HEAD T - MINISTRY OF NATIONAL DEVELOPMENT

The Chairman: No, it is not at my request. It is stated in the guidelines. Please get it right.

Amendment, by leave, withdrawn.

The sum of $25,456,110 for Head F ordered to stand part of the Main Estimates.

The sum of $1,767,600 for Head F ordered to stand part of the Development Estimates.

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_

Head T - Ministry of National: Development _

The Chairman: Head T - Ministry of National Development. Amendment No.

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(1). Dr Amy Khor.

Public Housing Policy and Role of HDB

Dr Amy Khor Lean Suan: Sir, I beg to move,

That the total sum to be allocated for Head T of the Estimates be reduced by $100.

Sir, the ERC had recommended in 2003 that the Government review HDB's role in public housing and also undertake a fundamental review of the home ownership policy, which remains the key plank of this Government's social policy.

In July 2003, HDB divested its building consultancy function to HDB Corp. HDB Corp was granted a 3-year moratorium of public housing projects. Thereafter, the public housing sector is to be liberalised in phases, starting from July 2006. This move is laudable as it shows HDB's intention not to remain as the monopoly provider of new public housing. I would like to ask the Minister if the possible modes for private sector participation had been exhaustively evaluated and, if so, what is the likelihood of a particular option being chosen over the others. I would like to urge the Minister to go beyond the traditional outsourcing of the building management and consultancy services as these are already done for design-and-build schemes. The private sector should be allowed to assume a more significant role so that their skills and expertise in housing design and projects could be better tapped as well as preserved. Injecting private sector participation of up to 50% would lead to a more dynamic and innovative public housing sector. Moreover, the private sector should be given more leeway to be developers of public housing estates, since HDB Corp will, from July 2006, be able to compete

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in the private sector market. Given that its parent is the formidable Temasek, its activity will most certainly cause some concerns among the private developers in Singapore.

The reverse tender mechanism which allows the developer to bid for the land, taking into account the maximum end-unit selling prices fixed by HDB, could be a possible mode of allowing wider private sector participation whilst ensuring the affordability of the flats. Possible concerns that flat quality could be compromised by developers who cut corners to maximise profit could be allayed as eventually only half of the market is to be opened to private sector participation, even in July 2008. The remaining half will still be under HDB's ambit and will help to provide the quality and price benchmarks.

Another alternative approach would be to provide fixed housing subsidies in the form of cash vouchers or grants to first-time eligible home buyers, much akin to the CPF housing grant for first-time buyers of resale flats. The developers could then bid for the land and price their flats at market rates. The prices of the remaining HDB developed flats would help to provide a price benchmark and ensure that the developers do not overprice. Resale HDB flat prices would also act to keep prices of these new flats in check.

This leads me to my next point regarding the mix of public to private housing. In the previous 1991 Concept Plan, it was envisaged that a long term public to private housing ratio would be about 75:25. We are nowhere near this ratio given the percentage of public housing sector has consistently over the past 10 years or so hovered at about 84-85%. This may be attributed to the fact that HDB continues to offer flats of all sizes and shapes literally. A case in point is the Pinnacle at Duxton which arguably competes directly for home buyers in the

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private sector looking for flats within that area.

The recent economic downturn has increased the popularity of smaller size 3-room and 4-room HDB flats compared to 5-room flats. Demand for 5-room and larger flats has dwindled to a trickle. Even as the Government continues to preach against over-consumption in housing, it is better for HDB to focus its attention on the lower end of the mass housing market where the needs are more acute due to lower affordability as was indeed its original mission. In fact, it would be ideal if HDB completely stops building 5-room and larger flats and instead sell more Executive Condominium sites as a step towards increasing the proportion of housing types as well as giving the private housing sector more space. If a housing subsidy in the form of cash grant is to be allocated, this grant could be given to all first-time home owners with a household salary cap commensurate to that stipulated by HDB. And they should be allowed to buy any property they choose, be it private or public. With 84% already housed in HDB flats, some 95% owning the flats and an ageing population, there should be sufficient 5-room flats in the resale market for those who wish to upgrade.

Indeed, one of the worries is that with an ageing population, there could come a time when there are more downgraders than upgraders and then there could be a glut of larger HDB flats. This would depress prices, leading to further asset deflation and fulfilling the fear of a new underclass of asset-poor and cash-poor Singaporeans.

Housing Policy

Dr Ong Chit Chung (Jurong): Mr Chairman, Sir, in terms of public housing, the Government has done remarkably well in providing affordable public housing. But HDB has many rules. For example, if

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one were to buy a flat from the resale market, one could not sell the flat until a stipulated time. But, at the same time, one may not qualify for a HDB preferential loan and would have to obtain a commercial loan from the banks. Currently, those who buy resale flats and use commercial loans have to wait for one year before they could sell. Why not allow them to sell freely in the market as they have to use commercial loans? We should make it easier to buy and sell in line with market forces and conditions. It should be quid pro quo for the use of commercial loans. Some of the residents also need to sell the flats earlier because of financial distress.

I have the following points to raise. Why should we insist on 20% down-payment by cash or CPF for the purchase of HDB flats? Many young couples, and those of lower income groups, will find it painful to cough up 20%. Why make it more difficult for us to promote home ownership, particularly for first-time buyers? High down-payments would inevitably delay marriage plans for young couples and further delay in them having babies and would act against our national procreation policies. Why not cap it at 10%?

Sir, in an economic downturn, some of the poor and the elderly are finding it hard to provide for their old age. In such a situation, would the Government seriously consider launching reverse mortgages? Reverse mortgages have been brought up many times before but there was no real follow-up. The Government grants $30,000 in CPF for first-time buyers of certain flats. This is a very good scheme and the idea could be extended to first-time buyers of HDB new flats or resale flats or Executive Condominiums. The Government could make such grants portable and give a much wider choice for first-time buyers who qualify.

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Affordable Public Housing

Mr Gan Kim Yong (Holland-Bukit Panjang): Mr Chairman, I would like to support Dr Amy Khor's call to review our public housing policy. We have to make sure that our houses remain affordable and that they do not deplete the retirement savings of our people. In this regard, I would like to make three specific suggestions.

Firstly, HDB should focus on building smaller units such as 2-room and 3-room flats, leaving the larger ones to the private sector, which is more than capable of building them. Smaller units would also be more affordable and would take up less of their savings.

Secondly, HDB should also consider providing more rental flats, given the long waiting list for rental units. HDB has always taken the position that because rental flats are heavily subsidised, their eligibility criteria have to be very stringent. Perhaps, HDB could introduce a two-tier rental rate system. The first tier is the present subsidised rate meant for those who qualify under the existing criteria. The second tier could have lower subsidy, but meant to be more flexible.

Thirdly, I would like to urge the Ministry to reconsider the reverse mortgage scheme. I am not suggesting that we open this scheme to all Singaporeans at this stage but, at least, we should allow those who are retired and need financial help to re-mortgage their flats, because the alternative would be for them to sell their flats in order to resolve their financial problems. They would then end up losing their shelter over their heads. Reverse mortgage would, at least, help to defer, if not avoid this unpleasant outcome. Sir, we have done well in providing public housing. Now we should refine HDB's role to focus on providing housing for the lower income

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and the needy families. After all, this is what an inclusive society is all about.

Dr Wang Kai Yuen (Bukit Timah): Mr Chairman, Sir, I would like to come back to the results of the Feedback Unit's survey on the challenges facing Singapore, which I have spoken on earlier during the debate on the Budget Statement. In this survey, there are five issues where there exist a significant gap in public perception between seriousness of the issue versus the confidence that we, as a people, would be able to overcome this problem. And keeping public housing affordable is one of these five top-most concerns.

71.2% of the respondents consider that this is a serious matter with major impact. On the other hand, only 48.5% of the same respondents are confident that we would be able to cap the increase in public housing cost and keep public housing affordable. Thus, there is a significant gap of close to 23%. In other words, Sir, up to a quarter of the people surveyed do not think we could keep public housing prices down. I find this survey result particularly vexing because 86% of Singaporeans are already housed in HDB and of those living in HDB flats, over 90% are owner-occupants. As such, this perception does not tie in with reality.

However, this survey was designed and conducted scientifically and should truly reflect the concerns of Singaporeans surveyed. Clearly, past policies of the HDB have contributed to this, perhaps to switch to bank origination is one of these and perhaps the various co-payment schemes under MUP is another. I would like to find out from the Minister what steps would he be taking to dispel this perception gap.

1.30 pm

Mdm Cynthia Phua (Aljunied): Sir, I want to address the concern of providing

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appropriate affordable housing for those who cannot afford to buy a flat but looking for a rental flat. The current rate for 1-room and 2-room rental flats is about $33 to $75 for household income below $800. For those with household income below $1,500, the 2-room rental is about $165. I find that after this, there is a wide gap. People have to rent a unit in the open market today. A 3-room or 4-room flat is from $700 to $1,300, depending on the proximity to a MRT station. What is HDB's role in meeting the needs of rental housing to the people? We have reached a stage where Singaporeans own about 90-odd per cent of HDB flats. What is the current demand for rental flats and the anticipated future demand, as our jobs are getting less stable and housing loans are big commitments. I would like the Ministry to bridge the gap by, firstly, allowing more flats to be let out by HDB owners, ie, relaxing the rule on minimum occupancy period, and also to make available more 3-room flats for rental through the buy-back from the public.

Next, I would also like to appeal to the Ministry to review its debarment policy. We are talking about families who have sold their flats twice previously and are neither allowed to rent or purchase a flat from HDB. Most are forced to downgrade because of financial difficulties, and most of these cases would incur losses and left to the mercy of the open market. The debarment policy was instituted, I believe, to protect people from abusing the system of subsidised public housing for profit. Although the Minister has asked us to appeal for these cases, many appeals have been made but most cases have been rejected. I would like the Minister to look at it again.

Rental of HDB flats

Dr Amy Khor Lean Suan: Sir, on the rental of HDB flats, I would urge the Minister to enlarge the pool of rental

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housing, to allow Singaporeans more options. This should not be construed as a deviation from our long cherished and highly successful home ownership policy since it is but an interim housing solution. There are clearly many couples who have household income above the $1,500 per month cut-off for renting flats but may earn below the estimated 50th monthly income percentile of $3,000. They may wish to have time to build their nest-egg before they purchase a flat and therefore wish to rent, but find rentals of HDB flats in the secondary market unattractive or unaffordable. These couples are caught between a rock and a hard place.

Three other groups of Singaporeans have also come to our meet-the-people sessions to appeal for rental housing as temporary relief for their woes. Such requests have continued despite the economy having shown sterling performance last year. These are the elderly singles, the financially strapped, downgraders and the elderly whose children are unable or unwilling to live with them.

Sir, the experience of the past few years of economic downturn, the tightening of CPF rules, the requirement of larger downpayments, etc, are likely to make the phenomenon of downgrading a permanent feature of economic down cycles and increase the demand for rental flats. The financially strapped HDB flat owners who wish to sell their flats in order to repay their debts also find themselves at their wits' end since they are debarred from renting a flat for 2 1/2 years. Occasionally, through successive and passionate appeals, this requirement may be waived, but this is the exception rather than the rule.

In fact, most recently, I have come across a financially-strapped family who has no choice but to sell their flat as they

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are deep in debt. The husband was unsuccessful in his application for renting a flat from HDB. He was informed by HDB that he is debarred permanently from renting a flat as he had purchased two flats directly from HDB and had resold them in the open market. No concessions were made despite his dire financial consequence. Where then does HDB expect him and his family to stay other than out in the streets?

Sir, I would like to argue that there is a case for the Ministry to relook at our own versus rental mix in public housing, since our home ownership rate has already attained 95%, believed to be the highest in the world, whilst the percentage of rental flats is less than 10% of the total stock. The existing HDB rental policy appears too restrictive and contradicts the Government's current pro-ownership and pro-family stance.

Sir, the rules for requiring elderly singles to pair up and the permanent debarment of families who have already bought two flats direct from the HDB should also be re-examined.

Dr Tan Cheng Bock (Ayer Rajah): Sir, since the Asian financial crisis, SARS and the economic downturn, I have noticed a dramatic change happening at our meet-the-people sessions. No longer do residents queue up to see us for priority of housing or upgrading to bigger flats. But on the contrary, they are asking for the reverse - downgrading to smaller flats, requesting for rental flats, and also restructuring the mortgage loans.

I notice that there is a confidence loss in their ability to sustain their lifestyle and home, because of job insecurity due to global and domestic change, in work norms, expectations and performance. Increasingly, more and more are asking for assistance to pay their utility bills, SC&C charges, medical bills and, earlier on as I pointed out, the mortgage payment for the HDB flats.

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Sir, we have to look and find answers, or it will become a big social problem. The answer lies in the HDB flats, their prized asset. We have to give them a life line by allowing them to monetise their asset, to release funds for their use and to ease their hardships. At present, flat owners can downgrade if they stay in 4- or 5-room flats. But downgrading means having to sell and wait for a 3-month period before they can rent or buy smaller HDB flats. This point has been brought up by my parliamentary colleagues. Of course, this causes a lot of inconvenience, frustration and hardship for these people searching for a place to stay while waiting for this 30-month period to lapse before they can buy or rent again. This ruling, as Members know, was introduced many, many years ago when HDB home owners were upgrading and the property market was very buoyant, and many of them cashed in on the situation and they made money. But situations have changed and we have to look at the rule again. I think many Members in this House had brought up this rule. This rule must really be looked into by the Minister, because it has to be applied appropriately to the situation.

Because some flat owners cannot wait, they are forced to buy smaller HDB flats in the open market. But this eats into whatever little funds they have salvaged from the sale. HDB used to buy back 3-room HDB flats from the open market and rent them to the poorer Singaporeans. This is to encourage home ownership. Now I am asking the HDB to apply this rule but with a widened scope - to buy back the flat at market rate, especially the 3-roomers for those in severe hardship and then rent back the same flat to them at a subsidised rate.

Some people have told me that the numbers involved may be very small, because many probably will have negative equity as a result of the sale of their flats. When they sell their flat, they have to pay

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back the CPF component, and they also have to pay back the outstanding HDB loan. I feel that in spite of that small number, we should not reject the idea. What I am asking for is an option, a way out for people in severe hardship. It is a choice to help those to raise some funds to ease their hardship.

I am not asking for welfare. I am asking for compassion. Those who agree to the scheme must also agree to another scheme, to allow their money to be used wisely; in other words, the money has to be used to offset their rentals for at least a minimum of two years or maybe even more.

Can we extend this to the 4-roomers and 5-roomers? I think we have to look into this because even if they downgrade to a 3-room HDB flat, they still cannot get sufficient funds to help them out, especially those who have failed in their businesses. I think we should look into this, not forgetting that there are also many people who have suffered very serious medical problems and they need funding. Sir, while I advocate that they should be primarily for the 3-roomers, let us not rule out the possibility that we could also extend this to the 4- and 5-roomers.

Sir, I do hope that the Minister will consider my proposal.

Ms Indranee Rajah (Tanjong Pagar): Sir, I would like to call for a review of the HDB policy of not allowing single mothers to rent HDB flats. If the policy objective is to discourage single mothers from having babies, it is not working because the problem is recurring. And, in any event, I seriously doubt that the unavailability of rental housing is a consideration at the point of conception. They do not sort of sit back and think, "Oh, I shouldn't do this because I can't rent a flat."

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If we say that the number of units is limited and we have to make a moral judgment as to who should get it, then we should extend this policy to fathers who father illegitimate children as well. This policy operates harshly and creates unnecessary hardship on single mothers. HDB's primary role is to provide housing for Singaporeans who are in need of it. And if a mother is seeking to rent a HDB flat, it usually means that she cannot afford to rent in the open market or to buy one and that she does not have family support for whatever reason. I would therefore call for a review of this policy.

The Parliamentary Secretary to the Minister for Health and Acting Minister for Community Development, Youth and Sports (Dr Mohamad Maliki Bin Osman): Sir, when I was a student social worker back in the late 80s, I was confronted with a rude shock of flat evictions. Yes, I saw Singaporeans being evicted from their flats because they were not able to pay their rentals. Of course, HDB tried to minimise the impact by informing social workers of the impending eviction. The families were devastated. Some tried to protect their children from the crisis.

Sir, I fear that history may repeat itself. I am referring to the situation of flat owners now having to secure mortgage loans from commercial banks. Yes, we acknowledge the rationale behind the policy, ie, HDB is not in the business of lending money.

Sir, with the new policy implemented, the HDB flats are no longer as secure as they used to be. We know that the commercial banks have the first charge in cases where flat owners cannot make good their mortgage payments or when they are declared bankrupt. In other words, they will lose their flats should the

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commercial banks take action against them.

Sir, my fear is beginning to come true. A couple of weeks ago, a resident came to see me asking me for a rental flat. The reason is that she had been given notice by the bank to vacate her flat by March, as she has not been able to make good her loan payments.

There are many others who are facing legal action at various stages. I am afraid to see more evictions of these cases, as these cases are really on the verge of losing their flats. This is something that I fear most when the new policy was implemented.

In this regard, I would like to ask the Minister whether HDB tracks the cases of those who take up loans from commercial banks and who are at risk, through default payments, of losing their flats. How many are currently in this category operationalised by banks taking legal action against them already? Also, how many flat owners have had their flats repossessed by the banks since the policy was implemented?

1.45 pm

On a related

note, Sir, I would like to ask the Minister whether HDB or MND has plans to help Singaporeans better understand the implications of them getting loans from commercial banks and the risk that they have to take. This is especially so for cases who choose to downgrade due to inability to pay for their current mortgage loans. Sir, in some cases that I have seen, families are threatened with repossession within a year of their purchase of their flats. While I understand that we should leave the commercial banks to operate freely within the open market, we should be mindful of the implications to Singaporeans. Many are unaware of what they are getting into.

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I think we should pay close attention to the issue before we revert to the early days of having to deal with families losing their homes. As we pride ourselves as having a high percentage of home owners, I hope we will not get into a situation of having to deal with a larger number of home losers or move into rental flats once more.

The Senior Parliamentary Secretary to the Minister for Information, Communications and the Arts (Encik Yatiman Yusof): Sir, over the last three years, I have seen an increasing number of cases where HDB flat owners who want to downgrade to smaller flats or sell their flats and move to rental flats facing great difficulties in financing their needs. The financial crisis, SARS and economic downturn had changed their capability to pay for their housing needs.

Sir, the first group consists of divorcing couples, the second group involves people who are retrenched during the economic downturn. They found themselves unable to continue the mortgage payments and did the right thing by downgrading to smaller flats. However, there are three major difficulties facing them. First, the minimum occupancy period set by the HDB; second, the 30-month debarment period during which they are unable to apply for purchase or rental of flats; third, in getting financing from the banks.

Sir, in the past, when the market was buoyant, they had no problem as the selling price was good. After deducting all the necessary payments, they still have enough money to buy flats from the open market. Now, divorcing couples and downgraders may face the prospect of not finding shelters over their heads. As some were divorced only after two years of marriage, they have difficulties of selling their flats as ordered by the courts because they have not met the minimum occupancy period. For those retrenched

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and wanting to downgrade, the above HDB conditions are also not helpful to them. Those who bought their flats during the peak years of 1997 or 1998 and took the maximum loan of repayment for 30 years are the worst affected. Many are unable to meet their mortgage repayment. At the same time, they could not sell their flats to downgrade because of lower selling price of their existing flats. If they do so, they would have to chalk up the difference with cash. I appreciate the assistance that the HDB gives to them by allowing them to defer their payments, but this does not solve their problem. I also know that in some instances, HDB did consider the request on a case-by-case basis.

