PIDEMCO (Mission and objectives)

[Mr Speaker in the Chair]

Dr Wang Kai Yuen asked the Minister for National Development (a) what is the rationale of setting up Pidemco and what are its mission and objectives; (b) under what authority Pidemco is given the right to levy a commission in handling the sales of government properties; and (c) how commission rates for different properties are determined.

The Minister for National Development (Mr S. Dhanabalan): Mr Speaker, Sir, Pidemco was set up to take over some of the functions of the Urban Redevelopment Authority (URA) and allow URA to focus on its primary role as a national planning agency. Properties formerly owned by URA were transferred to Pidemco. As a private company, Pidemco has greater flexibility in the management and promotion of the properties. It aims to become a leading property company in Singapore through:

i) upgrading its existing properties;

ii) redeveloping some of the properties; and

iii) developing new ones.

Pidemco does not handle the sale of any Government properties. As a consequence, it does not receive any commission from such sales.

Dr Wang Kai Yuen (Bukit Timah): Sir, is it not true that under certain circumstances, before a property can be transacted, Pidemco would have to give its permission and, under those circumstances, Pidemco would normally levy a certain administrative fee?

Mr Dhanabalan: Mr Speaker, Sir, I think the Member is referring to properties which Pidemco has taken over from URA. They are now Pidemco's properties. Pidemco's properties are of two kinds. Many of them are rented out on monthly rentals and there are others which are sold on long-term 30-year leases. Among the 30-year leases are a number of properties which were sold at special concessionary prices to those who are affected by resettlement. In such cases, when the resettled owner wants to sell, a levy imposed on the transaction. This is to make sure that the company or the person who had obtained the site at special rates - because it is a resettlement case - does not sell and take the profit when sold at market prices. In all other cases, a nominal administrative fee, of course, is charged.

Dr Wang Kai Yuen: Sir, is it not true that under the Housing and Development rules, private developers are prevented from imposing exorbitant administrative fees? In this case, would Pidemco, as a private company, be subject to the same rules from imposing, what the market would call, such exorbitant administrative fees or, what you would call, a levy in that specific case?

Mr Dhanabalan: Mr Speaker, Sir, we have to differentiate between the two types of payments. In the first case, as I explained, if the property had been obtained under resettlement terms, they are special concessionary terms, and if the owner of the property or the lease wants to sell, then a 10% levy on the transaction is imposed. That is not an administrative fee. That is because the lessee had obtained the property at special low rates and when he sells it on the market and obtains the market price, a 10% charge is levied. But there are very few such cases. The majority of the cases would be leases sold at market rates. In such cases, it would be a purely administrative charge and my answer to the Member's query will be that Pidemco should be and will be subject to the same kind of limits as any other developer.