ETHNIC INTEGRATION POLICY IN HDB ESTATES

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ETHNIC INTEGRATION POLICY IN HDB ESTATES:

(Impact on sale of flats): 7.

Mr Viswa Sadasivan asked the Minister for National Development (a) how does the Government address the issue of HDB flat owners, especially ethnic minority owners, who have difficulty selling their flats because of the restrictions under the Ethnic Integration Policy; (b) how many such owners have had to sell their flats below market valuation; and (c) whether in such cases, the Government will consider buying back the flat from the owners at market valuation or offer a cash top up equal to the deficit, to demonstrate that such owners will not be unduly penalised because of restrictions resulting from a Government policy.

The Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman) (for the Minister for National Development): Mr Speaker, Sir, the Ethnic Integration Policy (EIP) was implemented in 1989 to prevent the formation of racial enclaves and promote racial harmony in HDB housing estates. With the EIP, we ensure a good mix of residents of different races in different neighbourhoods and blocks of an HDB estate.

The EIP limits are applied consistently across all ethnic groups, and are reviewed regularly to ensure that they remain relevant. Just recently, we increased the EIP limits for the "Indian and Others" category by 2% points, to address demographic changes. When the EIP limit for a particular ethnic group is not reached, there are no restrictions on the sale and purchase of an HDB resale flat. As at September 2010, 86% of 162 HDB neighbourhoods have not reached any EIP limits. In other words, potential flat sellers may face limitations in 14% of HDB neighbourhoods only. And even when the

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EIP limit for a particular ethnic group is reached, sellers can still sell their flats to buyers from the same ethnic group, as it will not increase the ethnic group's proportion.

Resale flat transactions take place on a willing buyer-willing seller basis. The resale price is an outcome of the different attributes of the flat such as location, age, extent of renovation and the prevailing market conditions. EIP is not the only factor that affects the resale price. It is also difficult to attribute the resale price to any single factor.

HDB does not take back flats from lessees who have completed the minimum occupation period for resale, as they may sell their flats in the open market. There are a large number of resale flat transactions in the open market, averaging about 30,000 units annually, in different locations, with a wide range of flat types and prices. Sellers who are affected by the EIP limits should have no problem finding buyers from the eligible ethnic groups as long as they are realistic in setting their asking price.

Mr Viswa Sadasivan (Nominated Member): I thank the Parliamentary Secretary for his response. The reason I raised this question is because quite a few of my friends and their friends have highlighted that they have had difficulties selling their flats at market rates because of their ethnic background, especially because they are in the minority groups. I am wondering if this perception is pervasive on the ground. It does not augur well for the multi-cultural nature of our society, if people feel that they are disadvantaged as a result of their ethnic minority status. That is the concern with which I have raised this question. What is the Parliamentary Secretary's response to that?

Dr Mohamad Maliki Bin Osman: Sir, as I have mentioned earlier: first, the potential

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flat sellers may face limitations due to EIP in only 14% of the neighbourhoods. Secondly, even if the flat is affected by EIP, it is difficult to attribute that EIP has affected the resale price as a single factor. If we look at the argument – that minorities may be affected by the EIP, and who sell their flats below market valuation, as the Member pointed out – the assumption is that if we take out the EIP component, they will be able to sell their flats at higher market rates. This is not necessarily the case because there are sellers who are not affected by the EIP restrictions, who are selling below market rates too. There are also sellers who are affected by EIP restrictions, who are able to sell at way above market valuation, even $30,000 above market valuation. The point that I am making is that EIP is not the only factor that affects resale prices. There are many other factors that affect resale prices.

The EIP policy has benefited Singaporeans as a whole by ensuring that there are no ethnic enclaves. We really seek Singaporeans' understanding that EIP is a necessary encumbrance for a greater social good.

Mr Speaker: Mr Sadasivan, last question.

Mr Viswa Sadasivan: Thank you. I understand and most Singaporeans understand the principle of why we need the EIP. But the question is that if an individual, especially from an ethnic minority community, feels that he is disadvantaged financially through the resale flat process because of his ethnic minority status, that is not going to be good. In the instance where they come from one of the 14% of neighbourhoods that the Parliamentary Secretary has talked about, if it is true that he has been disadvantaged because he is from an ethnic minority community, should the Government not find a way to reach out to that individual and help him out?

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Dr Mohamad Maliki Bin Osman: Sir, the point I am making is that it is not conclusive that a sale is necessarily disadvantaged because of the EIP restrictions. There are many attributes that relate to the resale prices, whether he is able to sell the flat at market valuation, above market valuation or below market valuation, it is not necessarily affected by the EIP alone. As I have mentioned earlier, there are sellers who are affected by EIP restrictions and can command very high resale prices. It is not that because of the effect of the EIP, that necessarily flat prices will be depressed. We have to look at the individual cases. The point we are making is that EIP affects everyone, and it has been shown that it is not just the EIP that is depressing prices, because those who are affected by EIP policies have been able to sell their flats way above market valuation, too.