Sir, may I ask the Minister what else can be done to assist these people on their housing loans? Sir, the rules were made many years ago and the circumstances merit such rules to be made and enforced, and enforced vigorously if necessary. But, now, I strongly believe that the situation is different. Can we not review the policies?

Housing for an Ageing Population

Dr Lily Neo (Jalan Besar): Sir, there is a need for better planning of the housing needs of Singaporeans in view of the fact that 12% of households today are headed by persons over 65. Should there not be more 3-room and 2-room HDB flats being built in view of more downgraders than upgraders in the recent times? Will MND consider building new HDB flats with "lifetime-designed HDB concept" so that such flats can be adapted as the needs arise to allow people to "age in place"?

More studio apartments and retirement homes will be needed to better accommodate the silver generation. Will MND set aside designated lands for this purpose? It may be more feasible to allow 30 or 40-year leases to the private sector to make retirement villages viable.

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Sir, may I urge MND to be less stringent on the HDB "Joint Singles Scheme"? I am not suggesting that we convert all HDB rental flats to only "Singles Scheme" as many lessees may prefer to rent with spouses or other family members for companionship. Will MND be more flexible to those with no family members or friends to share with as it is very difficult for many singles to live with complete strangers?

Like my parliamentary colleague who spoke earlier, may I urge MND to give HDB cash-poor retirees the option of reverse mortgages? This facility will allow the elderly to pay for their daily living and remain in their own homes and there will be less cases of bad management of funds from selling of HDB homes and lesser demand on rental flats.

On faster upgrading of HDB lifts, may I suggest that priority be given to those HDB flats with a higher percentage of elderly residents to get earlier upgrading?

Mr Ang Mong Seng: (In Mandarin) : Sir, at the moment, the imminent problems faced by our senior citizens are cash flow and housing, and these two problems are inter-related. During their younger days, in order to realise the dream of owning their own flats, they used up a lot of cash and CPF money to buy their flats. After retirement, when their children grow up, they move out. The old folks have a property but no cash. If they were to sell their flats, under the present policy, they are barred from applying for a HDB flat. But if they do not sell the flat, they would not have enough money for their daily expenses. So I suggest that HDB consider allowing them to rent a flat without having to wait for 30 months after selling their flats.

Although the HDB has studio apartments for the elderly, they are all for

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sale, on a 30-year lease. During this period, if anything happens to them, who is to inherit the apartment? And that would be a problem. On the other hand, should they outlive their lease, then it would be yet another problem. Therefore, I would suggest that the best thing is for them to rent the flats. Then they do not have to buy their flats and, at the same time, they can sell the present flats so that they have the capital to provide returns for their investment. If they were to sell a 4-room flat, they would have more than $200,000 in hand, and they could get the fund managers to invest for them, and get back some $2,000-$3,000 a year, enough to pay the rent. Their housing problem is solved and they can have cash for their daily expenses. It is a win-win situation.

At the moment, there are quite a lot of vacant flats in Jurong West. I would suggest that HDB start a new plan to convert one or two blocks of these vacant flats into rental apartments for the elderly; for those 3- or 4-room flats, maybe they can be converted to 1- or 2-room flats for the old people to rent. At the same time, in order to look after the welfare of the residents in the studio apartments for the elderly, VWOs and grassroots organisations can set up some special care groups to organise some welfare and recreational activities for the old folks. The concept of "Senior Citizens looking after Senior Citizens" launched by the Redhill Residents' Committee is a good one. Perhaps we should extend it to other areas as well.

Neighbour Problems

Dr Tan Boon Wan (Ang Mo Kio): Sir, problems between neighbours appear to be increasing. I wonder if the Minister can share the statistics on the matter for the HDB estates. Many of these cases are intractable, even with strenuous efforts by grassroots leaders to resolve

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them. This is despite the involvement of the police, town council and other Governmental agencies. In many instances, even the efforts of the Mediation Centres have failed. Perhaps, it is now time to consider the use of legislation to force the quarrelling parties to sit down and resolve the differences in the interest of peace in the community and to provide relief to the aggrieved party. I wonder if HDB would consider reviewing its lease agreements or moving legislation for this purpose for the HDB residents.

Sir, a cause of friction between neighbours in HDB flats is ceiling leaks. The generosity of the HDB to absorb half of the repair costs under the Goodwill Repair Scheme has gone a long way to abate the problem. The remaining half of the costs is shared equally between the two flats. Residents agree that this is reasonable if the leakage is due to normal wear and tear as a result of ageing and usage, not the fault of any party. But residents do not think this is a fair arrangement when the ceiling leaks are caused by renovation works of the upper flat, which weakened the water insulation of the floor. They do not think that they should be asked to share the repair costs. The owner who did the renovation should take full responsibility. To be fair to the owner, a reasonable time between the subsequent ceiling leakage and the renovation works should be worked out for the owner to be held responsible. I hope that HDB will seriously consider this suggestion to impose this condition on owners who apply to renovate their flats.

The Minister for National Development (Mr Mah Bow Tan): Sir, Members have spoken on a very broad range of issues relating to public housing. But let me first respond to probably the most fundamental question on public housing, which is the role of the HDB, raised Dr Amy Khor.

As Members would know by now, the HDB was set up in 1960 at a time when

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Singapore was facing very severe housing shortage and most of the people were living in slums and squatters in the cities and outside. And HDB had to build thousands, literally thousands of flats, in a very short space of time. It was a challenge for HDB. It was a challenge to HDB's resolve to overcome. And I must say that it did an admirable job.

Today, almost nine in 10 Singaporeans live in HDB flats. Almost all own their flats. No other country, whether you are talking about a developed or a developing country, has been able to achieve this.

Now that it has largely met its objective of providing affordable housing for the majority of Singaporeans, the question that all of us are beginning to ask is: what next can it do? What more can it do? What is the role of HDB moving forward?

To answer this, I would like to look at the broader context of our public housing programme. Right from the start, the Government's public housing policy has not just been about providing a roof and shelter. Public housing is also very much about promoting rootedness, about giving Singaporeans a stake in this country, a physical stake in giving them an asset. The Government has therefore encouraged home ownership right from the beginning. To own a home is to own a part of Singapore. It is what makes Singapore worth defending and worth contributing to.

Rootedness also means being a part of the community and contributing to the well-being of this community. And that is why in the design and planning of HDB estates, we consciously set out to create a strong community spirit and foster social integration. So we carefully guide the ethnic balance in our housing estates, we mix different flat types within the same block. We provide recreational

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facilities to draw HDB residents out of their flats and create plentiful opportunities for them to mix and mingle in the common spaces. The walkways and the corridors that you see in the HDB estates are not just about connecting blocks to blocks or connecting blocks to bus stops. They are also about connecting people and connecting lives.

The HDB void decks, in particular, are something which are quite unique to Singapore. If you walk around HDB void decks today, you will see young and old playing guitar; sometimes playing football to the annoyance of some residents; you see older people playing chess, playing qigong; housewives catching up on the neighbourhood gossip on the way to market; or young parents sitting at the void decks waiting for their children to finish kindergarten and during that time, exchanging ideas or gossip. Most Members would also have at one time or another attended a happy occasion, a wedding, or a sad occasion, a funeral of, say, a friend or a resident at the void deck.

2.00 pm

Our HDB estates, with their flats, hawker centres and shops, have become a common point of emotional reference for many Singaporeans - just like what we were talking about earlier. National Service for males - in the same way that our schools have brought Singaporeans of different races and socio-economic groups closer together. So, what I call the "HDB experience" has become an integral part of the Singapore experience for many Singaporeans.

Two National Days ago, the parade organisers produced a little red book which they called "Things that make us Singaporean". I still keep my copy, because I find thumbing through it some

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very nice little snippets. One of my favourites is by a Mr Ong Wee Loong, who is a full-time National Serviceman. He says, "A foreign friend once asked me: How come you know so many languages? I told him I live in a cultural language centre called an HDB flat, learning Malay from the left, Tamil from the right, dialects from the people above and below me." So, each HDB estate is like a "mini-Singapore", culturally, racially, religiously diverse, and yet everybody living harmoniously together.

Our public housing programme has played a critical role in bonding Singaporeans together. Like many of my colleagues in this House, I grew up in an HDB flat and I have many fond memories of my childhood. My children grew up in a private property. But, fortunately, for a while, we lived in an HDB flat in Eunos, and that experience had a very big impact on my children. They had the chance to meet regularly and to mingle with Chinese, Malay and Indian children living in the same block or playing in the playground or waiting in the carparks for the school bus to take them to the school nearby. And this "HDB experience" has been a valuable one for them and for me. They still recall with fondness, the friends that they made there, Salleh, Jamal and so on. And this is an experience which as many Singaporeans as possible should have.

Today, the first home for nine in 10 Singaporean first-time home owners is an HDB flat. More than eight in 10 first-timers who bought their HDB flats 10 years ago are still residing in an HDB flat, either in the same one or in another HDB flat. For the minority who upgrade to private housing, I believe their HDB years have formed an important and cherished part of their memory and life experiences.

Sir, I submit that we must endeavour to make the "HDB experience" a pleasant, memorable and a rewarding one for all

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HDB residents, whether they are young or old, for newcomers, long-staying ones, people of different socio-economic backgrounds, different races. That is the challenge for HDB. That is the role that HDB must continue to play, going forward. We must continue to plan and execute our home ownership policies in such a way that the "HDB experience" that I talked about is a memorable and rewarding one.

(1) We must make sure that public housing policies are fairly disbursed because, after all, we only have a limited amount of money to spend on public housing;

(2) We must make sure that the flats that we build are of good quality and continue to remain affordable, a point which many Members of this House have brought up;

(3) We must make sure that the leases are properly administered, eg, rentals, resale, etc;

(4) Towns with supporting amenities are comprehensively planned and developed to meet demand; and

(5) Older estates are systematically and properly reviewed, renewed and revitalised, so that vibrant communities continue to thrive there.

Of course, HDB cannot do all these alone, and this is where I believe that we must now start to leverage on the experience and expertise of others, eg, the private sector, the people who are not currently involved. Let us get them also involved in contributing to this "HDB experience".

Let me now touch on private sector participation in public housing. This is the first point that was raised by Dr Amy Khor when she asked how we intend to involve

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the private sector in the provision of public housing.

Currently, public housing accounts for about 80% of the total housing stock. All of these flats are designed and developed by HDB. This is quite unusual. In fact, most other countries do not practise this. They do not have such a dominant player in the form of an HDB. Hong Kong and Malaysia, for example, do involve the private sector in various forms of public housing.

In 2003, when I announced the formation of HDB Corp, when we corporatised the building and development arm of HDB, I explained to the House that, together with this, we will also be opening up the private sector gradually to the private sector, starting with 10% in July 2006, reaching 50% in July 2008. Private sector participation will enable our public housing programme to be more responsive to the needs of our residents. And market competition, I believe, will also result in greater innovation in building and design, greater choice and, ultimately, better value for money for flat buyers.

My Ministry has been studying various options for implementing and involving the private sector in public housing development, and we have narrowed it down to two modes. Under the first mode, the private sector will provide the consultancy services, for example, architectural design and project management and, of course, the building works, as one package. This is known as Design-and-Build (D&B). This is a familiar method. It is tried and tested. It has been done for various estates in the past few years. But under the second mode, which I will call the Design, Build and Sell Scheme (DBSS), the private sector will undertake the entire development process for HDB flats, from tendering for the land to designing of the flat, the development of the flat, the building of it and, ultimately, selling the flat. So, design, build and sell.

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Upon building completion, the developer will pass the common areas back to HDB. The flats will remain as HDB flats. They will be subject to the prevailing HDB rules and conditions. They will be sold to Singaporeans who are eligible to purchase subsidised public housing. The Ethnic Integration policy will also continue to apply.

Dr Amy Khor asked whether we considered other schemes, such as the reverse tender mechanism. Yes, we did. Under this scheme, we would cap the price of the flats and then we will let the developers tender for the land and build. The problem with this is that, having capped the selling price, the only way that the developer is able to make money is to stinge or save on the construction cost and, therefore, may create problems, as far as quality is concerned. And this is the experience, for example, that the Hong Kong authorities had, which they strongly advised us not to follow.

Under the DBSS, developers can price their flats, based on what the market can accept. To ensure affordability, eligible first-timers will receive a $30,000 or $40,000 CPF housing grant from the Government, similar to the grant for first-timers who are buying HDB resale flats. Those eligible can also obtain the HDB concessionary loan to finance their flat purchase.

Developers will be free to decide on the design and flat mix, so long as the character of public housing is preserved.

The DBSS scheme is untested. It is brand new. It is unfamiliar to HDB as well as to the flat buyers. So, we will take a cautious approach. We will test out the concept via a pilot project. HDB has identified a site at Tampines Avenue 6 for the pilot project. It will tender out the site

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to interested developers in the second half of this year.

I expect that the majority of HDB projects that will be outsourced to the private sector will be under the tried and tested Design-and-Build (D&B) scheme. HDB will continue to be the developer, and set prices for the bulk of new HDB flats. HDB-developed flats, along with the HDB resale prices, will form the benchmark. It will set prices for the DBSS flats, and this will ensure that public housing continues to remain affordable for Singaporeans.

MND will evaluate the pilot DBSS project carefully before deciding whether to implement the scheme more widely. If we do, it will be done selectively, most probably in the more mature estates which are more popular with residents. We will modify the scheme, if necessary, depending on the outcome of the pilot, to ensure that our overall objectives are met, and to make sure that DBSS flats remain affordable for HDB flat buyers.

Sir, the liberalisation of the public housing market is a key milestone in the development of our public housing programme. I think it will reshape the way HDB provides public housing in future. It will introduce different ideas, it will bring different designs and minds to bear on how we can provide good public housing. But I want to assure Singaporeans that, even as we involve the participation of the private sector in our public housing programme, we will continue to provide housing subsidies for young couples to set up homes, start a family and for those who need to upgrade from their smaller flats. I hope that private sector participation in the development of public housing will help to enrich and enhance the "HDB experience".

Let me now turn to the issue of affordability of HDB flats. Many Members

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have spoken on this. Dr Wang Kai Yuen revealed to us the results of a survey that the Feedback Unit did which showed that there was this gap between what the sample survey considered to be serious and the confidence that they had that the Government would address these concerns.

Sir, housing is a basic need, and I can understand why Singaporeans are concerned, and why they have raised the cost of public housing as a major concern, along with public transport and healthcare. Let me assure Members that the Government is committed to ensuring that HDB flats remain affordable to Singaporeans, especially to first-timers. But the question always is: how do we measure affordability? What do we mean by affordability? The universally accepted way is to compare prices with income, ie, what you have to pay versus what you expect to earn. Specifically, this means comparing the monthly mortgage instalments with your monthly household income. This is known as the debt-service ratio, with mortgage as a numerator and household income as the denominator.

2.15 pm

Last year, those who bought HDB flats needed to use, on average, less than 20% of their monthly income to service their housing loans. In other words, there was a debt to service ratio of 20%. This 20% ratio is reasonable and affordable by any standard. It is well within the 40% guideline which most banks use when they give out loans and when they do their credit assessment. It is also in line with international benchmarks when you compare across countries on whether housing is affordable. In our case, we are talking about public housing. Typically, the benchmark is around 25%-30%. Most flat buyers will be able to service their housing loans entirely with their CPF

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contributions, in other words, they need not touch their take-home pay.

Dr Ong Chit Chung suggested we review the 20% downpayment required for the purchase of HDB flats. He argued that by requiring 20% downpayment, we are making flats less affordable. I just want to inform him that we need a downpayment because you cannot expect to buy such a big ticket item as a house without any commitment on your part. This is meant for financial prudence and it applies equally to buyers of HDB flats as well as private properties. For HDB flats, the conditions are less onerous than private properties because, in the case of HDB flats, for this 20% downpayment, you can actually use your CPF to fully pay for it. I just want to enlighten him further. To further ease the cashflow of younger first-timer couples and to enable them to set up home earlier, HDB has also introduced what it calls the Staggered Downpayment Scheme. In this Scheme, they only have to pay an initial downpayment of 10% when they book a flat that is under construction and the remaining 10% is payable only when the flat is completed, which is usually a few years later.

To further enhance the affordability of HDB flats, HDB last year resumed the building of three-room flats under the Build-To-Order (BTO) system, ie, to build only when there is demand. The first contract in Sengkang last year achieved a very high take-up rate of about 90%. This resumption of the building of new three-room flats after a hiatus of many years has helped to moderate price increases for resale three-room flats, and it has benefited flat buyers who want to buy three-room flats.

Mdm Cynthia Phua and Dr Amy Khor also asked about HDB's plans to ensure optimal supply of HDB flats. They talked about building smaller flats, even two-room flats and less five-room flats. Let me just say that with the new Build-To-

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Order system, the building programme will be entirely demand-based. In other words, if there is demand for smaller flats, HDB will build smaller flats. If there is demand for larger flats, of course, HDB will also consider. But the focus at the moment is to sell its current stock of flats which encompass a wide range of flat types, ranging from the Executive flats all the way to the four-room flats. HDB will monitor the demand and adjust the supply of new flats and new flat types accordingly.

Sir, let me now turn to the issue of HDB rules and regulations. I think many Members - Dr Amy Khor, Dr Ong Chit Chung, Mdm Cynthia Phua and Mr Yatiman Yusof and others - in their speeches, alluded to the many different regulations and rules that HDB has. When I first became Minister for National Development, I asked for a briefing from HDB about their rules and regulations. I was given a folder this thick [ indicating ]. Of course, I did not look at it. But in the course of the briefing, I discovered that there is actually a reason for every single rule and regulation. There is a reason for every single one of them and it is all very logical.

They are there to support current policies. It does not mean that the rules and regulations cannot change because if policies change, rules will change accordingly. But many HDB rules and regulations are there for a serious purpose. Let me take one example which many Members have commented on. In fact, I get a lot of appeal letters on this, and this is our ethnic integration quota. This policy is there to make sure that we do not have racial enclaves re-forming in our HDB estates. If Members will recall, in the early days of Singapore, we had communities and settlements based on race and sometimes even based on dialect groups. We had Malays in Geylang Serai,

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the Chinese in Chinatown and Indians in some parts of Serangoon.

With the HDB's building programme, these racially based settlements were dispersed. They went to live in different parts of Singapore as a result of the new estates being built in Toa Payoh, Ang Mo Kio, Bedok and so on. But over time, they started to re-form again. This is why we have the Ethnic Integration Policy (EIP). And as a result of the EIP, we now not only maintain the multi-racial character of our HDB estates, but we also allow our neighbourhood schools, hawker centres and shops to also be multi-racial. Together, they form and create that comfort level, that familiarity with one another's customs, traditions, idiosyncrasies, languages, whatever, which bind us together as Singaporeans.

Having said that, as I indicated, rules and regulations are made by men. They are not cast in stone and we will change them. We regularly review our policies and when the environment has changed, where the rule is no longer relevant, we will modify or even remove the rule altogether. As Singaporeans become better educated, they want to make more of their own choices. They are prepared to take responsibility for their choices. Together with this increase in responsibility undertaken by the residents, we can relax the rules and regulations. I believe this will improve the HDB's experience.

Over the last few years, HDB has made several major key changes to policies and rules aimed at giving residents greater flexibility in the use of their flats. Let me briefly mention three of them. First, bank origination was implemented in January 2003. Many flat buyers have now been able to take advantage of very attractive home loan packages. Yes, some of them have over-extended and Dr Maliki has mentioned the consequences of some of these. I will

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address the issue later. But to-date, 50,000 bank loan applications have been processed, and almost $9 billion worth of bank loans have been disbursed.

