HOUSING AND DEVELOPMENT BOARD FLATS (Review of policy on sale and purchase)

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HOUSING AND DEVELOPMENT BOARD FLATS:

(Review of policy on sale and purchase): 5.

Mr Leong Horn Kee asked the Minister for National Development whether he will (a) review the existing policy restricting sale and purchase in the open market of HDB flats located in some estates due to the ethnic integration policy, and (b) allow some flexibility for sale by persons who are affected by retrenchment, hardship or other grave circumstances.

The Minister of State for National Development (Dr Vivian Balakrishnan) (for the Minister for National Development): Column: 3280

Mr Speaker, Sir, the Ethnic Integration Policy (EIP) was implemented in 1989 to promote racial harmony in public housing estates. The policy maintains the proportion of each ethnic group in a neighbourhood and a block within certain limits. It is applicable for the purchase of new flats from HDB as well as resale flats from the open market.

The EIP has worked well in forging ethnic integration and harmony among HDB residents. It has maintained the ethnic balance in our housing estates.

In 1989, 28% of the 125 neighbourhoods had at least one ethnic group which had reached or exceeded the neighbourhood limit. Now, there are 24% of such neighbourhoods, although the total number of neighbourhoods has grown from 125 to 165.

As the EIP is very important in maintaining racial harmony in Singapore, we have to apply it consistently. HDB will maintain this policy.

Mr Leong Horn Kee (Bishan-Toa Payoh: ): I would like to ask the Minister of State whether, for some very special cases, like very difficult hardship cases or even retrenchment cases, the HDB could allow some degree of flexibility, say, just 5% of such cases, whereby a person can be allowed to change?

Dr Vivian Balakrishnan: Mr Speaker, Sir, the EIP is applied consistently. In cases of hardship, we have other avenues to help residents. For those who are having arrears or difficulties making their payments, HDB has schemes for deferred payments, reduced payments, settling the payments by instalments later on and adding another family member onto the list of owners. I think there are sufficient means to address hardship problems and we should not try to subvert or circumvent the EIP policy in

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order to address problems of financial hardship.

Dr Chong Weng Chiew (Tanjong Pagar): I fully agree with the fact that EIP is wonderful in promoting racial harmony. I do have an Indian resident who actually bought his flat in 1996 from a Chinese. However, when he wanted to sell his flat now, he could not do so because he was told that he could only sell it to a minority race. I would like to ask if it would be fair for a person from a minority group who bought his flat from a Chinese but is unable to sell it to a Chinese currently, as in the case of my Indian resident.

Dr Vivian Balakrishnan: Thank you for that question. When the neighbourhood or block limit for any ethinc group is not exceeded, then there are absolutely no restrictions on the purchase in the open resale market. That was what probably happened at the time when your constituent bought his flat. However, depending on whether any particular ethnic group has now exceeded that limit, the policy will then come into play. So I think that was what had happened in this case.

The policy has to be applied uniformly and equally across all ethnic groups. The same situation could have arisen for a Malay purchasing a flat from a Chinese, or indeed for a Chinese purchasing a flat from an Indian. The point I want to make here is that the EIP is applied fairly and consistently to all ethnic groups and we do not wish to make exceptions or to circumvent it because that would bring more problems into the equation.

Mr Zainudin Nordin (Bishan-Toa Payoh): I would like to ask the Minister of State whether MND has done any study to see the unintended impact of EIP on certain sectors of the community,

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because we understand that even though the objective and principle behind the EIP is a good one, and we support it, the realty of the market is such that the impact may not be the same on different communities.

Dr Vivian Balakrishnan: The HDB and MND monitor the situation all the time. However, I would say that at this point in time, it is far more important to maintain the policy, perhaps even more important that ever before, to maintain the policy, and to apply the policy fairly and consistently. Yes, there may be problems at certain times, in certain estates, in certain precincts, in certain blocks, and we will have to take time for these things to be resolved. It takes time, it may take a little longer for the flat to be sold, or the person may have to be a bit more flexible in his expectation of the price that he wishes to transact at. But I want to draw attention to the fact that the more important point here is the reason behind the policy. That still stays intact.

