mr Lee did not fully answer Mr Leong’s questions but did say that the estimated land cost for the project was $500 million, the amount HDB paid to the government for buying the land used in the project. In total, Mr Lee said HDB itself would incur a S$250 million loss on the project and an additional S$20 million if the grants were included.

Mr Lee, however, did not reveal the actual cost of the land which the government had acquired in the first place but it is believed to be low. Even though Mr Lee did not reveal the actual cost of the project’s land the government had acquired earlier, he did allude to profits being made from the land sale by the government to HDB. Such profits would go to the reserves. “Land forms part of the past reserves, hence when HDB uses the land for development, the money that HDB will need to pay for the land must be paid back into the past reserves,” said Mr Lee.

Indeed, commenting on his Facebook page, former GIC economist Yeoh Lam Keong who used to work for the government for 26 years, criticised Mr Lee for using a rather disingenuous and misleading analysis of the supposed S$270 million loss made by HDB and by inference the government in developing the AMK BTO flats at Central Weave (‘Former GIC chief economist ridicule clarification of supposed S$270 million loss by HDB on BTO project as “disingenuous and misleading”‘, 4 Oct 2022).

Mr Yeoh said that the accounting sleight of hand being that the government acquired most of the land at minimal or much lower cost through compulsory acquisition. He argued that the true cost price should be the original book value of the land plus construction costs which on average is probably much lower than BTO prices before subsidy. “The true cost to the government after subsidies will then be much clearer,” he said.

Mr Yeoh further noted that Singaporeans have been channeling a significant part of their disposable incomes to pay off HDB flat, leaving insufficient savings for retirement, medical expenses and education upgrading. In other words, a large part of Singaporean disposable incomes every month have indirectly gone to help build up Singapore’s reserves.

Govt acquires land at very low price via Land Acquisition Act

Although we do not know how much the government paid for the acquired land at Central Weave in AMK, we do know how much it paid for the land at Bishan through compulsory acquisition.

We know this from an article written by Mr Lim Chin Joo who was the lawyer acting on behalf of the Kwong Wai Siew Peck San Theng temple, which owned the cemetery land at Bishan before it was acquired and developed by HDB (‘Land acquisition – for the sake of nation building‘, 3 Dec 2010). The article first appeared in Lianhe Zaobao before it was translated and published in the Straits Times. Incidentally, Mr Lim is the brother of the late Lim Chin Siong, the famous trade unionist and politician in Singapore in the 50s and 60s.

Mr Lim was invited to the 140th anniversary celebration of the temple in 2010 and thereafter he wrote the article recounting his experience dealing with then the National Development Minister Teh Cheang Wan over the compulsory acquisition of the temple’s land in Bishan in the 70s.

He recalled that the government was determined to acquire the temple’s land in the 70s to develop public housing. The land acquisition gazette notification finally came in the late 70s. Understandably, the clansmen were saddened by the news and appointed Mr Lim as their legal adviser.

(Source: Becoming Bishan SG50 Booklet)

“The compensation granted under the law is, in theory, based on the market value of the land. However, who has heard of cemeteries having a market value? Regardless of its potential land use, a cemetery can be valued only as a cemetery,” Mr Lim wrote.

After much negotiations, the government was only willing to pay a paltry S$5 million for the 131ha land owned by the temple. “As expected, the compensation did not amount to much. It came to less than $5 million for the 131ha of land – or 30 cents per square foot after appeal. The HDB was responsible for the cleanup, including exhuming the graves and cremating the remains,” Mr Lim explained.

“The clansmen were more concerned about conserving the ancestral temple, which was more than a century old, and handling the cremated remains. These emotional issues sparked heated arguments. It was decided that the PST (temple) would try to keep the temple, and request the Government to allot it land around the temple to build a crematorium and columbarium.”

“On behalf of the PST, I wrote to the HDB and the permanent secretary of the Ministry of National Development on two occasions. The replies left no room for negotiations. We were told the decision to acquire the cemetery had come from the top.”

After appealing to then National Development Minister Teh Cheang Wan and more talks with HDB, HDB agreed to let the temple remain where it was, and allot surrounding land to restore it and construct a columbarium. Request for the crematorium was rejected. Finally, the clansmen at the temple had to accept whatever terms the government demanded.

“After due consideration, the clansmen accepted the acquisition for the sake of nation building. Bishan estate was the result. It was a decision that benefited Singapore,” said Mr Lim.

Clearly, the clansmen sacrificed the land their forefathers had built upon for the sake of nation building and public good. Whatever the case, the government has acquired the Bishan land on the cheap at 30 cents per square foot, but sold at a much higher price to Bishan residents later.

The profits made from the government land sales — such as that in the case of Central Weave @ AMK for S$500 million — supposedly goes to the reserves.

Mr Leong had also asked in March this year if the Singapore government could confirm if the total reserves was indeed at S$1.4 trillion dollars as the figures had been publicly been reported. However, he did not get a clear answer for his question.

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