The second change we made was in June 2003. We implemented the HDB's Home Office Scheme. This has enabled HDB residents now to work from home. They can list the home address as their office address. Now, some architects, tutors, IT specialists, work from home. It does not just save time and money but it also allows them to spend quality time with their families. Since then, 15,000 HDB dwellers have enlisted under the scheme.

Third, in October 2003, we freed up the subletting rules for HDB flats. Prior to this, there was a lot of difficulty in subletting your whole HDB flat except under very exceptional circumstances. Now, we have freed it up. To-date, more than 2,300 lessees have sublet their flats totally, and half of them are elderly lessees. They sublet their whole flat, use the money for their old age and move in with their children.

These are three major changes which illustrate how we have freed up rules and regulations over time to encourage residents to be more self-reliant, to be more responsible and to be more entrepreneurial. I am happy to announce that HDB will further liberalise its rules in two areas. First, we will reduce the time bar for households who have bought one subsidised flat to apply for a second subsidised flat from the current 10 years to five years. The 10-year time bar was implemented in 1997, together with other measures, such as the resale levy. This was to better manage the demand for new flats among second-timers. We do not believe that it is necessary to maintain the time bar for 10 years because the situation has changed. So we have reduced it to five years. Second-timer households who need to upgrade to

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bigger flats can do so sooner. This will take immediate effect.

Second, we will further relax the subletting rules for HDB flats. Those who have no outstanding HDB loan will now be able to sublet their flat after occupying them for five years, compared to the current 10 years. Those who have occupied their flats for at least 10 years will now be able to sublet their whole flat even if they still have an outstanding HDB loan, compared to the current 15 years. These changes will give flat owners greater flexibility to monetise their flat and it would also provide more housing options for those who are not yet ready to buy a flat and who want to rent.

This move will make 537,000 flats, or 65% of all HDB whole flats potentially eligible to be rented out. Of these, about 300,000 can be rented out immediately as the flat owners have met the 10-year occupation period or the five-year occupation period and do not have any outstanding HDB loan.

I hasten to add that while the numbers appear large, we would expect most flat owners to continue to owner-occupy their flats. The actual number of flats sublet is therefore likely to be much smaller, but still significant. HDB will announce more details of the two policy changes shortly.

On the issue of affordability, there is a quick point that I want to make in response to Dr Amy Khor and Dr Ong Chit Chung. I believe they suggested that we should extend the housing subsidies to those who purchase private properties. I am afraid I cannot agree. If they can afford to buy private properties, surely they would have less need for financial assistance from the Government. And in any case, the income ceiling for housing subsidy is already very generous. It allows about 85% of Singaporeans to be eligible. The last point, which is equally important, is that we would still want

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people to take the housing grant, to live in an HDB flat and go through the HDB experience.

Let me now talk about building a more inclusive society. This is the Prime Minister's vision, of building a more inclusive society and public housing will continue to play an important role in helping us realise this vision. In particular, let me touch on the housing needs of two groups which Members in this House have brought up.

The first group is the low-income and those in financial difficulty, and the second group, the elderly. HDB has in place various financial assistance schemes to help needy Singaporeans who have difficulty paying their housing loan instalments. Members would be familiar with them - reduced or deferred loan instalments, etc. HDB will work closely with individual flat owners to advise on the appropriate assistance measures. Last year, we approved 40,000 applications for financial assistance from HDB mortgagors, not a small number, but an indication of the last few years' financial difficulties or economic problems. Existing assistance measures are generally adequate in helping flat owners to tide over their temporary financial hardship so that they do not have to sell their flats.

But in cases where they do have to sell their flats, where they have been retrenched or have suffered a substantial pay-cut, etc, and they want to downgrade to a smaller flat, HDB would also view their cases sympathetically. HDB is prepared to waive the minimum occupation period to allow them to resell or to grant them another concessionary loan for the next flat purchase, depending on the circumstances of each case, ie, it is not a blanket change of policy

but it is a more flexible way of interpreting and implementing the policy. So I want to

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assure Members that MND and HDB would be as flexible as possible in cases of genuine hardship.

2.30 pm

Dr Maliki asked about the number of flat buyers who have defaulted on their bank loans and have their flats repossessed. So far, we only have one case of a mortgagee sale of an HDB flat by a bank, out of some 50,000 bank loan cases, as I indicated earlier. Before this, let us take a step back and just remind ourselves that the flat buyers who have to take bank loans, who are not eligible for HDB loans, are really those who are either better off or those who have already bought a flat earlier with a HDB loan. So, in other words, they have already benefited from the housing subsidy and the subsidised housing loan. So we do try to advise and educate our residents that when one takes a bank loan, one has to make sure that one does his sums, through the information material that we provide, the info web, newspaper advertorials and many other channels. In fact, even direct face-to-face meeting. I have asked the HDB counter staff to make sure that they explain to the prospective HDB flat buyers that they know what they are in for. So we constantly hammer home this message, that buying a flat is not like buying a TV set or even not like buying a car. It is a long term financial commitment, and flat buyers must do their sums carefully. Those who take bank loans must be aware that they would be subject to the mortgaging financing policies of the bank, not of HDB. So I urge all flat buyers, whether they are taking a HDB or a bank loan to please exercise financial prudence. Buy a flat within their means. We would provide all the counselling that is needed and necessary but, ultimately, the decision lies with them. So please be careful.

Dr Tan Cheng Bock suggested a very innovative scheme of helping those who

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are in difficulty. In other words, the HDB buys back the flat and then rents that same flat back to them at subsidised rates. He says that this is not a welfare scheme. I am not sure that I agree with him. If this is not a welfare scheme, then what is? The point really is that there are many, many ways of allowing a resident to encash or monetise their flat. They could rent out just a single room, which many are already doing today, without too much hassle. Or, they could rent out the entire flat and with the relaxation of the rules that I have earlier announced, more people could actually take this route. They could sell their flat and buy a smaller one. For those who could not afford to buy another flat after selling their existing flat, they may also be able to move into a HDB rental flat. And, to help these cases, HDB would consider waiving that 30-month debarment period to allow them to rent subsidised 1- or 2-room flat. So there are many avenues open for this group. I will be talking about another possible avenue later on, which is the reverse mortgage. But, because of all these different options, I do not think that we should start another subsidised rental scheme for flat owners, whether it is 3, 4 or 5-rooms.

Now, let me address issues and concerns on rental housing, which has been raised by Members. Mr Gan Kim Yong, Ms Indranee Rajah, Dr Amy Khor, among others, asked whether Government could provide more rental housing or to free up the regulations to have more people to be eligible for such rental housing. As Members would know, the Government provides 1 and 2-room rental flats to meet the housing needs of lower income Singaporean families, those who are unable to own their flats. The rentals under the public rental scheme are very heavily subsidised. And this is the reason why we have to make sure that there are strict eligibility conditions on citizenship, income, family nucleus, property ownership, etc. Otherwise, the

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demand for such heavily subsidised flats would go up very sharply.

Mr Gan Kim Yong asked whether we could relax eligibility criteria for rental flats. In fact, we have done so. Last year, we raised the household income ceiling for rental flats from $800 to $1,500 and this has made subsidised rental housing accessible to more lower income families.

Ms Indranee Rajah suggested that MND review its policies on rental flats for single mothers and also for PRs with citizen child. As far as PRs with citizen child are concerned, we cannot change the rules for rental housing, for the very simple reason that citizenship must have its privileges. We have heavily subsidised rental flats. We have to reserve them for citizen households. As far as single unmarried mothers are concerned, we would treat them the same as other singles for rental of HDB flats, in other words, age cut-off of 35 and they must also have another single to qualify. This, I must hasten to add, is not to penalise single mothers, but to encourage them to look first to their families for care and support. But, again, for those who are victims of circumstances and who first face severe hardship, HDB would exercise flexibility, on a case-by-case basis, depending on the merits of each case. By the way, I wish to inform Ms Indranee that this policy applies to single fathers too. So we do not gender discriminate.

Let me stress that as we provide even more rental flats for low income families, we will continue to assist low income families to buy flats and to become home owners when they are financially ready and we have many schemes under the Special Assistance Housing Programme to do so. Why? Because, it is important that we keep the home ownership dream alive for as many Singaporeans as possible, including those low income

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Singaporeans who would over time make good and who also feel that they deserve a stake in this country.

Let me now move on to the topic of housing for the elderly. Dr Lily Neo, Mdm Cynthia Phua and Mr Ang Mong Seng have raised this. And it is an important issue. Our elderly are not a homogenous group. They have different financial, healthcare, housing, social and psychological needs, as well as lifestyle preferences. For MND, the challenge really is to provide a comprehensive range of housing options, such that these diverse needs can all be met. For example, Dr Lily Neo spoke about the need to have lifetime designed homes that would change as the lifestyle changes. Our public housing policies today encourage our elderly to age in place. In other words, they should continue to live in a home that they are familiar with, strong family ties, strong community support. And it is for this reason that our HDB flats can be modified to enable residents to stay in the same flat over the various phases of their life cycle. It is for this reason that we constantly upgrade our HDB flats, especially the older estates to make sure that they are elderly friendly, both inside the flat as well as in the surroundings. Later on, I will be speaking about the lift upgrading programme, which is another way for us to make sure that our HDB estates continue to be elderly friendly.

Besides making sure that estates are elderly-friendly, we also need to look at how we could help retirees who are so-called "asset rich but cash poor" to monetise their asset for their retirement. Mr Ang Mong Seng suggested removing the 30-month time bar that is currently preventing elderly lessees from selling their flats and moving to a rental flat. This is a very common and current request in our MPS sessions. We are now

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seeing many such cases, but there is a problem with just depending on this as a solution to our problems. HDB's rental flats are part of the social safety net provided by the Government for low income Singaporeans who could not afford to own their own flats. The monthly rentals are very low. They are substantially below the market rates. For example, for a 1-room flat we are talking about $26-$30, for 2-room flats we are talking about $60. The market rate for a room is only probably $200-$250, maybe more depending on the location.

Why are they so heavily subsidised? It is for the simple reason that they are meant for the very low income families who could only afford to rent the flats. The fundamental issue is not whether we should retain or remove the 30-month moratorium, rather it is whether we should widen our safety net further and create another welfare scheme for elderly HDB flat owners who have already enjoyed one subsidy, who are already owning a HDB flat, sometimes maybe more than one over time. If we do this, we are simply going to increase the demand for HDB rental flats. Last year alone, for example, HDB received something like 2,300 requests for waiver of this 30-month debarment. If we were to build another 2,300 flats just to cater for this demand, we would really have to up our public housing budget considerably. I do not think the Ministry of Finance is going to be very tolerant of this. So how else would it be funded? Money from within the budget? If we took it from the existing public housing budget, we would have to scale back on other expenditures, lift upgrading, particularly subsidy for first-time home owners even. So, at the end of the day, it is a matter of prioritising our resources, making sure that the many competing needs are met, and met as fairly as possible. Giving elderly flat owners who already own a flat another subsidised rental flat is not a sustainable option in

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the long term. So what are the options available to them? Because the problem is there, and it is a real one, how do we ensure that the elderly have enough funds for their retirement?

First, HDB has built studio apartments and the studio apartments which are on short lease. They are equipped with all the necessary elderly-friendly features. The elderly can sell their current flat, use the proceeds or part of the proceeds to buy a studio apartment and keep the rest for their old age.

Second, we have liberalised our subletting rules for HDB flats. The elderly can now rent out a room, or the whole flat, and they can move in to stay with their children. Many elderly have done this. They sublet their flats and they have moved in with their children, slightly more than half have done so.

Third, the elderly can sell the flat and rent a flat or room from the open market, and I hope that with the further relaxation of the subletting policy, with more HDB flats available to be let out, this would help to keep rentals competitive.

The Government will look at other options to facilitate monetisation of flats by the elderly. Many Members have mentioned reverse mortgages. We have done many feasibility studies on reverse mortgages. In principle, it is a very attractive concept. But, so far, the schemes that we have studied indicate that monthly repayments are low. What is more worrying is that because the reverse mortgage currently has fixed tenure, if the elderly outlive their reverse mortgage term and are unable to repay the loan, they actually risk losing their homes. But we will continue to pursue this option. We will talk to the banks, the insurers and, if they are able to offer schemes on more favourable terms for HDB flats, we will certainly consider such schemes.

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Sir, to effectively address the challenges of our ageing population, the Government would need to work very closely with the private and the people sectors. I am glad to hear Dr Lily Neo talking about selling land on shorter leases to private developers to develop private retirement housing. I think this is something worth studying and we would certainly explore it further.

Mr Ang Mong Seng also had another suggestion of converting vacant blocks in Jurong West for senior citizens' rental housing. Again, this is something that I would ask HDB to consider further.

Sir, finally, the issue of neighbourly disputes raised by Dr Tan Boon Wan. I just want to let him know that, in fact, under the existing lease agreement, HDB flat owners have agreed not to create nuisance for other residents. That, of course, does not mean that they do not.

They obviously do. Otherwise, he would not have raised it here. But we do have the legislative powers to actually persuade and encourage HDB residents to be more tolerant and be more mindful of their neighbours' needs. In the worst case or nightmare scenarios, HDB can actually acquire the flat under the Housing and Development Act. If they have neighbours from hell, this is something that is very tempting.

2.45 pm

But the point is that we should not have to come to this point. We should not have to do this. If we can force a sense of community, if we can get neighbours to understand that they are actually living in a wider community, whatever they do to their neighbours, their neighbours can also do to them, then I think we should not have to resort to such things. And this is probably the more fundamental point, that if we can

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create this more harmonious living environment, we can actually enhance the HDB experience for everybody and therefore create a more active, a more self-reliant citizenry and strengthen the social bonds that bind us together as a nation.

Dr Amy Khor Lean Suan: Sir, a point of clarification. The Minister said that he does not agree to consider the extension of the housing grant for the purchase of any property, which includes private property. He said that one of the reasons is because we do not want to deprive them of the HDB experience. I would like to inform the Minister that first-time owners who purchase Executive Condominiums receive a housing grant. The Executive Condominiums are, in all intents and purposes, private property because they will be privatised in five years' time, and first-time owners receive a housing grant. These first-time owners never had HDB experience, in any case. So what really is the difference? What I am saying is that we could allow them to receive the housing grant but subject to the same conditions for purchase of HDB flats, ie, subject to the income ceiling cap as well as possibly not able to sell the property within a certain timeframe.

My next clarification is that I appreciate the Minister espousing on the benefit of living in HDB flats - the benefit of community bonding and so on and so forth. But surely we are not saying that this is the only possible way to have such an experience and that it is not possible if you do not live in HDB estates. Surely this does not mean that only HDB can provide such an experience of community bonding. If this were to be the case, does it mean that HDB will continue to dominate the housing market? Is this really an ideal and healthy situation for Singapore in the long term?

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Mr Mah Bow Tan: Sir, the Executive Condominium scheme is straddling between full private housing and HDB. It is a hybrid scheme. It was started at a time when housing prices were high. But even when we did so, we were very careful to make sure that the locations of the ECs were close to and contiguous to HDB estates. To that extent, while they are different from HDB flats, at the same time, they also enjoy the advantages of proximity to a HDB estate - the shops, schools, markets, hawker centres and so on. And their residents are also able to mix with those in the HDB estates. For example, when we organise activities in HDB estates through the RCs, if there is an EC located nearby, we invite them and, in many cases, they do respond. I do not believe that Executive Condominiums are entirely private in that respect.

There is a difference in giving a housing grant of $40,000 for a person to buy an Executive Condominium in Simei, Jurong, Woodlands or Tampines and giving a person $40,000 to buy a bungalow in Queen Astrid Park, because his father happens to be a multi-millionaire. There is a difference, and this is where the eligibility criteria that we have for housing grant at the moment are actually so generous at $8,000 that it allows almost 85% of Singaporeans to be eligible. So if we were to take that line of argument, most Singaporeans would actually be eligible for the grant and they would then be buying different types of property - private property and HDB property. And it comes back to the point that I made earlier, that we would not be able to have as many Singaporeans as possible living in HDB flats.

Is the HDB experience special? Yes, I believe it is. It is special because it is an environment that, as I said earlier, is like a mini Singapore - different races, different smells, different flavours, different kinds of practices. It is quite different from a private estate.

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Will HDB continue to dominate? I believe it will continue to dominate the housing market. It may go down to 75% or whatever but I think for the foreseeable future, we are going to have HDB flats as part and parcel of the landscape. But will it be dominated by HDB statutory board? Will it be built by the HDB? The answer is not necessarily because we are embarking on an exercise to allow the private sector to do more of this. But will it retain the character of an HDB estate? Yes, it will.

Dr Lily Neo: Sir, can I seek clarification on the upgrading of HDB rental flats? The upgrading of HDB rental flats with elderly friendly features in the past has been useful to many residents, especially the elderly residents, and it is a worthwhile project. May I ask the Minister of the progress and whether it can be enhanced further and be stepped up?

On another issue, can the Minister give us an update, either public or private, on the retirement village?

Mr Mah Bow Tan: Sir, we embarked on the programme to improve elderly housing several years ago, and we stepped it up quite considerably. And as a result of this, I visited many of these flats which benefit the elderly not just within the flat, not just in the provision of features such as emergency cord, sitting toilets, non-slip flooring, elder friendly taps and so on and so forth, but it also creates a community that allows them to be involved, that allows them to get help when they need to and allows them to do some of the things that they enjoy doing - the singing, the qigong exercises and so on. Why? Because as we upgrade the flats, we also upgrade the block. We also provide facilities for VWOs to be located there and to provide all these community facilities for the elderly.

Yes, it is a worthwhile scheme. It is something that we are very interested to

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do, and we will continue to do so. Many of the flats in Dr Neo's constituency have been upgraded. Old estates in Queenstown, Whampoa and others have been upgraded. We have done most of it and we will accelerate the rest in the next few years.

On retirement villages, so far, there has really been no activity, because the private sector has been looking for land and they are asking us whether we can provide such land, and the answer is yes. We will be looking for such land and the URA will be considering whether they are suitable places for this.

Retirement housing in HDB estates would be the studio apartments. Is it possible for the private sector to also build studio apartments? Maybe.

Dr Ong Chit Chung: Sir, a point of clarification. Earlier, the Minister mentioned my name together with Dr Amy Khor that I asked for a housing grant for those going for private property. Although it is a privilege to be associated with Dr Amy Khor, I did not say that. My position is quite different. I asked whether we could consider making grants portable; in other words, making it applicable to first-time buyers of HDB new flats, resale flats or Executive Condominiums. It is just a point of clarification.

May I ask the Minister whether reverse mortgages are working well in other countries? If they are working well in other countries, why not in Singapore?

Mr Mah Bow Tan: First of all, I would like to apologise to Dr Ong Chit Chung for lumping him together with Dr Amy Khor. Maybe I should not apologise, but I think I may have scribbled my notes wrongly.

As far as reverse mortgages are concerned, yes, there are countries which have practised reverse mortgages, but

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these are mainly countries where the conditions are different from us, either the interest rate regime is different or lower, or the value of the houses is different, much higher. Yes, they have worked successfully in other countries. We just want to make sure that the conditions in Singapore are suitable for such schemes. As I said, it is a very attractive option and something that I would like to pursue. But we cannot pursue it unless there are insurers, banks and financial institutions who are prepared to offer favourable terms to our lessees. Otherwise, it is academic. There is no point in having a reverse mortgage scheme where your repayments are so low as to make it not worth the while.

The Chairman: I have to give priority to those who have made cuts. Dr Tan Cheng Bock.

