GOVERNMENT-LINKED COMPANIES (Financial status of overseas and local investments)

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GOVERNMENT-LINKED COMPANIES:

(Financial status of overseas and local investments): 9.

Mdm Ho Geok Choo asked the Deputy Prime Minister and Minister for

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Finance in view of the diversified overseas and local investments of Government-linked companies, (a) what is the financial status of these investments; and (b) how are these investments benefiting (i) Singaporeans who are seeking employment and (ii) Singaporean entrepreneurs seeking to grow their enterprises.

The Second Minister for Finance (Mr Lim Hng Kiang) (for the Deputy Prime Minister and Minister for Finance): Mr Speaker, Sir, many of our larger GLCs have invested in overseas markets to grow beyond the confines of the Singapore economy and to take advantage of regional and global opportunities. In this respect, GLCs’ overseas investments are no different from those by non-GLCs. GLC investments are guided purely by financial considerations and are subject to market discipline and scrutiny, as is the case with investments by any other commercial entity. The Government does not seek to guide or influence these investment decisions. This is one reason why our GLCs have generally performed well against their industry peers regionally and globally.

Leaving the GLCs free to operate on a commercial basis has helped to maximise their benefits to the Singapore economy and Singaporeans. The GLCs’ overseas investments have generally sought to complement their core businesses and strategies. For instance, SingTel acquired Optus - a key player in Australia 's telecommunications market - as part of its overall strategy to become a leading regional telecommunications operator. SingTel now has two main hubs - in Singapore and Australia - providing a wide range of communications services and diverse sources of revenue.

Where it makes commercial sense, GLCs have also teamed up with local enterprises to compete abroad or to complement their local operations. Temasek, for example, bought into some

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SMEs in their growing phase, such as Osim and Hyflux. GLCs also use SMEs extensively as contractors or sub-contractors. For example, SIA has been working with home-grown advertising agency Batey Ads for many years to establish SIA's brand internationally.

GLCs and their investments help to build and nurture internationally competitive businesses. This in turn enhances Singapore ’s economic resilience. Singaporeans and our local enterprises ultimately get to benefit as more business and employment opportunities are created in the economy.

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HOUSING AND DEVELOPMENT BOARD FLATS:

(Removal of 30 months' moratorium to purchase new flat): 10.

Mr Leong Horn Kee asked the Minister for National Development in view of the large stock of unallocated new Housing and Development Board flats and a considerable number of retrenched and unemployed persons, will his Ministry consider removing the present 30 months' moratorium on a person for selling his HDB flat or private property to enable him to purchase a new HDB flat.

The Minister for National Development (Mr Mah Bow Tan): Mr Speaker, Sir, the Government provides subsidised public housing to meet the housing needs of Singaporean families who cannot afford to own private housing. Therefore, rules are necessary to ensure that our subsidies are given only to those who need them most. Such rules include the Minimum Occupation Period (MOP) before resale of a flat in the open market, as well as the 30-month time bar for ex-private property owners before they buy a subsidised HDB flat.

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The 30-month time bar for private property owners is imposed so that they do not compete with other families, such as first-timer couples, who need such affordable housing. With the sales proceeds from their private property, they can buy a resale HDB flat, without being subject to the 30-month time bar. I wish to clarify that the 30-month time bar does not apply to HDB flat owners. They can apply for a subsidised HDB flat, if they meet

the eligibility conditions, even while they are occupying their existing flat.

I appreciate that, because of the economic slowdown, some private property owners may need to dispose of their properties due to financial hardship. Most can still afford to purchase a resale HDB flat. There is a wide range of resale flats, in terms of flat types, locations and prices and they can choose one that is within their financial means. However, HDB will consider waiving the 30-month time bar on a case-by-case basis, for those who are in severe financial hardship.

Mr Leong Horn Kee (Bishan-Toa Payoh): Sir, I would like to ask the Minister whether he has the data on the present stock of completed HDB units not allocated and how long will it take to fully allocate this stock, based on the current take-up rate. If this period is very long, then perhaps there is a justification for the Ministry to consider having a temporary lifting of the 30-month time bar so as to allow this stock to be taken up at a faster rate.