The second point is that we must be fair and consistent. If we were to deviate from that, in order to make exceptions or for short term advantage, then we will be going down a slippery slope. Having said that, we are very aware that this sometimes causes inconvenience or problems for our residents. And, if there are ways in which we can ameliorate this, we will. Whilst we are open to suggestions, bear in mind these two principles - maintaining racial harmony and making sure that any system which we have in place is something which can be implemented fairly and consistently across the board, without making exceptions.

Mr Leong Horn Kee: Sir, I would like to ask the Minister of State to consider two options. Perhaps in times of difficulty, like we are now facing an economic downturn, we have a short period of one or two years whereby we

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allow more flexibility, because during the downturn period the volume of transactions is actually very low and therefore the ability to sell the flat to the right ethnic group would be more difficult. Whereas, in a buoyant economic situation, the volume is higher and therefore the transaction can be easier and a sale can be achieved.

The second option is that if a HDB flat seller cannot find a buyer over a certain period, would HDB be prepared to take back some of the units and resell them at a later period when the market is buoyant?

Dr Vivian Balakrishnan: Thank you for those two suggestions. I do not want to dismiss anything out of hand at this point in time. But right now, the first suggestion, which basically calls for a suspension of the policy at this point in time, is one which I would not favour, primarily because we are all aware that the resale market is still active. In fact, prices are moving up in the composite retail index for HDB flats. The other important point to note is that if we look at transaction volumes by ethnic groups, these are still consistent with national proportions. So it is not as if the market has suddenly dried up for any single ethnic group. As long as there is sufficient liquidity and sufficient volume of transactions in the market, I would be very, very reluctant to suggest that we suspend the policy at this point in time.

The other suggestion about taking back the flat, yes, it is appealing in the short term. It does not solve the long term problem, which is again that we want to maintain an adequate and good mixture of the ethnic groups within our housing estates. Sooner or later, a transaction has to be made.

Coming back to my earlier point, if any of the Member's residents really have financial problems, please use all the other

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avenues which are available to help them. This policy is not meant to disadvantage our residents. While we have access to other avenues, all of you as MPs and Advisors, please use these other avenues. Do not look for a quick and easy short-cut which circumvents the policy and opens up a whole new can of worms.

Mr R Ravindran (Marine Parade): Sir, I have a resident who is a Chinese trying to sell his flat but is unable to find any buyers except Indians, and nobody has come forward to buy. Considering the fact that the EIP is posing a serious financial problem to some families, and the alternatives that are being offered by HDB involve extra expense for them because they have to pay, if it is a deferred payment, they end up actually paying interest for a longer period of time. So it is actually a loss-loss position for the owners of these flats.

So I think we have to find a solution whereby we have to be flexible with this percentage that we have put up and see whether we can accommodate a differential of perhaps 2-3% so that at certain times, like these difficult times, when residents have problems trying to sell off their flats, we can be more accommodating and flexible because many of them are actually trying to downgrade as they are unable to cope with the financial burden that they are facing. So I hope the Ministry can look into some ways of ameliorating the situation because many residents are indeed having problems in not being able to sell their flats.

Dr Vivian Balakrishnan: Mr Speaker, I thank the Member for bringing up this example, because very often people cite the converse. The point which I wish to make is that this is a policy which affects all races. Sometimes you win, sometimes you lose, sometimes it is easier for you, sometimes it is more difficult. So, it proves the point that this applies equally.

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With respect to his secondary point about flexibility, whilst I do not want to reveal the exact numbers, I will tell him, however, that there is flexibility in terms of the actual cut-off before the limits kick into place, and these cut-offs do allow for some variation from the national ethnic proportions. So, to the maximum extent possible, we have taken his suggestion. But, again I must appeal to everyone here that this is a policy which we have taken in order to achieve a higher objective, which is to ensure an adequate and good ethnic mix in our estates. Yes, it causes problems. If we can ameliorate those problems, we will do so. If we can get the understanding of all concerned, I think we can move this forward.