Dr Tan Cheng Bock: Sir, the Minister calls my scheme a "welfare scheme" I call it a "compassion scheme". So I just want to seek clarification from the Minister. The HDB has, in the past, bought back 3-room HDB flats at market price and then sell them to the poorer Singaporeans at a subsidised rate, so that the poorer Singaporeans can have ownership of HDB flats. My scheme is a modification of his scheme. What I am asking is that HDB buys back the flats from these hardship cases and then rent these flats back to them at a subsidised rate. So I do not think my scheme is a welfare scheme. I think my scheme is more to give a life line to these people and a way out - an option - so that they can have some funds to help them to tide over this bad period. And I also had some caveats in my speech. I hope the Minister can respond.

Mr Mah Bow Tan: Dr Tan Cheng Bock's compassion scheme, not welfare scheme, is another subsidised rental

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scheme. Because the bottom line is that the resident is actually renting the flat at a subsidised rate. As I indicated earlier, there is another option, ie, if a flat owner is in financial hardship, he can sell his flat and he can come back and rent a subsidised flat from the HDB. The variation that Dr Tan Cheng Bock has proposed is to actually rent that same flat to him. I will ask HDB to look into it but

the issue of having another subsidised rental scheme freely available to residents should be very carefully considered. At the end of the day, we are talking about how to allocate the public housing budget to as many people as possible. We already have tried to accommodate this group through other means. What Dr Tan has suggested is something that we will study.

3.00 pm

The Chairman: Dr Tan Boon Wan. After that, Mr Ang Mong Seng. We have got 12 more minutes for clarifications.

Dr Tan Boon Wan: Thank you, Sir. I am glad to hear that the Minister said that HDB has powers to take action against the difficult neighbours. But it seems that HDB is very reluctant to exercise it. Like the Minister, I sincerely hope that people understand each other and we can solve our problems in a very compromising way. But we are dealing with people who are unreasonable. And if we have the police, grassroots, town councils, all possible agencies, even the Mediation Centres and they still cannot resolve it, I think it is time for something more drastic to be taken. Can I ask whether the Minister will tell HDB to be more forceful and to exercise their power more willingly than to be more reluctant in using their power and give relief to the parties who are suffering?

Mr Mah Bow Tan: Sir, if Dr Tan has any specific cases in mind and he wants us to evict any of his residents, please let me know.

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Mr Ang Mong Seng: Sir, first of all, I would like to thank the Minister for agreeing to look into my proposal to convert some of the flats in Jurong West for the senior citizens. Since there are so many requests and the Minister has mentioned there are 3,200 cases at this moment, can the Minister inform the House when this idea can come true?

Mr Mah Bow Tan: I would ask HDB to look into it as soon as possible.

The Chairman: One more clarification. Mr Gan.

Mr Gan Kim Yong: Sir, I would like to clarify with the Minister on the rental flats. I understand that it is heavily subsidised but I was asking in my speech whether the Minister would consider having a two-tier rental system with the second tier that comes with a lower subsidy but more flexible criteria.

Mr Mah Bow Tan: Sir, we already do this. In fact, when we expanded the eligibility ceiling from $800 to $1,500 last year, the second tier is actually at a less subsidised rate. The $1,500 ceiling already corresponds to something like 20%-25% of the people. So we should refrain from expanding it even further. Of course, the other option really is for them to rent from the open market. One of the reasons why we are relaxing the subletting rules is really to free up the market further and, hopefully, to bring down the rental prices for HDB flats in the secondary market. In this way, I hope that those who do not wish to rent or buy a HDB flat, for one reason or another, can look at this as a viable alternative.

The Chairman: I will allow clarifications at the end of this Head, if we have time. Mr Chay Wai Chuen, your cut, please.

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Main Upgrading Programme

Mr Chay Wai Chuen (Tanjong Pagar): Sir, the MUP Programme has been in place for some time and it applies to units which are 17 years and above. I would like to ask the Minister why are 40-year old flats still not upgraded. The reason I am concerned about this is that while the priorities are accorded all round to the different constituencies but for the 40-year old flats, the piping, lifts, ceilings and corrosions are all day-to-day issues that the residents have to live and put up with. So I would like to find out what are the reasons for this delay and why is it so difficult for HDB to make up its mind on this. I am referring in particular to some of the flats in Queenstown and Margaret Drive.

Town Council Sinking Funds

Mr Chew Heng Ching (East Coast): Sir, the town councils are required under the Town Councils Act to lock away some 30% to 35% of their funds into a sinking fund to ensure that they have adequate funds in the long term to do major cyclical works, like repainting, re-roofing, replacement of lifts and water supply system, and so on. And the remaining 65% to 70% of the funds are for routine operating expenditure, ie, cleaning, repairs, utility charges, and so on, in the upkeep of the towns.

Over the years, since the formation of town councils in 1990, many town councils have accumulated very healthy balances in their sinking funds, certainly more than enough to meet their long-term needs. Sir, PM, in the recent Presidential Address debate, has said that the Government would step up their LUP programme for all towns and perhaps have it completed within 10 years. This is a very ambitious target. Depending on the level of funding from the Government, town councils and residents, this exercise will have an impact on the town council

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sinking funds. On this, Sir, I urge that the amount payable by town councils for this ambitious LUP project be kept at status quo, and not higher.

Sir, besides the impending use of sinking funds for the LUP, I am also asking that the Ministry consider, if necessary, amending the Town Councils Act to allow the town council sinking funds to be used for other strategic purposes. By this, I am referring to various improvement works within the town, which are of a cyclical nature, ie, replacement of lift parts, facilities like playground, fitness station, and so on. Currently, town councils could only use routine operating funds to fund these expenditures.

Sir, I could go on and list other types of expenditures for which sinking funds could be allowed. May I therefore propose that the Ministry, in the light of this massive LUP project announced by the PM, review the adequacy and the use of town council sinking funds. Sir, if sinking funds could be freed up for certain expenses, then this would help ease the pressure on town council operating funds and, over time, lessen the need to increase S&C charges.

The Chairman: Order. I propose to take the break now.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker: I suspend the Sitting and will take the Chair again at 3.30 pm.

Sitting accordingly suspended

At 3.13 pm until 3.30 pm.

Sitting resumed at 3.30 pm

[Mr Speaker in the Chair]

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Debate in Committee of Supply resumed.

[Mr Speaker in the Chair]

Head T (cont.) -

The Chairman: Head T - Ministry of National Development. Mr Tan Soo Khoon is not here. Mr Ang Mong Seng.

Lift Upgrading

Mr Ang Mong Seng: (In Mandarin) : Sir, first of all, I would like to thank the Prime Minister for shortening the cycle of lift upgrading from 15 years to 10 years. All the residents of HDB estates appreciate this kind gesture. Among all the HDB upgrading programmes, the Lift Upgrading Programme (LUP) is most welcomed by the residents. According to a survey by HDB, some 97% of the residents support this scheme. Recently, in officiating the launch of the Lift Upgrading Programme in Tanjong Pagar GRC, Minister Mentor Lee urged the residents to give full support to the programme. He said the LUP not only improves the environment of the estates but also enhances the value of the flats.

Since 1997, I have been appealing on behalf of the HDB residents, especially those who live in 4-storey blocks, for lifts to be installed. This had been reported in the Straits Times. Finally, in 2001, the first set of lifts for 4-storey blocks was installed in Bukit Gombak. The Chinese press Lianhe Zaobao reported on this news. As a result, whenever the residents who live in 4-storey blocks meet me, they would ask, "Mr Ang, when can you help us to get the authorities to install lifts for us?" I would like to take this opportunity to ask the Minister when the lifts could be installed for the 4-storey blocks.

In Europe, fibre glass is used as the material for the lift walls, and they mount

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the lift motor on top of the lift-cars, thereby reducing the installation cost by 30-40%. Could the Minister consider studying their method? This will help to speed up our LUP process. At present, it takes about two years from the time of the announcement of the decision to install the lifts to the commencement of the installation works. I think the time is too long. Can it be shortened to one year?

Dr Tan Boon Wan: Sir, I have four requests to make to the Government with regard to the Lift Upgrading Programme.

First, I appeal to the HDB to expedite the LUP. Residents with low mobility, especially the senior citizens and the frail, are crying out for lift access. This is especially so for those older estates like Ang Mo Kio.

Second, I would appeal for the inclusion of low-rise flats for the LUP, especially those with many senior citizens. For those with low mobility, every step is one too many, whether you live in a high-rise or a low-rise flat.

Third, in order to bring the benefits of LUP to the most number of people, I would like to request that LUP voting be brought down to the shaft level, from the block level that is now being used. If 75% or more of the residents directly benefiting from the building of the lift shaft and eligible to vote, support LUP, then that lift shaft should be upgraded or built.

And last, I would like HDB to inform the buyer of a flat of its LUP status during the sale appointments, and require the buyer to sign a statement that he or she had been duly informed. This is to encourage residents offered LUP to think and vote more carefully. Some younger owners told me that they will not vote for LUP as they do not need lift access immediately. They will sell their flats and

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buy another with lift access when they are old and lose their mobility. They must be made to consider the impact of their decisions on their neighbours and themselves, if not in all aspects, then at least on the price of their flat and its saleability.

Ms Indranee Rajah: Sir, like my parliamentary colleague, Dr Tan Boon Wan, I would like to inquire of the Minister whether under the recently announced policy change of allowing town council funds to be used for lift upgrading, LUP will now be extended to low-rise blocks. The policy to-date is that there is no LUP for low-rise blocks, on the basis that it is not cost-effective. But this creates a lot of hardship for the elderly in the low-rise blocks, including those who are disabled, whether chair-bound or with arthritis or joint problems. The lack of lifts effectively confines them to their own corridors, and I hope that there will be a policy review to provide LUP for low-rise blocks.

Prof. Ivan Png Paak Liang (Nominated Member): Sir, the Ministry's development budget includes $517 million for lift upgrading. As mentioned here by the hon. Member, Mr Chew Heng Ching, on 15th January in this House, the Prime Minister announced that lift upgrading would be accelerated to 10 years. Would the Ministry estimate the change in total cost if we accelerated the programme to five years? There are two reasons why the total cost may well be lower.

First, the construction industry is presently very depressed, so prices will be lower.

Second, lift manufacturers will compete aggressively for larger contracts, so we can gain scale economics.

Therefore, Sir, an accelerated programme might well give us more for less.

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Selective En-bloc Redevelopment Scheme (SERS)

Mr Chay Wai Chuen: Sir, I would like to ask the Minister to give more choices, in terms of compensation or alternatives and flat type allocation for those people who are affected by the Selective En-bloc Redevelopment Scheme. Children should be, as best as possible, allowed to help pay for their parents in some of these choices that they have to choose.

Many of the SERS type of choices which are offered may have to be friendly to many of the older citizens who are affected by the SERS scheme. So, I suggest that the Ministry should consider going for two-room or even studio units within this kind of compensation flat types. A lot of the people who are affected by these SERS schemes are old people, and I caution the Minister in the fact that many of them fear going into debt to finance any purchases.

Mr Mah Bow Tan: Sir, first of all, on lift upgrading in HDB estates, Members would have heard the Prime Minister announce that MND will be targeting to complete the Lift Upgrading Programme in 10 years for all eligible blocks. Members have also asked whether we can speed up the programme. Let me now give some details about how we intend to implement the LUP in 10 years, as well as to address some of the Members' concerns and suggestions.

We introduced LUP in 2001, and that was to meet the needs of our ageing population by providing lifts on every floor, and the programme has been very, very popular with residents. I say that it is going to be even more in demand as our population ages.

What is the status so far? We have selected about 600 blocks for LUP. Some

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of the works have been completed, while others are in various stages of completion. Another 650 blocks have had their lifts upgraded under another programme, which is the Main Upgrading Programme (MUP) which incorporates lift upgrading. Blocks that are built after 1990 already have direct lift access. So, if we do our mathematics, it gives us about 3,000 high-rise and 800 low-rise HDB blocks which are still waiting for their lifts to be upgraded.

To provide lifts on every floor, we will have to add new lift cars, landings, lift shafts, depending on the different block configurations. This is a very major and costly exercise. The cost per unit ranges from as low as $1,500 to as high as $80,000 or $90,000 per unit. To provide for lifts for all the remaining blocks, it is going to cost the Government something like $5 billion. To put this figure in perspective, this is more than four times what the whole Ministry's public housing budget is for the financial year of 2005, if Parliament approves the budget for MND. That is $5 billion.

So, when Prof Ivan Png asked what if we were to accelerate the programme and complete it within five years, what is going to be the extra cost, the answer is really that it is not likely to be less than that. In fact, it may even be more. At the moment, we have low construction cost, but I do not think that this is going to be the case for ever and ever. Costs are likely to rise. In fact, they have already risen. Material costs have gone up. Labour cost will go up, and construction cost generally will rise over time. But, more importantly, we have to ask ourselves, if we were to accelerate the programme, whether HDB, the contractors, suppliers, etc, will have the capacity to cope with such an accelerated programme. We also have to take into account the funds that are available for completing this programme quickly.

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Obviously, when you do it in five years, you are going to spend much more per year, and the budget within each year would have to be considered very carefully.

So, our assessment is that 10 years is a realistic timeframe. It is achievable. Considering the fact that we have up to now been looking at a 15-year timeframe, I say that the target of completing it within 10 years is quite a challenging task for HDB. If we want to do this within 10 years, we will have to take several steps.

The first is that we will have to pick more precincts for the LUP and IUP Plus programmes, especially the LUP, starting from this year. So, for FY04, we will be selecting 43 precincts in total, compared to 24 in FY03. With more precincts selected for LUP and IUP Plus, given the same budget, we can afford to do less MUP each year. FY02, we did 10 MUP projects. In FY03, we did not select any because some of the MUP precincts had deferred the polling. In FY04, we will be selecting only three precincts for MUP. So, the first thing we will do is to speed up the selection programme.

The second thing we will do is to stretch every LUP dollar as much as possible. The cost of lift upgrading per unit, as I said earlier, ranges from about $1,500 for a standard block with a standard configuration, ie, common corridors where you just have to punch the lifts through, to something like $80,000 to $90,000 for some of the more complicated segmented blocks where you have to have virtually a lift shaft for every stack of flats. So, to ensure that the largest possible number of residents can benefit from lift upgrading, we will only select blocks for lift upgrading if the cost per unit does not exceed $30,000. With this cost cap of $30,000, 95% of the blocks will be eligible for LUP.

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HDB has always been very careful about keeping the cost of lift upgrading low, because this benefits not only the Government as it stretches the budget a little bit more, but it also benefits the residents because they do not have to co-pay as much. To keep costs low, HDB avoids over-provision of lifts, extravagant finishes, and it procures lift and building contracts via bulk contracts. To reduce costs further, HDB will now provide more basic finishes in the building works, for example, by minimising the amount of tiling and other finishes for the upper lift lobbies.

3.45 pm

I come now to the issue of low-rise blocks. This is something that many Members have been asking for in this House, not just in this sitting but

also in past sittings. Mr Ang Mong Seng, Dr Tan Boon Wan and Ms Indranee Rajah, amongst many other MPs, have done so. I am happy to announce that we have decided to extend lift upgrading to low-rise four- and five-storey HDB blocks. This is provided the cost does not exceed $30,000 per benefiting unit which is similar to the criteria that we have adopted for high-rise blocks, and also provided that the blocks are not affected by future development. This new policy will take immediate effect, beginning with the current batch of LUP and IUP Plus precincts, the ones for FY2005. HDB will inform advisors and town councils of the selected precincts shortly.

Mr Ang Mong Seng made several other suggestions, eg, HDB should find new and innovative ways to make lift upgrading more cost-effective. I agree with him. For example, if we can upgrade low-rise blocks in a way that makes it more economical to do so, we certainly will, whether it is in the construction of link bridges or in making use of new technologies. I think all these things are worth serious consideration. I will be asking HDB to get in touch with Mr Ang.

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Mr Ang also suggested reducing the period between the announcement of the LUP and the commencement of works. He mentioned that it took something like two years. My experience so far is that this ranges, on the average, about 16 months, and this includes the time to work out the design for HDB, to conduct the poll, to call a tender and, ultimately, to award the tender. But even then, it is a little bit too long. We will endeavour to shorten this period as much as possible so that residents will be able to benefit as quickly as possible.

Let me move on to lift upgrading by town councils, what I would call - TC-LUP. PM has announced that town councils be allowed to use part of their sinking funds for this purpose. This serves two objectives. One, it will speed up the upgrading in HDB estates and help us to achieve our 10-year target. Two, and more importantly, it gives town councils more flexibility and more responsibility as well to schedule and to prioritise the blocks within their estates, bearing in mind their residents' needs and their own resource capabilities.

Mr Chew asked if we could relax restrictions on the use of town council sinking funds to allow them to do their lift upgrading works or other improvement works. Although we do allow town councils, even now, to use their sinking funds for lift upgrading, I just want to remind Members that sinking funds are meant for the long-term cyclical maintenance of the estates. They come from the residents' S&CC contributions over the years and they should be deployed to do the necessary works, like re-roofing and repainting, ie, the cyclical maintenance works that are essential to make sure that our HDB estates do not degenerate into slums. This is a very important point because the basic

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difference between our housing estates and many other public housing in other countries is that our estates not only look good when they are first built, but they also look good after many years. If you look at council housing in UK or in other countries, you will know what I mean. After the initial period, because they do not have a system of regular maintenance, and they do not require their residents to actually pay for the maintenance, or enforce the maintenance, very soon it deteriorates. When it deteriorates, values drop and there is a vicious cycle, a spiral downwards. This is something that we really should not see. We must not let this happen in Singapore. This is why I believe that the sinking fund is very important to make sure proper cyclical maintenance is done when it is needed.

But over the years, we have re-looked at the sinking fund contributions. We have relaxed the rules governing the use of the sinking funds. And today, town councils, for example, use sinking funds to co-pay for lift upgrading under the HDB's Lift Upgrading Programme up to a cap of $3,000 per flat. Town councils have also been allowed to use sinking funds to pay for specific improvement works subject to the approval of the Minister, such as installation of video monitoring devices in lifts.

Subject to all these changes, we will still need to make sure that there are sufficient funds left in the sinking funds. Do not forget that over time, our estates are getting older. Our population is aging and our estates are also aging. Therefore, they need more care and attention and more works to be done.

Taking all these into consideration, we have set certain caps and limits on the amount of money to be spent for the town councils' Lift Upgrading Programme. We have decided to allow town councils

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to use up to 10% of their sinking funds as at 31st March 2004 to have a certain specific number for the purpose of their own lift upgrading programme. If you add this up cumulatively amongst all the town councils, this is quite a significant amount. It works out to something like $125 million for the 16 town councils. That is on the town councils' basis.

To ensure that more residents can benefit from the TC-LUP, ie, to spread the benefits out as widely as possible, we have also decided that town councils should avoid using the bulk of their available sinking funds to upgrade lifts for only a few blocks. Town councils will only be allowed to implement lift upgrading for HDB blocks where the cost per unit does not exceed $5,000. This, we have worked out, is enough for the typical common corridor standard blocks and also for the point blocks. Most of the standard blocks in our estates should be eligible under this cap. HDB estimates that this will enable town councils to implement lift upgrading for some 300 to 400 HDB blocks, based on these two conditions. It is a sizeable number, and it will go a long way to meet our 10-year target for completing the LUP.