Mr Mah Bow Tan: Sir, as I have indicated several times, there is a stock of unsold HDB flats and currently the stock stands at something like 10,000. However, this is a temporary situation. I think it arose as a result of a sharp drop in the demand and, since then, we have reduced the supply and we have cut back on the building of new HDB flats. So I expect that, over the next few years, this

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stock will be taken up. How fast they will be taken up really depends on economic conditions and how many people will opt for new HDB flats. But it is not something that I expect to be a permanent feature of the HDB market.

At the same time, the other point that I would like to make is that you cannot change policy as a result of temporary changes in the market situation. Yes, there is an over-supply of houses at the moment. But that does not mean that we necessarily change the policy. What it does mean is that we will look at the situation, and if the situation warrants it, for example, the individual case can demonstrate severe financial hardship, retrenchment, bankruptcy, whatever, and the sale of the private property is not sufficient to cover that cost, then such cases can be looked at and consideration can be given. But I am reluctant to change the whole policy on the basis of what, I believe, is a temporary phenomenon.

Mr Leong Horn Kee: Sir, I would like to thank the Minister for saying that he would take a review of special cases, especially those involving financial hardship and retrenchment. In fact, I would like to ask the Minister to consider a policy review, contrary to what he is saying that this is a temporary situation. In fact, this 30-month time bar had been introduced during the heydays of a buoyant property market. But the current situation is that the property market is quite stable and, in some cases, quite depressed, and there have been a lot of changes in the HDB policy, such as the changes to the holding period from five to 10 years and the imposition of levy to cream off the benefits that the sellers can get from the sale of flat. With all these changes, perhaps it is time for the Minister to consider a policy review of this 30-month time bar to a shorter period, so that at least it will not be such a long holding period for those who are affected.

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Mr Mah Bow Tan: As I have explained, the time bar is really to make sure that private property owners or those who sell their flat, those who currently own a flat and therefore wish to sell, do not compete with those who are first-timers, those who, I believe, would need a new flat much more than them. This is the reason why we have a time bar. Whether it is 30 months or whether it should be less, from time to time, we do review our policies. At this point in time, I see no need to change this policy. But I dare say that if there is a substantial or fundamental change in the situation, we will relook at it again.

Mr Leong Horn Kee: Sir, may I make a final appeal to the Minister that, in fact, the 30-month period is actually very, very long. I think he should seriously consider whether that can be reduced to a shorter period.

Mr Mah Bow Tan: As I said, we constantly look at our policies and, from time to time, we do change them. One day, we may change them.

Mr S Iswaran (West Coast): Sir, may I seek a clarification from the Minister? For HDB lessees who are forced to sell their flats due to financial distress, would HDB consider allowing them to rent HDB flats and exercise that policy with flexibility?

Mr Mah Bow Tan: I believe there is a question by Dr Lily Neo on this. So perhaps I could take a rain check on the answer.

Dr Wang Kai Yuen: Mr Speaker, Sir, in the Minister's response, the time bar was introduced to prevent competition between upgraders and first timers. Is he saying that there is still competition between first timers and upgraders, given that there are 10,000 flats that are not sold for the past few years and for the next few years?

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Mr Mah Bow Tan: As I have said earlier, we cannot frame policies on the basis of what is the current situation which is not something that is permanent. It is not HDB's policy to maintain a buffer stock of 10,000 units all the time. The 10,000 units will be taken up. It is a matter of time. And when that happens, what do we do? Change the policy back again? Obviously, we cannot do that. So the policy has got an intention behind it, which is to make sure that people do not sell their flat, get another flat without any hindrance or deterrence, or that they will just sell their private property and get a HDB flat, again without any hindrance. So there is a purpose in that policy, and that policy has served us well. Yes, it is true that there is a surplus of flats today. But do we change the policy to solve the surplus problem? I do not think so. I think that is a wrong thing to do because one day, the surpluses would be gone. Then what happens? Do I change back again?

Dr Wang Kai Yuen: Would the Minister consider retaining the time bar as a policy but adjust the period as a flexibility to meet market conditions?

Mr Mah Bow Tan: Sir, we are always very flexible. As many Members would attest, I think one of the areas where we are flexible is in the so-called hardship cases and where a genuine hardship case surfaces to the Ministry or HDB, there is complete flexibility in the sense that the time bar is waived. I think that is being flexible.