There are several other considerations. First, residents in blocks selected for lift upgrading by their town councils will need to vote. Similar to upgrading programmes under HDB, at least 75% of eligible residents for a block must vote in favour of lift upgrading before the works could start. Residents will also co-pay for the works in the same proportion as HDB's LUP. Why co-payment and why polling? Because we want to make sure that residents carefully consider whether they really require the lift upgrading works before the works proceed. In some blocks, it may well be that, as Dr Tan Boon Wan mentioned, some of the residents may not want it for one reason or another. Once the town council has achieved the minimum 75% support level

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for the upgrading, it will have the necessary mandate to implement the programme. So this is a very important point. We will have to amend the Town Councils Act to provide for the necessary legislative framework for town councils to carry out lift upgrading using their sinking funds.

Sir, finally, one last point to address Mr Chay Wai Chuen's point about the blocks in his constituency, Queenstown. Yes, there are blocks in Queenstown which are 40 years old. In fact, they were the earliest blocks that were built by HDB. These blocks have not been selected for MUP or SERS. We only launched MUP about 16 years ago and that was precisely for the purpose of rejuvenating some of the older estates like Queenstown, like Mr Chay Wai Chuen's, to bring them to the standard of the newer ones. So far, we have had 130,000 flats undergoing MUP. Of these, 80,000 have been completed.

But in selecting the precincts for MUP, I must say that it is not just age alone. Age is only one of the criteria. There will be other factors, like the overall redevelopment of the area and the budget, which is one of the big constraints. As we do more lift upgrading, there will be less budget for MUP, so fewer precincts will be selected for MUP. It does not follow then that the oldest blocks will be selected for MUP or, for that matter, considered for SERS. For SERS, there are several other considerations, key of which is the fact that it must have redevelopment potential. My advice to Mr Chay is to get his town council to quickly proceed with R&R works or cyclical maintenance works for those blocks that are urgently needed and not to wait and assume that they are going to be selected for MUP or SERS.

As far as SERS is concerned, Mr Chay also asked whether there can be other re-housing options for the lessees, especially

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the elderly lessees. I am pleased to inform him that, in fact, the re-housing options for SERS lessees have been relaxed in the last year or so. They can now opt for different types of flats - three-room, four-room, five-room. We have even built studio apartments for them, and of course now, three-room flats. If they do not wish to take up any of these options, they can still choose two-room flats in areas other than where they are going to be re-housed. In other words, we have opened up the whole of Singapore as re-housing option for those who are affected by SERS. They do not have to confine themselves to just the precinct where the replacement blocks are going to be built. In this way, I hope that the residents who are involved in the SERS programme will have more choices and will find the programme much more attractive. In fact, it is already an attractive programme, but in this way, we hope the elderly lessees will find such options more attractive.

The Chairman: The clarification time has already been exhausted. Dr Khor.

HDB Retailers

Dr Amy Khor Lean Suan: Sir, it was recognised, as early as 1992, more than a decade ago, when the retail sector development plan was prepared, that the retail sector, particularly HDB shop retailers, would face a very difficult business environment.

Except for HDB rental shops located near MRT stations and within town centres, many of the HDB shops in the neighbourhood precincts are not doing well. In fact, I would say that some are "terminally ill". In my own constituency, there are shops in some precincts which are perpetually vacant whilst the turnover of tenants in other shops is high.

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Past ad-hoc measures to restructure the HDB retail sub-sector and alleviate the misery of many shopkeepers have proven to be ineffective. Indeed, while well-intentioned, some might have added to their woes. The HDB's Sale of Shops Scheme, for instance, has unwittingly saddled many shopkeepers with high mortgage loans that they are now struggling to repay.

MND must therefore tackle this persistent problem in a comprehensive manner and not in a piecemeal fashion. I would like to suggest to the Minister that a special taskforce be set up for the entire HDB retail sub-sector with representation from town councils, SPRING, grassroots leaders and a panel of retail experts, if this has not been done already.

This taskforce can map out the broad directions that each HDB estate can take. At the local level, HDB can work with the respective town councils and merchant groups to identify for each HDB shop cluster or precinct what improvements can be made, the appropriate retail needs, etc, and then develop specific plans to revitalise these shops, including physical improvements and alternative uses for spaces which are clearly not viable. The town councils, SPRING and the merchant associations

could help shopkeepers get together to promote the area, provide assistance to upgrade employees, improve marketing skills, etc.

4.00 pm

I do not advocate keeping unsustainable retail shops afloat. But there has got to be a mutually acceptable exit strategy for their owners. This could comprise reasonable compensation for rental shops or a buy-back scheme for shops sold, similar to the JTC buy-back scheme for factories, if the tenants decide to exit from the businesses or the tenants could be offered some resettlement scheme in more viable HDB retail precincts. HDB could, like any

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experienced shopping centre landlord, use a small portion of the substantial amount of rental it collects every year from the 6,000 rental shops, to promote the shops via advertising and promotional programmes. After all, HDB does set aside an A&P budget for its neighbourhood shopping centres. So, why not for the shop clusters?

It is well recognised in privately-owned and run shopping centres that there must be some degree of control over the tenant-mix in order to make the entire centre mutually reinforcing rather than competitively damaging from having too many of the same shops all over.

Also needing some review is the tender system for allocating space. The tender system leads to maximum revenue but also possibly to unsustainable businesses from aggressive overbidding. It is time to explore other modes of allocation as Sentosa Cove has recently done with its private treaty method for selling bungalow plots. This could help to ensure the right mix of retail trade and activities. Studies of shopping centres have often found tenant-mix to be the key for the success of a shopping centre or precinct. Both these suggestions, use of non-tender methods of allocation and picking tenants for their trades, are somewhat anathema to a Government that espouses free market principles, and letting the market, rather the Government agency, to decide. But, perhaps, new operating structures should be devised and experimented with, to balance all these areas of concern.

Sir, much of what I have said is not new. The issue now is to move beyond the plans to concrete action. Sir, I sincerely hope that the package to help shopkeepers restructure, relocate or retire, which is to be announced by the Minister shortly, would be comprehensive and aggressive enough to try to resolve this very endemic problem.

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Mr Arthur Fong (West Coast): Sir, I rise to speak on assistance schemes to help HDB retailers upgrade to remain relevant. A large proportion of the domestic retail sector is made up of HDB retailers. There are about 15,000 retailers in our HDB estates, of which almost 90% are located in neighbourhood centres and precincts. Many of these retailers located in the older estates fight a daily battle to make ends meet. As Prime Minister and Minister for Finance stated in his Budget speech, these retailers need to be given a means to exit their business if they are non-viable or otherwise they should be encouraged to upgrade to remain relevant. I applaud the Government's effort to help these retailers who make a meaningful contribution to our economy.

Mr Chairman, in the past, retailers who wished to upgrade themselves relied on the LETAS grants which funded up to 70% initially, then subsequently reduced to 50% of the allowable cost involved in upgrading. Allowable cost included consultancy and related travel expenses, whereas costs such as equipment and material costs were excluded from support. I understand that LETAS has been totally removed now. In its place is the Domestic Sector Productivity Fund (DSPF), which links its funding closely with key performance indicators. Retailers would be able to draw from this fund provided they submit a detailed proposal that lists projects, cost breakdowns and ROI before they could embark on upgrading. However, while the HDB retailer may be genuinely committed to upgrading his business, he may not be able to record the level of improvement expected. Take, for example, a retailer selling children's clothings. With the declining fertility rates, his business could not be expected to grow by leaps and bounds. Instead, upgrading will allow him to remain competitive and maintain his level of performance. Thus, the criteria set out

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under DSPF may not be applicable. Would it thus mean that such a retailer would not be able to benefit from the fund?

Sir, while it is important to tie funding of upgrading projects to the expected impact, I ask for the Minister's assurance that the process of obtaining assistance in itself does not become a hurdle for retailers who genuinely wish to upgrade themselves.

Mr Chay Wai Chuen: Mr Chairman, Sir, some years ago, the HDB piloted a scheme to allow the exit of some of the retailers from the shops in the neighbouring housing estates. Subsequently, this pilot scheme was stopped. As a result, many of those units that remained after some of these shops had exited, their business has gone from bad to worse because of the lack of traffic, mix, and so on. So I was wondering whether this new retail scheme that the Government is coming up with, for allowing the exit of retailers from the neighbouring shops, would include lessons learned from the pilot scheme that was done some years ago and, whether we should not also consider widening the scope of this restructuring of the retail shops by considering the right proper mix, as mentioned by Dr Amy Khor just now, including the possibility of lower rentals and so on, to allow this sector of people to carry on with their trade.

The question is, after they exit from the retail shops which they manage in the neighbourhood, what are these people going to do? They have exited their business, they do not know what to do, and after a while the money is gone. So I wonder whether the Minister will address this.

Assistance Measures for HDB Shops

Mr Wee Siew Kim (Ang Mo Kio): Sir, by and large, the HDB is an organisation

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Singaporeans have a lot of reasons to be proud of. The announcement in the Budget that there would be measures to assist the retailers in the HDB heartland is an indication that it is sensitive to the pain of the heartlands. There are many retailers who are trapped in high rentals that they are committed and are sloshing in losses. While we wait with bated breath for details of the measures that will handle the situation, I wish to comment that exit from the business may not be the only solution both for the retailer and also for the interest of the immediate community which HDB heartland shops were set up to serve in the first place.

I seek to ask the Minister to explore alternative ways of handling the situation. Would the Minister consider flexibility in handling specific cases that are in difficulty? There is often-mentioned comment that it is not fair to the other tenderers that have not succeeded in their bid if we now give quarters to the incumbent retailer. But let us not assume the worst of Singapore's businessmen. They do not bid to fail. By the time they start to scream, they are already deep in the hole. So would the Minister allow a review of each case, specifically more from the standpoint of changing business circumstances and the environment since the bid? Yes, there would be grey areas and judgements would have to be made and officials pressed to come out with the work-around solutions. But is this not in the nature of the uncertain world we live in? Work-around is a commonly heard word in the corporate corridors to find ways to turn around poor performers. Could I ask the Minister if he will consider stretching out a hand as a partner to work out a situation? It is a hand of partnership and not a handout.

Dr Ong Seh Hong (Aljunied): Mr Chairman, Sir, during the Budget Statement debate, I spoke on the plight of

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HDB shop owners and tenants who face difficulties in making ends meet. I had called for the Government to extend further assistance to help lower the rental and business costs of HDB shops. I also called for the HDB, as the developer and landlord of HDB shops, to take an active role in the advertising and promotion efforts of the HDB neighbourhood centres. I, therefore, hope that the Ministry will give some good news to our long-suffering HDB shops in today's COS debate.

Sir, to be fair, HDB had, in response, made several policy changes to alleviate some of the challenges. For instance, it is now easier to change the use of HDB rental units. HDB also allows HDB retailers to sublet their units, either in whole or in part to others. This is a step in the right direction. However, I have learnt that even with the policy on subletting, some new problems have emerged. For example, when a HDB shop sublets its unit, the rent is adjusted towards the market rate set by the HDB. And, for whatever reason, this market adjustment seems to always be an upward adjustment. The rationale is that the rental burden is now shared between two tenants, thus the final amount payable would be lower than if the tenant were to take up the unit on his own.

Sir, when a HDB shop has to sublet, it is often due to the fact that the original tenant finds it no longer able to sustain his business. When HDB adjusts the rental upwards, it is counter-productive to the business. Another problem arises when the original tenant loses his subtenant. I understand from the ground that HDB does not adjust the rental back to the original level and, in effect, the rental is left at the higher market rate. This creates problems to the tenant who had sublet the unit to help ease his rental burden in the first place. Now he is faced with an even higher rental.

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Sir, I ask the HDB to thoroughly review all its rules and regulations governing change of use ---

The Chairman: Dr Ong, your time is up.

Mr Arthur Fong: Mr Chairman, Sir, I rise to speak on steps we could take to reduce the burden on ailing HDB retailers. The plight of HDB retailers has been in the headlines for some time now, the recent one being on Insight in the Straits Times . It has been suggested in the ERC Subcommittee on Domestic Enterprises that the condition of over-supply exists in the HDB retail sector, particularly in the older estates. With this, many HDB retailers are suffering from ailing businesses and could barely make ends meet.

While the Government may not want to take a direct hand in shielding retailers from market forces, it may still be too early for market forces to be applied wholesale within the HDB retail sector. Many of these retailers had taken up retail shops based on the development plans earmarked for the area. However, many of those plans did not materialise during the economic downturn these past few years. This, combined with the gradual pulling back of HDB rental rebates, serves a double whammy to HDB retailers. I, therefore, ask the Minister whether it would be possible for HDB to follow the examples set by JTC in the aftermath of the economic downturn, namely, to reduce rentals to help HDB retailers weather the storm until the point that the market has stabilised.

Second, in the private sector, part of the rent collected forms the budget where major shopping malls conducted advertising and promotional events to draw crowds to their malls. I believe Dr Amy Khor had also touched on this suggestion earlier. I ask if HDB, being the landlord, and collecting rentals from the

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6,000 tenants of well above $100 million annually, could, and is prepared to, do likewise to help boost up business in the neighbourhood shops.

Mr Ang Mong Seng: ( In Mandarin ): Mr Chairman, the problems faced by our HDB neighbourhood shops is a complex issue. Each faces different problems due to their different localities, different types of businesses and different management systems. If we want to thoroughly resolve the problems they face, I think we would need to have a comprehensive review on our policies and use multi-pronged measures to resolve their problems once and for all. I have five suggestions and I hope that they would help to solve the problems.

First, I think HDB should consider reviving the sale of 30-year lease shops to the tenants. I understand that those owners of 30-year lease shops are very happy and satisfied because their monthly instalments payable to the bank are even lower than the rent payable to the HDB. I hope that the HDB could conduct a survey and if more than 75% of the existing tenants are willing to buy the shops, then HDB should consider selling the shops to them.

Second, for those shops whose businesses are no good because of unfavourable localities, HDB should buy back the shops for other developments.

Third, reduce the rent. I hope the HDB would reduce the rentals for those shops which are continuing to serve the residents. I hope that HDB would reduce their rent by 20%. As long as they can keep their businesses going, they would have a chance to turn around. We should help them tide over the present problems so that they could make a come-back later on.

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Fourth, we should reduce the property tax of the shops. Some owners of 90-year lease shops are going through severe ordeals as their businesses decline. Reducing their property tax would be one way to alleviate their burden. Some of them have to pay very high instalments to the bank every month resulting in increases in their cost of operation. Maybe the banks could consider extending their repayment periods from 10 years to 15 years or even 20 years.

Fifth, upgrade the HDB neighbourhood centres. In places like Chong Pang, Jurong West, Bukit Batok Neighbourhood II, Toa Payoh, Tampines and Marine Parade, the shops are getting a new lease of life after the upgrading exercises. I hope that HDB will consider upgrading all neighbourhood centres so as to attract the crowds to help the shops do better.

I hope the Minister will consider my suggestions.

Mr Mah Bow Tan: Mr Chairman, Sir, various Members have spoken on the problems faced by HDB shop tenants and asked how HDB could help them.

Let me first of all say that the Government empathises with the problems faced by our HDB shopkeepers. Some of them are first generation shopkeepers who were resettled when their old shophouses were cleared so that we could build roads, schools, HDB flats, factories and so on. So we do remember their contributions to Singapore's development and prosperity. And that is why over the years, we have tried to help them in various ways to tide over these difficulties.

But I think we must not forget that a HDB shop is first and foremost a business. It is run by the shopkeepers. HDB does not run the business. And, as with any other business, shopkeepers with good business sense, acumen, skills,

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knowledge of the market would do better than those who do not. Ultimately, whether a shop thrives depends not on how much help he receives from the Government, but on how they could attract and retain their own customers. It would be unrealistic for us to harbour this belief that the HDB or, indeed, any Government agency would be able to solve all their problems. It is unrealistic for an ailing business to rely on Government's life support to keep it going. Having said that, I am happy to note that many of our HDB shopkeepers are doing well.

They are doing business in the heartlands serving the customers well and making a good living for themselves. They do not need additional Government assistance. Whatever we give is gratefully accepted.

4.15 pm

Every time I visit the shopkeepers in my constituency, I ask them how is business. Usually, they answer me guo de qu - can manage, can do. Of course, to get the real sentiment, we really need to look at their faces. Are they smiling or not when they say that? Because that seems to be the stock answer.

HDB tells me that the shops located at the town centres and most of the neighbourhood centres are doing well. It is really the shops in the smaller precincts that are not doing well. All of us know that HDB shopkeepers face major challenges, not just general problems facing the economy, but specific problems facing HDB shopkeepers. They serve a segment of the population whose tastes are changing. They are becoming more sophisticated. They want more quality goods. They want a better shopping environment, and there are new shopping malls coming up all the time, not just in Singapore but also in JB. Because of working patterns and lifestyles, most young couples I know do not shop every

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day. They shop weekly and they go to the supermarkets for that purpose.

So we must do something. But, as I said, realistically, we can only do so much. As a responsible landlord, HDB will do what it can to help tenants who face difficulties. Mr Chay, for example, suggested that we widen the scope of the shops for other trades. This is something that has been done progressively over the years and this flexibility has given shopkeepers a way out. If they cannot survive doing this, they can rent out their shops and let somebody else do something else. In fact, HDB today is so liberal that it is more likely to say yes rather than no to requests for change of trade, and I do not mean just changing from one retail shop to another, but even to showrooms and offices. There are still some noes because sometimes HDB neighbourhood would really need a provision shop or a coffeeshop and they cannot be changing the trades too liberally.

But even as we liberalise, even as we accede to the request for some shopkeepers to allow them to change the trade, we do face other problems. Take, for example, the relaxation that we made several years ago where we allowed shops to convert into family restaurants, as a result of which family restaurants have proliferated across many estates. But what happens then? This has led to complaints from the nearby coffeeshops and the eating house operators who now resent this mushrooming of family restaurants because of the new competition. So we will have to manage this very carefully between flexibility as well as trying to manage the competition.

Those who wish to exit their trades are allowed to assign their tenancies and to sublet 50% of their premises. And, of course, during the economic downturn, we granted extensive rebates to the shopkeepers.

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Dr Ong just now asked why is it that when we allow tenants to sublet their shops, we adjust the rentals upwards from the prevailing market rent. The reason was that, in the past, most HDB shopkeepers, especially those who are resettled, were paying very heavily subsidised rents, and HDB revised their rentals to market rates when they sublet their premises because they would, in turn, charge their sub-tenants market rate. But now that most tenants are paying market rates, I am pleased to inform Dr Ong that HDB has reviewed this policy and it will allow tenants to retain the existing rents for the remaining term of their tenancy when they sublet their shops. This will also, of course, apply to assignment cases, and the rents will be adjusted to market rate only when tenants' leases are renewed.

There is another relaxation pertaining to the subletting rules. Currently, shop tenants can only have one or two sub-tenants, depending on the shop size. I have asked HDB to do away with this restriction and to lift the cap on the number of sub-tenants, so long as the subletting does not involve more than 50% of the total shop area.

Mr Arthur Fong and Mr Ang Mong Seng, among others, also asked about rentals - why not HDB reduce rentals further? Let me explain how rentals are set. HDB does not set the rentals. They ask a group of private professional valuers to value the property and then set the rental based on the attributes of that property. Adjustments are made for location, size and so on. And these rentals are then fixed for a duration of one, two or three years. The tenant can choose whether he wants to go for one-year, two-year or three-year tenancy. But whichever one he chooses, for that particular period, that rental is fixed. I think this is not unusual. This is what

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most contracts are all about. This is what the private sector does. It works both ways. If the market goes up during that period, the landlord does not go to the tenant and say, "Look, I want to adjust your rental upwards because rents have gone up", and vice versa. This is a way to have some security of tenure and to protect the tenant from any escalation but, of course, in a down market, there is a request to adjust the rentals downwards. I think this is clearly not tenable. So the choice really is for those who wish to have more responsive rental to choose the shorter tenancy period of one year. But in fact, almost all tenants choose the longest tenancy period which is three years.

Mr Wee asked what assistance HDB can provide shop tenants who overbid for their shops. They went into a bidding exercise for their shops. They tendered for the price. Presumably, this is the price at which they are prepared to do business, ie, the price that they have factored in in the cost of doing their business. Now that they have bid and their business is not doing well, can we adjust the bid? I am afraid that is not something HDB should do.

The tender process works only if all the players - the tenderer, the landlord, the bidders, winners and the losers - agree that these are the rules of the game. They all bid and they abide by the rules. The highest bidder wins. If the rules say that we do not give it to the highest bid but to the second highest bid, then let us set the rules upfront. This does not mean that the bids are going to be lower, but those are the rules of the game. Once we fix the rules, that is it for the duration of the tenancy. Do not change it half way because, as I said, it works both ways - for the winning bidder as well as for the losers. If we say that after winning the bid and then we lower the bid, I think the second highest bidder would have every reason to feel aggrieved.

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The consideration on how to allocate shops depends on what kind of shops, whether the shops are limited in supply or whether it is an area where there is no limit on the number of shops. Since last year, HDB has experimented with a different way of allocation, that is the e-bidding system, which essentially is an auction system. So bidders know who they are competing against. They know what sort of prices are in the system. I must say that it has been well received. So HDB will be moving fully to the e-bidding system for its commercial properties with effect from this month. This way, the problems faced by those who have gone into a closed tender will largely be eliminated.

Sir, let me now move to the restructuring programme for shops. I think this is a matter that is of great interest to Members. The Prime Minister has announced that HDB will implement this new programme in order to rationalise and restructure HDB shops. Let me now provide Members with the details of this restructuring programme for shops (RPS).

The RPS would be targeted at shop tenants where there is an over supply of shops and where the business is poor. Some MPs, like Dr Ong, dubbed it the 3R programme - relocate, restructure and retire. I think that is quite apt. The RPS will look at areas where business is not doing well in a cluster that is probably located in one of the older estates. And they will be polled on whether they wish to exit their business - whether they want to retire. Those who opt to quit will receive an ex gratia payment of $60,000. This is higher than the ex gratia of $48,000 that was previously offered under the voluntary retirement scheme (VRS). It is on a purely goodwill basis and should not be seen as payment for their shops. To be consistent, HDB will also increase the ex gratia to $60,000 for its

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future clearance and redevelopment programmes.

The RPS will be triggered on a block basis if more than 50% of the tenants in the block opt to quit. So more than 50% would have to say, "Yes, I want to quit." Then the excess shops will be converted into other uses, especially social and communal uses, childcare centres, RC centres, etc.

HDB will assist the tenants in the blocks that are cleared out but who did not want to quit and who wish to stay to relocate, where possible, to another block within the same cluster or nearby. They will be given a removal allowance of $10,000 which is twice the current allowance of $5,000 paid by HDB.

Over the past five years, HDB has cleared something like 1,700 shops, which is roughly 10% of the total stock of shops through the various clearance and redevelopment programmes, and this has helped to reduce the over supply. It has helped to improve the business conditions in these areas. But, obviously, that is not enough. And through this RPS, we hope to accelerate this process.

Members asked what happened to the VRS pilot scheme that we had implemented earlier. Should we not learn the lessons from that scheme? The RPS will be different from the VRS in two main areas. First, under the old VRS scheme, tenants who did not take up the ex gratia were allowed to stay put. As a result, as Mr Chay Wai Chuen pointed out, there were vacant units interspersed within the estate. And as a result of that, we had worse situations. We do not want to see that happening again, and that is the main reason why we discontinued the VRS.

Under the new RPS scheme, should more than 50% of the tenants in the block opt to quit, HDB will proceed to clear the remaining shops as well and pay

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them $10,000 removal allowance. If less than 50% opt to quit, of course, it is status quo - all the shops will remain as they are. That is the first difference.

Secondly, and more fundamentally, the VRS scheme focused on clearance of shops. The emphasis of the RPS is on restructuring and upgrading the operations of the remaining shops. How are we going to do this? HDB will be working with the Retail Promotion Centre of SPRING Singapore to help those who wish to remain in business to upgrade their operations and improve their general competitiveness. Again, this has got to be done

in conjunction with the shopkeepers. So they would have to form themselves into groups, hopefully, into shopping associations or management companies. They would need to engage consultants to see how they can map out promotion strategies, advertising strategies, buying strategies, etc. To help them, SPRING will set aside $5 million from its Domestic Sector Productivity Fund (DSPF) to co-fund up to 50% of the revitalisation programme cost over the next three years.

[Mr Deputy Speaker (Mr S. Iswaran) in the Chair]

4.30 pm

Members asked whether HDB can take some of the money from the rentals to do promotions and programmes for the shopkeepers. Let me, first of all, say that HDB is not the retail shop manager. Its expertise is in housing. Even then, many Members have questioned whether HDB should be doing so much, why not do less and so on. I would urge Members not to expect that HDB is going to be able to solve the problems of the shopkeepers, just simply by deciding on the tenant mix, doing promotions, and so on. In fact, the people who would be in the best position

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to do so are the shopkeepers themselves. Of course, there will be consultancy and there will be other experts who can help them. We will try and co-fund, and help them to do so. For example, we may want to look at an arrangement where there is a master operator, instead of having individual operators. Perhaps, through this RPS, we can assign the shops to a master operator. This master operator, who has the expertise and experience, can then manage the trade mix, create a certain identity in the shops, and so on and so forth.

I have asked my Minister of State, Mr Cedric Foo, who is also the Chairman of SPRING, to oversee the implementation of the RPS. We will target to launch the RPS on a pilot basis in a few clusters of shops by the middle of this year. Critical to the success of the RPS is the support of the Advisors. So if any Member here would like to volunteer for this scheme, please put up your hand or get in touch with my Minister of State or myself. We will work with you to make sure that this scheme takes off. As Dr Amy Khor said, we should work with the merchant association, grassroots leaders, etc. This has got to be a collective effort on the part of everybody.

Sir, now, let me turn to the issue of HDB shop owners. The RPS relates to a programme for shop tenants. What about the shop owners who have bought their shops? Many Members have asked for assistance for shop owners who bought their shops under the Sale of Tenanted Shop (SOTS) Scheme. Contrary to the picture that is painted that most of these shopkeepers are struggling, my information and the information of HDB suggest that the first-generation shopkeepers who bought their shops under SOTS had a very good deal. They received upfront discounts of up to $96,000 when they bought their shops. These shops were all located in very good locations, ie, in town centres or in neighbourhood centres.

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Together with the purchase, came a whole slew of unbundling of many of the restrictions that governed HDB shops at that time. So once they bought over, they were free to sublet their shops, totally or partly, and many of them in fact did. Many of the shopkeepers in my constituency, for example, after they bought their shops, they sold them off straightaway and then disappeared and somebody else is now doing business there.

For those who wish to retire from business, having bought their shops, rather than asking HDB to buy back their shops, they can actually sell it in the open market, often at a substantial premium, even today, to what they bought or what they originally paid HDB. I asked for some figures. One shop in Bedok North Town Centre, for example, was sold for $2.8 million last year. The owner bought it from HDB for $630,000 (net of $96,000 tenancy discount) in 1992, made a handsome capital gain of nearly $2.2 million. The market rates for shops in these areas now, compared to the discounted rate and original purchase price, are roughly more or less about the same.

Dr Amy Khor asked whether we can buy back the sold shops that are struggling. The shop in the Bedok Town Centre, that I cited earlier, the current owner, the one who bought over, is selling footwear, health goods and telephone equipment. His business is doing well. I hope he will continue to do well. But should his business decline, I think it is not the Government's responsibility, or HDB's responsibility, to buy back the shop from him. He would have to find other ways to guard against these fluctuations in the property market. So, those who buy the shops from the original owners, at the market rate, would have to calculate whether, at this rate, they are able to do business, or whether it is a good buy or not. The Government

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cannot protect them from any fluctuation in the property market.

Mr Ang asked whether we can revive the Sale of Tenanted Shop (SOTS) Scheme. I think we should focus at this point in time on the RPS Scheme. Let us try and see whether we can do something for the tenants in the shops before we reactivate the SOTS Scheme again.

One last point about property tax. Mr Ang asked if property taxes can be lowered. There are currently no plans for us to touch the property tax which is already pretty low.

The Chairman: I think we should move on. Ms Indranee Rajah, next cut, please.

Making Singapore a Distinctive City

Ms Indranee Rajah: Sir, I would like to ask the Minister what plans MND has for Singapore's urban redevelopment and for making Singapore a distinctive city. Distinctive cities are not products of a single feature, but a combination of good urban planning. You need architectural design, gardens, parks and, most importantly, that intangible factors, which some people refer to it as an X-factor which gives the city its own particular identity. With New York, for example, you immediately think of buzz and energy; Paris, you think of a romantic city; London, you think of history. So my question is: what are we doing in Singapore to create and develop our own unique urban imprint?

Revamp of Orchard Road

Ms Eunice Elizabeth Olsen (Nominated Member): Sir, the Government initiated the Remaking Orchard Road Plan to make the area a "compelling shopping destination" for Singaporeans and tourists. By that, I hope the Government also means the disabled. Since a

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committee was formed 17 months ago to oversee the plan, nothing has been said about whether the revamp would make Orchard Road more disabled-friendly.

We have heard of the URA's $59 million subsidy scheme to help landlords build underground links. We have also heard the URA will review the existing planning and building guidelines to give owners more flexibility to redevelop. But how these initiatives will improve accessibility for the physically disabled, we do not know.

As the hon. Member, Ms Irene Ng, has pointed out last week, wheelchair-bound folks find it "very difficult" to go shopping in Orchard Road. So I took a walk to find out what problems they would face getting from, let us say, the Marriott Hotel to Shaw Centre. They have to go all the way up Scotts Road, past the Hyatt, past Far East Plaza, past Goodwood Park Hotel, up the incline to get to the pedestrian crossing to get to the other side and come back all the way down again. Or they have to go along Orchard Road, past Lucky Plaza, past Paragon, all the way to the traffic junction where they can cross and come back down again. I am not sure how long either route would take but the rest of us would take three minutes to get from the Marriott Hotel to Shaw Centre via the underpass.

Incidentally, the underpass to Borders is fraught with staircases. Each time, I came to a flight of stairs, I saw a mother struggling with her pram. Let me read from a mother's recent letter to the press about her Orchard Road experiences, and I quote:

"Most of the shopping malls there are not family-friendly. For instance, when I need to use the lift, it would often be located all the way at the back of the mall. And when I want

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to enter a shopping centre, I would most likely have to carry the pram up the stairs, as there is no sloped walkway near the entrance."

This is what the disabled have told me: They can get from one end of Orchard Road to the other; they just cannot enter the buildings, the older ones, in particular. And to think that Orchard Road is our most visited free access attraction for overseas visitors!

As the URA intends to improve public infrastructure and the pedestrian malls as part of the revamp, I would like to ask the Ministry how the needs of the disabled, the elderly and families are being considered and provided for specifically. What features - for the shopping centres, along the pavements and underground links - will there be? Will there be more surface crossings? And how much, or what percentage, of the total funds for the revamp will be allocated for this purpose? If we want Orchard Road to be "one of the greatest shopping streets of the world", then it should be so for everyone.

Use of Farm Land

Assoc. Prof. Low Seow Chay (Chua Chu Kang): Sir, in 1998, an orchard farm land tender price was beyond $20,000 per acre per annum. Lately, the tender price of farm land came down. So it is below $10,000 per acre per annum. This worked out to be roughly about 0.8 cents per square feet per month. Because of this, the farmer, despite being labour intensive, still can earn a comfortable living by planting vegetables. This is a good sign. However, due to the low farm land rental price, rich non-farmers also take advantage and become Suzhou farmers and build their retired homes in the farm land. Take, for example, a 100,000 square feet land, which is 10 times bigger than a normal bungalow, if they build a house there, the monthly rental is only $715, which is about the

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rental for a HDB 4-room flat. If anyone had done this, it is an obvious misuse of the Government's resources intended to help the poorer farmers to be gainfully employed and also as a means to provide an alternative means of food supply for Singaporeans.

The misuse has recently turned from bad to worse. AVA has introduced further relaxation of such land use by allowing restaurants and guest houses to be operated on the farm land. The relaxation of the Government policy has negative impact on the agricultural policy of Singapore, though the Government had all the while in the past said that it did not have one. It has changed the nature of the original purpose of farm land occupation.

Land for eating houses, hotels and residential properties commands a higher premium in terms of land price and rental. The result of converting agro-tech farm land for such use will certainly attract more non-farmers to set up their business on the farm land. It will cause an escalation of land prices and the bona fide farmers will find it unaffordable if they do not follow the same trend. As a result, it will kill the genuine farming activity and end up in the agro-tech park becoming a holiday resort, instead of a farm that produces food as an alternative source of food supply for Singapore.

Sir, I hope that AVA could look into this particular matter, and it should call for reconsideration if there is a change of land use application. I seriously believe that AVA should ask for re-tendering of the land again or, at least, to charge them a premium for such an application. By doing so, we can clearly distinguish between a genuine farmer and a Suzhou farmer.

The Chairman: Prof. Low, your time is up. Encik Yatiman Yusof.

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Property Market

Encik Yatiman Yusof: Sir, the economy is recovering. Many of us are looking forward to a sustained, albeit smaller, annual growth rate. This is expected. Yet, reading the reports from the newspapers, I get the impression that the recovery in the property market would be very slow. Many are fully aware that the golden years of the late 1990s property boom will never return. We are also fully aware of the fact that the property market is cyclical. There is always a gap between economic recovery and improvement in the property market. Therefore, it is not unusual if the potential players and buyers are still taking a "wait and see" attitude.

Sir, the question is: should the Government take a hands-off position and let the market decide its future direction? In the past, the Government had been known to do something to stimulate the market, such as controlling the land supply and releasing the land parcels and adjusting the development to meet the changing circumstances. Could the Government consider helping stimulate the growth of the property market by (1) reviewing the property ownership involving locals and foreigners? After all, we have done it for the Sentosa Cove; (2) reduce the stamp duties for purchases of properties; (3) be flexible on the five-year occupancy period for flat owners who want to sell their flats; and (4) review the 80% cap for the bank loans for the purchase of properties?

Records for Rental and Lease Transactions

Mr Lawrence Leow Chin Hin (Nominated Member): Sir, at present, there are official records available to the public on sale and purchase transactions of properties. I would like to know whether official records on rental and lease transactions, similar to those on sale and purchase transactions, could be kept

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and made available to the public, especially rental rates for commercial and industrial properties. The availability of such information would help retailers and smaller businesses to be more discerning about the market rates for rental of properties and help them make a more informed decision in their negotiations with landlords. Some friends in the retail business

have related to me their experience on taking up space at popular retail locations. I was told that, typically, for a popular retail location, competition for retail space could be quite keen. Without information on the prevailing rental rates and, in the heat of the competition, some over-zealous retailers would agree to rentals which are higher than the going rate, just to secure the space.

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I was told that a new retail start-up operated by a group of young graduates once went all out to secure a space at a popular shopping location and ended up paying a rental rate that was almost 50% higher than the prevailing rental there. Of course, the landlord was very happy, but everyone else suffered. On the surface, this may appear as competitive forces at work. However, if we examine the issue a little closer, we have to be really concerned with such a situation. I was told that, with such a high rent, this new start-up fizzled out after operating for a while and eventually folded up. If we look at the wider implications, apart from doing itself a disservice by paying unnecessarily high rent, the new start-up had also driven out the previous tenant who was operating a thriving business but was forced to relocate because it was not prepared to match the rent paid by the new start-up. I was also told that the business for the previous tenant was also affected after it had moved to a new location. Hence, the repercussions of a

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simple situation of competition for space could have a damaging chain effect. The case brought up here is not a one-off situation, and it is quite common in the retail industry.

In this regard, Sir, I would like to ask the Minister to look into the matter of providing information on rental and lease transactions to the public on request, particularly those relating to commercial and industrial properties, since rent is a significant component of business costs. With IRAS administering the stamping of lease agreements, it would have ready access to all rental transactions presented for stamping. Perhaps the Ministry could work with IRAS on the provision of such a service to the public.

Heavy Vehicle Parking

Mr Wee Siew Kim: Sir, last year and the year before, I spoke on the crying need for parking lots for vans and vehicles that could not access the multi-storey carparks in Sengkang New Town, and the hon. Member Miss Penny Low has also asked me to voice the same for the Punggol New Town. This new HDB town is very well designed. The comment that it is as good as some condominiums is often heard and well-deserved. However, the only parking facilities available are the MSCPs. Drivers of vans and vehicles that have heights that exceed the height constraints have no parking solutions at all nearby.

Yes, I hear the reasons that were often given for rejection are noise and safety. But what I am asking is for a carpark that meets the needs of these drivers that are one to two kilometres from the nearest flats, really walkable or a bicycle ride away. And what safety concerns can we not address if one possible place is already earmarked for industrial park some time in the unknown future? Yes, I know that people who drive buses for SBS and trains for SMRT - and

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for that matter, tanks for the army - do not get the option of driving them home.

But we cannot compare the solutions and requirements of the big organisations with that of smaller entrepreneurs. Some just own one bus or one van and that is their livelihood. Yes, there is a concern that once built and when development overtakes this carpark, we would have problem taking it away. But if we state constraints ahead of time and set the conditions that once development encroaches on the park, the carpark would have to go, I am sure the people will understand. Whatever they get is better than what they have now, either struggling to get to their vehicles a long way away or running a cat-and-mouse game with parking enforcement on the side of roads and, to top it all, there are vast stretches of space in Sengkang and Punggol that would not see development for some years.

Can I ask the Minister to consider the plight of these drivers in parking in Sengkang New Town?

Mr Chairman: Mr Wee, your time is up. Prof Ivan Png.

In-vehicle Parking Device

Prof. Ivan Png Paak Liang: Sir, let me show two things which Members will be very familiar with. In the year 2005, why are we still punching holes to pay for parking when there is an obviously better alternative? URA and HDB should please work with LTA to adapt the in-vehicle unit to charge for parking.

A simple design would be to add a timer, an on-off button and a green light. The motorist can press the button when parking, then the green light will switch on. URA and HDB parking inspectors need only look out for green lights instead of doing a ton of mental mathematics. When motorists leave the parking space,

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switch off the button and the timer. This device would be more convenient and more accurate for motorists. You do not have to worry about punching the right number of coupons in future, and it will be more convenient for URA and HDB parking inspectors. I think, Sir, every one will benefit.

Sir, if the problem is inter-Ministry cooperation, as I know LTA is under the Ministry of Transport and URA is under the Ministry of National Development, then perhaps the Prime Minister's Office should liaise between the Ministries.

Carparks

Mr Steve Chia Kiah Hong: Sir, on another matter regarding carparking, two years have passed since the testing and implementation of minute-by-minute charging at certain public carparks like those in Toa Payoh Central, I am wondering how are the testing and the results of the tests so far. Since minute-by-minute charging of public carparking benefits the consumer and makes for a more efficient pricing system, I would like to ask the Minister when will this system of minute-by-minute charging be implemented island-wide across all the URA and HDB carparks.

Mr Mah Bow Tan: Sir, Ms Indranee Rajah asked how we can make Singapore a distinctive city. During the lunar New Year holidays this year, I was invited to many homes. My hosts were very quick to show me their newly-renovated homes, their new furniture, paintings, trendy home accessories, etc. They had decked out their homes with the latest accessories and flowers, they provided good food, there was good company, and I could feel that spring was in the air. My hosts had gone to great lengths to make all their guests feel comfortable and to have a good time. But, most importantly, they were obviously very, very proud of their homes.

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Sir, in the same way, Singapore is our home and we are proud of it. We want to make Singapore attractive and comfortable for all who live in or visit our city. For Singapore, it is different from other cities in that this is the only city we have. This is where our home is, and we owe it to ourselves to make it the best home. Some visitors will want to stay here for a while. They want to enjoy what we have to offer. Others may even want to make it their home. This pride is evident from the responses that were received from some of the 25,000 visitors to the Shaping Singapore Exhibition at the City Gallery at the URA Building. Both exhibitions tell the story of Singapore's transformation over the last 30 years, and they give a glimpse of what the future holds. I would recommend this exhibition highly to Members of this House, for those of you who have not been there.

What struck me, as I flipped through the comments in the guestbook, were the repeated refrains: "I love Singapore", "I am proud to be a Singaporean", "I am proud of my country and the development over the years". Even the visitors expressed support. There was a visitor from Canada who wrote: "Makes me want to spend the rest of my life here. Truly a place where you can live, work and play."

Looking ahead, how should we develop Singapore, to make it an even more attractive place? At the launch of the Shaping Singapore Exhibition, the Prime Minister mentioned the "x-factor". What is the "x-factor"? If we knew, we would not be calling it the "x-factor". It is something intangible, something extra that gives the place character, vitality and uniqueness. It is a combination of many things, eg, the hardware, infrastructure, buildings, public places, etc. It is also the software, eg, the vibrancy of the place,

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the arts and cultural scene, the environment of energy and vitality, the greenery, the habits of the people, etc.

As Ms Indranee pointed out just now, various cities around the world have these distinct characteristics, eg, London, a city of history; Paris, a romantic city. Now we have Shanghai creating an identity for itself; Dubai, spending its way into the record books. All these cities are sparing no effort to differentiate themselves from the competition. Recently, you may have heard or read in the Business Times and the Straits Times about New York, a city which we all envisage to be buzzing with life and vitality that are unique. In New York, Central Park recently had an exhibition known as "The Gates" where the two artists said that they spent about US$21 million of their own money - I am not sure how true that is, but that is what they said - to create this artwork in Central Park. Some may say it is a frivolous waste of money, but the residents said it brought a lot of joy back to the city. Whatever, the statistics showed that it attracted four million visitors to the park, including one-and-a-half million visitors from out of town and brought in an estimated US$254 million in revenues for hotels, tourism outlets and other services. Mayor Michael Bloomberg said, "We had to go out for big bold projects that would set our city apart. We showed the world that New York is safe and exciting."

If an established world city like New York feels the need to go for big bold projects to set itself apart, what should we do in Singapore, a newbie, to borrow an Internet word, as far as world cities go? In Singapore, we have been careful and prudent in our developments, and we will continue to do so. We do not go for grandiose buildings and extravagance to attract attention, eg, the highest this, the tallest that, the biggest this, that and the other.

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But Singapore cannot continue developing as a city in the usual way. We need to recognise the economic and social benefits of a distinctive city, one that is bold to invest where wider benefits can be reaped. The "x-factor" cannot be decreed into existence, it needs to evolve over time. But we can create an environment that can facilitate this evolution. It requires boldness and experimentation by planners in urban development. It requires higher standards in architectural design and building from industry, and it requires an atmosphere that nurtures creativity and excellence among our people.

One such area where we can encourage boldness and creativity is in the development of the Downtown at Marina Bay. The Bay area, which has a large tract of unencumbered land and prime waterfront location, provides a unique opportunity for us to create something truly special. The Downtown at Marina Bay is envisioned to be a live, work and play environment where we will have prime office space, quality housing, shopping, dining, the arts, entertainment, recreation, etc. A new waterfront promenade and pedestrian and vehicular bridges will connect all these attractions. It is like a necklace around the bay. An exciting attraction for the area would be the second botanic gardens. This large park will be the central park in the new Downtown for all to enjoy. It will be strategically located, easily accessible and well integrated with the surroundings. It will create a unique green-blue lung in the new Downtown, a respite from the hustle and bustle of the city, and it will be a legacy for future generations.

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As the development agent for Downtown at Marina

Bay, URA will work with other agencies and industry professionals to realise the potential for this area. And even as I speak, plans are

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being implemented. Just a week ago, I announced the launch of the tender for the Business and Financial Centre (BFC). The BFC will be a key milestone in the development of the new Downtown and, together with the completed Esplanade, One Fullerton, One Marina Boulevard and, in future, One Raffles Quay and The Sail, the Downtown at Marina Bay looks set to become an exciting venue and a signature image of Singapore to the world.

Another opportunity to create that "x-factor" is in Orchard Road. The vision for Orchard Road is for it to be one of the great shopping streets of the world. Great buildings can contribute to a great street. To encourage developments along Orchard Road that support this vision, we will be implementing several initiatives. URA will be relaxing the guidelines and grant gross floor area (GFA) incentives to encourage the refurbishment of existing buildings. For example, GFA incentives will be given to encourage more buildings to create dynamic facades such as the one that we are seeing in Wisma Atria. We will also relax guidelines and grant incentives to encourage buildings to integrate with adjacent developments to provide better connectivity between buildings and, as far as possible, along Orchard Road.

I am also pleased to announce that an inter-agency Commission, known as the Orchard Road Development Commission will be set up to review development proposals for quality and innovative projects along Orchard Road. URA will head this Commission with representatives from the Singapore Tourism Board, the Land Transport Authority and other agencies. The Development Commission will support projects that contribute to making Orchard Road a distinctive place. These projects must offer refreshing business concepts and interesting architecture. It must enhance the surroundings through public spaces and facilities that promote vibrant street life,

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arts and culture and good pedestrian linkages. Developers whose projects contain these qualities will be granted incentives and allowed to deviate from current planning parameters.

The Development Commission will also consider proposals for the rejuvenation or redevelopment of existing buildings in Orchard Road beyond their masterplan plot ratios. Additional GFA can be granted for worthy projects that push the boundaries or create new innovative products that add value to our city. URA will be announcing details of these initiatives soon.

To encourage new developments along Orchard Road, we will be placing two sites on the reserve list in March, ie, this month. One is a commercial site at Orchard Road/Paterson Road and the other at Orchard Road/Killiney Road. There will also be two short-term leased parcels at Orchard Road - one next to Faber House and one next to Orchard Building. Details will be released by STB shortly.

The Orchard Road enhancement works will also involve upgrading of the pedestrian mall. And, here, I would like to assure Ms Eunice Olsen that in the proposed upgrading of the pedestrian mall, one of the key considerations is to enhance the pedestrian and street experience, and make Orchard Road freely accessible for all.

Furthermore, when building owners undertake major redevelopment or upgrading works, these buildings will be required under BCA's building control regulations to comply with the requirements in the Code on Barrier-free Accessibility (BFA) in Buildings. So her concerns about making Orchard Road accessible to the disabled will be allayed.

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To successfully develop the Downtown at Marina Bay and Orchard Road, the Government is prepared to experiment and move decisively. However, there is a need for our people to embrace design excellence and quality as a way of life. Whether you are talking about a watch, a car, a chair or a dress, good design adds value. Why do people pay thousands of dollars for a well-designed Swiss watch when they can pay $50 for a simple Quartz watch that can tell the time just as accurately, if not more so? And so it is with well-designed buildings, the pursuit of design excellence, quality and innovation in a built environment is key to the creation of an attractive city. Whether we are talking about an airport, a theatre, a civic place or a private building, a quality and well-designed development will add value to the environment. It will reflect the values of excellence and creativity in its people.

To this end, URA will contribute $3 million over the next three years to kickstart a programme, beginning this year, to co-sponsor an architecture and urban design promotion programme with the private sector. With these efforts to encourage greater creativity, I hope to see greater awareness of good design which will eventually translate into more outstanding buildings and better public spaces.

Sir, part of the effort to develop a distinctive city and to nurture greater creativity and enterprise must come from not just the physical developments, but also from improvements in our processes and policies. One such area is our land use policy. There is a growing demand for greater flexibility in land use because we know that businesses are evolving, and demands are changing. There have been lots of requests for the introduction of new uses on sites, for the integration of activities within the sites, and so on.

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Just now, Assoc. Prof. Low Seow Chay raised one such issue in the House - allowing non-farm uses on farmland. Earlier this year, we decided to allow non-farm uses such as cafes, shops, visitor centres, farm stay facilities on farmland, in response to farm owners' request. But as Assoc. Prof. Low Seow Chay pointed out, such flexibility has brought about some problems which required certain trade-offs. He is concerned, for example, that allowing recreational uses on farmland will affect the livelihood of bona fide farmers. They will be priced out of business with higher farmland prices. He has a point, but I want to assure him that we have taken this measure, trying to be more flexible without creating major impact on the bona fide farmers. For example, we have imposed maximum caps for non-farm uses on farmland. At least 70% of the land area must be used for agricultural production. So it is not possible, for example, for somebody to tender for a piece of farmland and convert the whole farmland into a large bungalow or a ranch. 70% would still have to be used for farming, like orchids, vegetables or whatever.

Land set aside for commercial uses will be charged commercial rates. This addresses the question about unfairness, ie, not having a level playing field. So, again, if you want to use part of your land for such uses, you will have to adjust the land rental or the land price to that particular new use that you want to put it to. All these guidelines help to ensure that genuine farmers are not unduly affected.

This is just one example of the many issues that planners have to face on a daily basis. It is a dilemma that they have to deal with because when you adapt to new business models, you try to consider and accommodate new interests and new needs. As you relax your guidelines and regulations to provide flexibility, invariably, you will create a ripple effect or impact on other users. This is a very

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fine balancing act, but that does not mean that we do not do anything. It will become more complex and more contentious because, as we develop a more distinctive Singapore, one thing has not changed - the land area that we have. No matter how much we reclaim, we will still remain "a little red dot". That is the reality.

Sir, it is not easy for us to balance, but it is something that we must do. We cannot stand still. We will have to ensure that our land use policies are relevant and updated and, in this way, help to maximise the economic value of the land that we have.

Let me turn now to the request by Mr Yatiman Yusof for Government to take steps to intervene in the property market. The property market has undergone major corrections since the boom years. We had not just one, but many different crises hitting us one after the other - the financial crisis, 911, SARS and so on. It is not surprising that property prices have fallen sharply from their peak in the mid-90s. But the recent indications are that the market appears to have stabilised and is showing signs of recovery.

The prices of private residential properties increased by about 1% in 2004. Rentals of office and shop space increased by 3.5% and 3.7% respectively in the same period. The Government has taken measures to stabilise the property market in the last few years. We suspended the confirmed list for the Government Land Sales programme since October 2001. We have been releasing land only via the reserve list; in other words, if there is a need for land, private sector developers would have to make a conscious effort to trigger that release by offering to tender for that piece of land at a price that the Government considers acceptable.

We have removed some of the anti-speculative measures such as income tax

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on gains from selling properties within three years of their purchases. We introduced the Deferred Payment Scheme which basically means that you need only pay 10% for your initial cash downpayment. We allow CPF monies to be used for paying up to half of the 20% downpayment. All these have helped improve the financing for private home purchases.

Sir, the question is whether we should do more, especially now when the property market appears to be recovering. The Government has always sought to ensure stability in the property market. Why? Because a stable property market is important in providing certainty to business, to investors and to home owners. Whether it is through the Government Land Sales programme or other financial measures on property purchase, the aim is to moderate property swings due to rampant speculation or sudden disruptions. However, we should not intervene in the market more than is necessary. To do so would distort the market, introduce rigidities and make the property market less robust.

Let me turn now to some other specific queries, one by Mr Lawrence Leow on rentals and rental transactions. Currently, data on rental transactions for private residential properties is available to the public through URA's property portal, the REALIS system, and this is aggregated on the street or postal district level. If you are talking about specific individual property rental, then this is only available from IRAS because that information is provided from the individual property owner to IRAS for income tax purposes. For this reason, IRAS is not at liberty to disclose such information without the permission of the owners. For the purpose that the Member has in mind, the information provided by URA, via the

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REALIS system, is sufficient to help investors and other players in the market make informed decisions.

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Finally, very quickly, on carparks. Mr Wee Siew Kim has raised the issue about parking for heavy vehicles. He has in his speech accepted the fact that heavy vehicles are meant for purposes of doing business, and not a means of transport. But, at the same time, he also asked for certain special considerations to be made to allow his residents to drive their vehicles home.

This is again another dilemma that we face. If we allocate space within the HDB estates for such heavy vehicle parking, invariably, the complaints are going to come from the residents. The question, of course, is where can we put these heavy vehicle parks. We would have to locate them away from residential areas. Of course, this, by definition, means places which would not be convenient for the heavy vehicle drivers and, hence, the persistent requests for us to find a place which is nearer for them.

So, I think this is a dilemma that we will constantly face. There is no easy solution. We will be looking for heavy vehicle parks all the time. But with developments, I think such parks are few and far between. What we can do, of course, is to provide such parking facilities in purpose-built heavy vehicle parks which are properly shielded, near workplaces and in factories. I hope that we do not have to start worrying about having to provide parking for tanks in future, because there are also tank drivers who want to drive their vehicles home.

Prof. Ivan Png and Mr Steve Chia asked about charging for parking. I want to inform them that, yes, the technology is available. Both HDB and URA are working on this technology. They have

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already implemented it in several town and neighbourhood centres where there is demand, and they are going to roll out more of such automated systems to other carparks when it is feasible and cost-effective to do so.

Construction Industry

Dr Amy Khor Lean Suan: Sir, our construction sector has been an economic perpetual under-achiever. It has been shrinking continuously since 1999 and its safety record has been dismal. The blemishes are plentiful and include low productivity, high dependence on foreign labour, bad payment records, and a public image exemplified by Phua Chu Kang. To paraphrase his famous marketing tagline, our construction industry is certainly not the best in Singapore, best in JB and, everyone would say, best in Batam.

While construction is not a strategic sector, accounting for only about 5% of our GDP, it is a means of livelihood for larger numbers of people. A vibrant and resilient construction sector also helps to support our infrastructural development that underpins our national economy.

Sir, how could we adequately deal with the industry's afflictions? I have a few suggestions.

First, set up an industry taskforce to look at how construction standards could be raised, without raising the need for more foreign workers upon which the industry already has an inordinate reliance. This could be done through encouraging even greater use of mechanism, labour-saving devices, pre-fab components, etc. More tangible incentives could be considered to motivate all parties in the construction value chain to adopt practices which raise industry standards. MOM would also need to raise skills standards for foreign construction workers, for instance, by

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allowing contractors to retain the skilled foreign workers for a longer period.

Second, despite the Government's numerous efforts over the years to consolidate the large number of small and fragmented players in the industry, such as through tightening the contractors' registration system, the number of contractors has hovered at around 5,000. Low entry barrier of the industry, since there is no licensing required of contractors in terms of the qualifications of the key personnel, may be one of the reasons for the persistence in the proliferation of industry players. Perhaps the licensing of contractors should be considered as this would help to reduce the proliferation of many inexperienced contractors and, hence, raise the level of professionalism that is sorely needed in the industry.

Third, safety standards must definitely improve because each fatality, whether it is in a spectacular fashion like Nicoll Highway or an unknown project, is one too many. While it is possible to resort to more rules and regulations, this raises the cost of compliance. But I urge the Government not to compromise on safety. A safety culture must be imbued in all workers, from the managing director right down to the site workers. Hence, many of the accidents were simply waiting to happen because if one were to look at the recent worksite accidents, it has revealed the appalling lack of safety culture and disregard for safety by supervisors and workers alike, as many safety requirements were not implemented.

The Minister of State for National Development (Mr Cedric Foo Chee Keng): Mr Chairman, Sir, Dr Amy Khor has touched on the state of the construction industry, the need to improve standards in quality and professionalism, as well as construction safety. I would like to thank her for her comments and I fully agree with her that more should be done to upgrade the construction industry.

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Sir, the construction industry today faces two fundamental challenges, namely, over-capacity and over-reliance on foreign workers. These challenges have direct impact on the professionalism, productivity and quality standards of the industry. Construction demand hovered around $10 billion in 2003 and 2004, less than half the peak demand of $24 billion in the mid-1990s. In the next five years, BCA projects annual demand to be between $12 billion and $14 billion a year. This is to be expected because our infrastructure development has reached a mature stage. It is not realistic to continue building flats, roads, MRT lines or schools at the same rate as before. Despite the sharp drop in demand, the number of construction firms has not correspondingly declined. The over-capacity has resulted in firms resorting to price cutting, with ramifications on professionalism, quality and also safety.

The other fundamental challenge facing the industry is its high reliance on foreign workers. This is a structural problem. While low cost foreign labour has kept construction cost down, it has also contributed to low productivity level in the industry. Contractors would rather turn to lower cost foreign labour than adopt efficient building technology. Local labour participation has also declined, given the relatively less attractive wages.

Recent measures to improve professionalism, quality and productivity have had some limited success. For example, the number of top-tier contractors that can vie for public sector work has come down through tighter registration requirements. Man-Year Entitlement cuts and wider adoption of buildable solutions have reduced Non-Traditional Source foreign workers by up to 30% in certain projects. However, we still lag substantially behind many developed countries, such as Australia, in

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terms of the value-add per construction worker.

The construction industry will need to adjust faster. Otherwise, I fear that the industry will weaken further, with our better firms becoming casualties of cut-throat competition. As the industry contributes 4% to 5% to our GDP and it is integral to our economy, the Government will need to be more proactive in positioning the industry for recovery and for long-term competitiveness. MND and BCA are conducting a mid-term review of the implementation of the Construction 21 (C21) Plan, which was launched in 1999 to address the problems in the industry. We are consulting industry stakeholders to evaluate the effectiveness of the C21 initiatives and explore additional measures to advance the industry. I will highlight some of the measures under consideration.

First, to raise professionalism, BCA is considering the licensing of main contractors and specialist sub-contractors who carry out works that require building control approval as suggested by Dr Khor. This means that only contractors that meet licensing requirements will be allowed to carry out general building works that require building approval and other specialised works, like geo-technical works, that have a significant impact on quality and safety. BCA will study the practices in other countries and implement a system that is suitable for Singapore. BCA will also consider a further refinement to the registration requirements in the Contractors' Registry System (CRS) for public sector projects. This is to ensure that only highly competent and financially stable firms are allowed to undertake public sector projects. Together with licensing, this will raise the quality of our construction firms.

Next, promoting exports. To supplement the limited domestic demand, the

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industry needs to venture abroad. BCA will step up efforts with IE Singapore to facilitate the formation of consortia among local firms to export construction services. The early signs are, indeed, very promising, with local firms securing $2 billion worth of overseas contracts last year. There is still much scope for our contractors in the overseas markets, which stood at $6.6 trillion in 2004. The size of the construction market in China and India alone was $580 billion last year. So, hopefully, over time, our local contractors can say (in the words of Phua Chu Kang) that they are the 'best in Singapore and some say India and China as well'.

Sir, BCA is working with MOM to moderate the number and improve the quality of foreign workers in the construction industry, through a combination of higher levy and skills certification. This should help improve labour productivity and construction quality. At the same time, BCA will study the feasibility of building up a pool of locals for some core construction trades. The focus will be on trades where sustained growth in quality, productivity and safety are badly needed. Unlike the transient foreign workforce, a stable local workforce will be more prepared to upgrade their skills every few years and can accumulate experiences which make for higher quality and safety.

BCA will study the merits of introducing registration and skills certification for construction trades. We can also consider incorporating local hiring requirements for these trades in the licensing of contractors. Also under consideration is the public sector procurement system for construction works. BCA intends to give more weightage to quality and non-price attributes, such as contractor's past performances and safety records. We already have a price quality system for evaluating tenders for consultancy

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services in the public sector. This would be extended to the procurement of construction works. The principles of value for money and transparency will still be upheld. With this, contractors who have consistently performed well will stand to gain. Over time, a group of better performing contractors would emerge, setting benchmarks for construction quality in Singapore.

BCA will continue to promote buildable designs, such as pre-fabricated solutions, which are more innovative and less labour intensive. It will raise buildability requirements progressively over the next few years.

MND and MOM are undertaking a comprehensive review on construction safety. The review would take into account the findings of the Committee of Inquiry into the Nicoll Highway incident when they are released.

Sir, in summary, MND and BCA will proactively address the fundamental challenges facing the construction industry. We will consider the measures outlined above as well as those suggested by Dr Khor and others to upgrade the industry and will work closely with all stakeholders to achieve this goal.

Supply of Food

Assoc. Prof. Low Seow Chay: Sir, according to the Yearbook of Statistics, the current basic food price compared with that just before the 1999 Nipah virus attack in Malaysia shows that the fresh meat price index increased by 36.8% - 15 times more than the 2.51% increase in consumer price index during the same period.

Sir, a steady supply of food from the nearest source ensures the stability of their prices. To achieve this, we must not unnecessarily create restriction for food

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imported from sources which are scientifically safe for import. Lately, the AVA, in dealing with animal diseases such as foot-and-mouth disease, adopted a zonal approach, instead of the simple traditional method applied in the past, ie, on a country basis. In the past, when there was a problem in the country, all the affected food from that country would be banned from import. Because of this reason, there is no beef from the United States and Europe and, likely, there is no Kobe beef from Japan and, of course, we know there is no pork from Malaysia.

The recent permission for import of poultry, meat and eggs from Malacca and Johore is one of the best examples for this new zonal initiative, despite the bird flu-infected Kelantan which is less than 300 km away from Malacca. Because of this, poultry, meat and eggs took only three months to be fully reinstated to the level of the normal supply and price. I was told that the price of duck has even fallen lower than before. The AVA should be commended for this unprecedented scientific approach in ensuring the continuous supply of certain food, and keeping prices affordable.

I would like to ask how the AVA could apply this genius thinking of food supply to pig, lamb, goat and cow imported from countries much bigger than Malaysia. They are also affected by different types of animal disease.

Food Prices

On 19th March 1999, a day before the ban on Malaysian pork, the wholesale price of Indonesian's Pulau Bulan pork was $1.20 per kg. A few days later, it was doubled to $2.70 per kg; a month later, it tripled to $3.50 per kg.

Since then, it hovers around $4 per kg. During the last Chinese New Year, the wholesale price quadrupled to $5 per kg.

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5.30 pm

Sir, the 300%-400% jump in the wholesale pork price shows that the AVA has obviously failed very badly in keeping the pork price affordable. This is a multi-fold jump in terms of food price, and, in Chinese, we call tian wen shu zi. In countries, like Indonesia, just a 29% hike in the oil price led to a public commotion and demonstration. I just cannot understand why our officers in Singapore could take this matter for granted and persist with the high food price policy, not for one year but for six consecutive years. The officers may blame it on animal disease.

Sir, the Malaysian pork price has gone back to normal. Why are Singaporeans - they are, in fact, quite smart - still paying such a high premium for pork? Is it true that the Nipah virus is still haunting us? Every day, we have about 40,000-50,000 Singaporeans crossing the Causeway and most of them are Chinese. Over there, they are eating food using Malaysian pork. I have never heard of any person contracting the Japanese encephalitis from consumption of such pork. Or is our AVA choosing to play safe and waiting for the Malaysian government to declare to the WHO that it is not a Nipah virus affected country? By doing so, perhaps blame could be shifted to their Malaysian counterparts for any risk arising from the lifting of the import ban. If Malaysia chooses not to declare it, does it mean that we should forever pay such an exorbitant price for pork?

Sir, the economic downturn and restructuring reduced the take-home pay and CPF savings of our low-income families. The statistics also show that 20% of the families, at the bottom in terms of income, spend 23% of their income on food. In this respect, the AVA has an additional role to make life more affordable for this particular group of

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people by taking pro-active measures to ensure that food prices are reasonably low and not unreasonably high. It is time that the AVA took action to put the matter right.

This is March 2005. It has been six years from the outbreak of the Nipah virus. How long does the AVA need to wait in order to put the matter right? The officers should overcome all the technical obstacles and risks and start accepting pork from Malaysia. By doing so, the current man-made artificial high price for fresh pork will immediately evaporate, thus ending six consecutive years of windfall profit for the monopolistic Pulau Bulan pig farm favoured by the AVA policy.

The Chairman: Prof. Low, your time is up.

The Second Minister for National Development (Mr Lim Swee Say): Sir, first, I would like to thank Prof. Low Seow Chay for sharing his concerns on the stability and affordability of food prices, and his suggestion to adopt a zonal approach in dealing with food imports from disease affected countries. As pointed out by Prof. Low, prices of certain foods did increase by as much as 35% between 1998 and 2003. One such item is the retail price of chilled pork, as cited by Prof. Low.

One may wonder whether something could have been done to prevent or reduce such increases in food prices. Prof. Low seems to imply that maybe the AVA could have adopted a more relaxed policy on our food safety standards, by allowing the import of pigs from Malaysia which was affected by Nipah virus, or from Thailand which was not free of foot-and-mouth disease (FMD).

Sir, AVA did not do so - and we disagree with what Prof. Low said - because we simply could not take the

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risk, and risk Singaporeans being infected by these diseases. The potential threat to our public health and our economy was simply too high for us to take the risk. As a result of the import bans from Malaysia and Thailand, we rely more on chilled pork from Australia which is a more expensive source of supply - because the chilled pork has to be air flown from Australia. This explains the 35% increase cited by Prof. Low.

Sir, my point here is this. The key consideration of the AVA is more than just price stability and affordability but, more importantly, food safety as well. We have no choice but to balance between food safety on the one hand, and supply adequacy and price stability on the other hand.

Having said that, I agree with Prof. Low that looking ahead to the future, it will be even more challenging for us to balance between the two. Because, as pointed out by Prof. Low, we are seeing more frequent outbreaks of food-related diseases such as Avian flu, Nipah, mad cow and foot-and-mouth disease. Some of these, like the Avian flu, have or could become endemic in our region.

To avoid seeing more volatility in food supply and more drastic increase in food prices, we have no choice but to come up with a more effective and pragmatic approach in managing food imports in the future. Sir, I am pleased to share with Prof. Low and this House that AVA is now ready to adopt a risk management approach, instead of the risk averse approach which is currently being used, in the screening of food supply in future. Our aim is to alleviate a tight supply situation by accepting manageable risk, rather than to hope for no-risk solution at all cost all the time. Such a risk management approach is now more appropriate for us for three reasons.

First, we have built up a stronger base of knowledge and experience from the

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handling of food crises, such as the Avian flu outbreak in Kelantan last year.

Second, our laboratory testing facilities are now more advanced. For example, we can now quickly detect animal disease agents such as the Avian flu virus as well as other food-borne hazards.

Last but not least, the international food safety organisations have also set guidelines to allow food imports from disease-affected countries under stringent controls.

Sir, briefly speaking, the adoption of the risk management approach will comprise three main strategies.

Our first strategy is to allow food imports from a disease-infected country to continue but only from specific disease-free zones established in these countries. I think this is what Prof. Low has suggested in his speech. In fact, this was what happened during the Avian flu outbreak in Kelantan last year. The AVA worked closely with their Malaysian counterparts to quickly isolate and establish Johore and Malacca as disease-free zones.

Prof. Low asked whether this approach can be expanded to other countries and other sources of food supply. I am happy to inform him that the answer is yes. In fact, the AVA will be extending this zonal approach to as many countries as possible, where appropriate.

Secondly, our strategy is to continue to diversify our supply sources. Prof. Low is right to say that because of the limited sources of supply of chilled pork, as a result, suppliers from Pulau Bulan are able to benchmark their price to that of Australian pork.

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Sir, just to put the record straight, in 2004, in Singapore, we had about 3,000 licensed traders who imported pork and pork-related products from 18 countries; poultry and poultry-related products from 15 countries; vegetables from 20 countries; and fish and fish-related products from more than 80 countries. In other words, the AVA has been, and will continue, to diversify our sources of food supply.

Last but not least, for the risk management approach to be effective, it needs to be accompanied by greater public awareness and understanding of food safety and public education scheme.

In conclusion, I just wish to assure Prof. Low and the House that with this move towards a risk management approach, the AVA will be able to further enhance the reliability and the stability of our food supply. Our ultimate objective remains to provide a safe and wide variety of food choices at affordable prices for our people.

The Chairman: We have time for clarifications. Mr Steve Chia.

Mr Steve Chia Kiah Hong: Sir, the Minister did not answer my point about car park charges. When will minute-by-minute charging be extended to all HDB and URA car parks which use the cash-card? It is not whether the technology is available or not. I know that the technology is available. When will it be extended? I want the date.

My second clarification is on lift upgrading. When will the blocks which have undergone the interim upgrading but without the lift upgrading programme in the earlier precincts be given a chance for lift upgrading too?

Mr Mah Bow Tan: Sir, I believe I did answer Mr Steve Chia but probably not clearly enough.

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HDB has already rolled out the ERP-based car parking in 13 of its car parks. This is, of course, on a pay-per-minute basis. It will roll out the rest in the course of this year and next year.

As far as the interim upgrading is concerned, first of all, those blocks which have not undergone lift upgrading during the earlier stages of the upgrading programme, obviously, will have to vie together with the other blocks - 3,000-over blocks which I was talking about - which have not undergone any form of upgrading at all. Of course, if any of the advisers or the Town Council Chairmen wish to upgrade these blocks using their Town Council funds within the new rules that have been put in place, they will be free to do so.

Prof. Ivan Png Paak Liang: Thank you, Sir, for allowing me to clarify. I believe the Minister misunderstood the intent of my question. When I compared the parking coupon and the cashcard, I was not referring to the use of the cashcard through ERP devices but rather modifying the in-vehicle unit (IU) so that the cashcard can be used in open car parks along the side of the street, and in car parks where there is no opportunity to build a gantry. In fact, this can be done by a simple modification of the IU. I think this will be very much more efficient.

Mr Mah Bow Tan: I will have to refer this query to the Land Transport Authority which, obviously, is in charge of the in-vehicle unit. But having been involved with the design of the in-vehicle unit at that time, I believe that it is not such a simple process after all. In fact, to try and design an in-vehicle unit which is able to do all the things that we have asked it to do is a task in itself. And to make it durable, to make sure that it withstands all the knocks, hot sun and so on, is again not a small task. But if Prof. Png thinks

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that it is a simple thing to do, then I will refer him to LTA.

Mr Wee Siew Kim: Sir, I would like to thank the Minister for agreeing to look for additional places as properly protected car parks for heavy or large vehicles. I have two clarifications. First is that I am asking for a car park that is within bicycling distance and not in the middle of the HDB heartlands. Moreover, one side is even slated for a light industrial park.

My second clarification is that I am not asking for an additional limb to Total Defence by allowing tanks to be driven back home!

Mr Mah Bow Tan: Sir, the Minister for Defence will be very relieved to hear that.

On his specific request for a car park within bicycling distance, if he can let me have the details, I will ask URA to look into it.

Dr Tan Cheng Bock: Sir, I listened to Prof. Ivan Png's comments on the in-vehicle unit and the Minister's positive response. I agree with Prof. Ivan Png.

It is a good way to solve this problem, and to make it more efficient. But I want to add a word of caution. When you introduce technology of this kind, we will be putting many of our car park attendants out of job. So this is one time I say technology can wait. I think jobs should come first.

5.45 pm

Assoc. Prof. Ong Soh Khim (Nominated Member): I actually have three clarifications to put forth. With regard to the Minister's earlier reply before the break on the topic of housing for an ageing population, in view of our growing elderly population, would MND consider giving higher CPF top-up grants to first-time buyers of HDB flats who opt to stay with their parents, so as to encourage more Singaporeans to stay with and

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provide care-giving to their parents. There are two advantages. First, we actually reduce the need to build studio apartments for the elderly and, second, we also reduce the social cost associated with the various VWOs.

My second point is on the topic of affordable public housing. The Minister has said earlier that most Singaporeans can fully service their housing loans from their monthly CPF contributions. Sir, with the progressive reduction of the salary ceiling for CPF contribution and the big reduction in the employer's CPF contribution rate, many households actually can no longer service their housing loans solely from their monthly CPF contributions. How will MND help this working class of Singaporeans affected by these changes in the CPF contribution structure, but who have already been locked in a housing loan long before these changes were announced?

My third point is on heavy vehicle parking, mentioned by Mr Wee. If HDB can earmark specific plots of land to build multi-storey car parks for vehicles, can HDB also earmark specific plots of land to build heavy vehicle car parks in the HDB estates? We can have built-in features to minimise and buffer the disturbances to the constituents in these housing estates. HDB can charge more for these heavy vehicle car parks because the company who owns these vehicles will pay for the cost.

Mr Mah Bow Tan: Should we provide higher CPF housing grants to first-timers to stay with their parents? Currently, they have $30,000 grant for buying a flat, and $40,000 grant for buying a flat near to their parents. The Member is suggesting that we give an even higher grant to these first-timers, to encourage their parents to stay with them. That is an interesting suggestion. I have not

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really thought about it. Do give me some time to mull over that.

On monthly repayments affected by CPF changes - when we adjusted the CPF, we were mindful of the fact that some families or households would be affected because they had already committed a certain amount of instalments. That is the reason why we allowed them to use part of their Special Account to service their housing instalments, if they did not have enough in their Ordinary Account to do that. So provisions have already been made.

And, lastly, on multi-storey heavy vehicle parking, I am not sure. If single-storey surface parking is a problem, would multi-storey heavy vehicle parks not create even more problem?

Dr Ong Seh Hong: I would like to seek two clarifications from the Minister. First, on the LUP for the low-rise blocks. I would like to ask the Minister whether he will consider extending this programme also to those ongoing LUP projects, ie, precincts which are undergoing LUP and have low-rise blocks. Can these low-rise blocks now go for voting so that we do not have to go through another round of tendering and the whole exercise of LUP for these blocks? The second clarification relates to my suggestion made during the debate on the Budget Statement. I suggested that HDB consider setting a minimum income requirement for purchasing of bigger HDB flat type. I wonder whether the Ministry would consider my suggestion.

Mr Mah Bow Tan: For those projects that are currently undergoing upgrading, works would have been in hand at the moment, contracts would have been awarded and polling already conducted. So it would be very disruptive for us to go back and, retroactively as it were, to do an MUP or a LUP for those low-rise blocks. So my immediate reaction is that,

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for practical reasons, it would not be a good idea to apply this new arrangement retrospectively. But we do recognise that for those projects that have not been polled, there is no reason why it cannot be included. And that is the reason why for this particular announcement, I have indicated very clearly that for those precincts that have not yet been selected, the low-rise blocks would be included.

On the suggestion to have a minimum income for purchasing of bigger flat types, the rationale, as I recollected from the Member's speech, was to make sure that people do not over-commit themselves and that by preventing them from buying a bigger flat, they would be more prudent in their purchases. Rather than specifically stopping them from buying their flat, by using a minimum income, what HDB has done for first-timers is to provide counselling as well as credit assessment for them. In other words, we would base the ability to buy, ie, a loan that is to be granted to them, on their household income. Those whose regular incomes are low or who have no regular income would be affected by this credit assessment and, therefore, would not be able to get a large enough loan to buy their flat. However, if somebody who may not have a regular income but who has a lot of money, or whose children are prepared to subsidise him, and he comes to us and says, "I don't need a loan from you. I want to buy a bigger flat. Here is the cash.", who are we to say no?

Dr Amy Khor Lean Suan: Sir, I would like to seek some clarification. Firstly, for the LUP for low-rise blocks, would we be informed as to which are the low-rise blocks where it is not possible to do lift upgrading for various reasons? Because we would probably have residents enquiring, especially those who had previously missed out on the LUP programme.

My second point relates to HDB retailers as regards the sold shops. The

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point I was trying to make is this. If there is already a study done, and the decision or prognosis is that that whole area is really not viable for HDB shops and, for some reasons, some of the shops were already sold or a particular cluster was sold, for such cases, you could actually use it for alternative uses which would probably be more economical or efficient. Then, would the Ministry consider the Buy Back Scheme for such shops, which is quite similar to the JTC factories' Buy Back Scheme, where they actually have higher use for the factory sites?

My third point, again, relates to HDB retailers, and this is about rental shops. As regards the fact that HDB is not really an expert in retail and, therefore, would not be unable to undertake (a) and (b), and so on - I understand that - but HDB actually imposes market practice in determining the rent and charging rentals. So, if rental is collected on a commercial basis, then surely HDB can look into either appointing a consultant or a marketing retail expert to look into how to revitalise that area if that area is actually not to be taken over.

Mr Mah Bow Tan: The answer to the first question is, yes, we will certainly advise the Member which are the low-rise blocks in her constituency which would not be amenable to upgrading, and so it is with the other Members as well.

Coming to the issue of retailers and HDB shops, I think we need to come back to the fundamentals again. HDB, when it rents out its shops, does so because it feels that there is a need, having built the housing estate, to provide some shops to service the needs of the residents. It did so in the early years, partly for that purpose and partly also to cater for resettlement. That is the reason why, in certain areas, we may have over-provided shops. So when we redevelop precincts today, either under SERS or other

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schemes, we do not provide a one-for-one replacement, in the new area where the resettled blocks are. Why? Because we know that there is an over-supply.

But having built these shops, having recognised the need for flexibility, and having changed the rules such that we allow them to sublet, change trades, etc, you cannot have that flexibility and, at the same time, say, "Look, you can only change trade to this particular shop or that particular shop." It is like the bubble tea phenomenon. The first few bubble tea shops did very well. Everybody else wanted to sell bubble tea. Should HDB have told the fifth guy in line, "Hey, there are already four bubble tea shops in this place. You cannot change." It would be very difficult because he would be saying, "How do you know that I am not going to be the one to succeed and the rest will fail?" So the best solution must be where it is necessary, yes, determine that there must be certain types of shops. In the new estates, for example, you need to have one provision shop, at least one coffeeshop, maybe one or two other specific trades. But, by and large, I do not think it is tenable, neither is it possible, for HDB to go and determine what is the retail mix.

If there was one developer that owned that area, for example, in the case of a shopping centre, that one shopping centre owner said, "OK, I am going to rent these shops out. I am going to decide who is going to rent these shops. And I will then undertake to promote them." Fine, that is possible. But I do not think HDB has that kind of expertise. That is the reason why in the RPS exercise, we want to make sure that we get the HDB retailers, together with the consultants, to work together to determine what is the optimum mix of shops, what is the kind of retail niche that they want to occupy, and

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then we will facilitate, rather than for HDB to undertake upon itself that particular role. Because, frankly speaking, I do not think HDB has that expertise.

The Chairman: I think we have almost reached "guillotine" time. Dr Amy Khor, can you withdraw your amendment?

Dr Amy Khor Lean Suan: Sir, I would like to thank the Minister and Minister of State for their comprehensive answers and, in particular, for the announcement of more involvement of the private sector in the development of public housing as well as relaxation of rules in the sale and subletting of HDB flats. Sir, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn .

The sum of $332,743,270 for Head T ordered to stand part of the Main Estimates.

The sum of $4,024,171,900 for Head T ordered to stand part of the Development Estimates.