I was in Singapore over the weekend and observed that Singaporeans are still mourning the recent loss of their founding father. No doubt the late Lee Kuan Yew was a great man but to erect a new monument in his honour is totally unnecessary. Every Housing Development Board (HDB) apartment in the city state can easily be his lingering and towering shadow. The imprint is so strong on the republic.
Having turned the third world country to a first world economy, his leadership has captured the admiration of the world, particularly at a time when Singapore was facing a severe housing shortage as a result of a low rate of construction and the massive damage it suffered due to World War II. The rate of homelessness was severe with a high average person per building density. Being an advocate of public housing, the late Lee acknowledged the urgency to house the nation and initiated the HDB .
Charged with the task of housing the population, HDB’s first priority was to build as many low-cost housing units as possible. A five-year building programme was introduced. Obviously, this initial move was meant for rental only by the low-income group as they lacked the means to buy. It was only after this that the home ownership scheme was introduced to encourage its citizens to buy rather than to rent.
Furthermore, the Singapore government also gave the the green light to use the Central Provident Fund savings as a down payment. Ten years down the road, the HDB started to build and market middle-income apartments to be followed later by offering executive condominiums in 1999 and the rest is history.
One will find the above situation – a shortage of housing – somewhat familiar to what we have today in Malaysia. The only difference is we call it “affordable housing”. Another difference is, a lack of clear definition of what affordable housing encompasses.
Since budget 2011, housing a strata of the population has been a key agenda of the Government. The initial effort was My First Home Scheme (Skim Rumah Pertamaku). This was through the establishment of Cagamas Bhd that guaranteed the financing of 10% down payment for the low to middle income groups. Benefiting the same target group is the Rumah Mesra Rakyat Scheme which was introduced by Syarikat Perumahan Negara Bhd.
Subsequently, a third avenue was brought into the picture in the form of Perumahan Rakyat 1 Malaysia (PR1MA). It was to be the sole agency to develop and provide affordable housing – specifically the middle income category. This agency was established under the PR1MA Act 2012.
At the same time, the Government also allowed homebuyers to withdraw funds from their Employee Provident Fund (EPF) to finance the down payment when buying a house subject to the certain requirements. The withdrawal of funds from the EPF is allowed for the different housing schemes advocated by the Government.
While recognising that affordability is still the main barrier to home ownership, Prime Minister Datuk Seri Najib Tun Razak has also launched the rent-to-own scheme in September 2014. This is specifically targeted at PR1MA applicants who are unable to obtain financing from the banks, a move similar to Singapore’s initial plan to house its population.
Singapore’s HDB has proven the effectiveness of its strategy. Today, Singapore has one of the world’s highest homeownership rates – 90% of Singaporeans own their homes.More than 80% of Singapore’s resident population lives in HDB properties.
The HDB attributes its success to three important fundamentals:
• One agency to be solely responsible for public housing, for effective resource planning and allocation;
• One total approach from planning and design to land assembly and construction; and
• Strong government support in the form of political and financial commitment.
In comparison, Malaysia’s affordable housing approach is conducted through Cagamas Bhd, SPNB and PR1MA with each having distinct roles to target separate income groups.
A singular planning and construction approach is also not sustainable here as land matters are a state issue. This means there is a need for more collaboration from each state government. The need for uniformity of planning to construction is an issue but this can be overcome if one were able to untangle the the message behind the letter of the law and the spirit of the law.
While many third world countries view economic progress as a priority, Singapore has distinctively considered economic progress and housing the population of equal and symbiotic importance. Singapore’s Economic Development Board (EDB) was also simultaneously formed with HDB to reform and promote the supply of economic growth and employment. This makes perfect sense as without strong purchasing power, the citizens will face difficulties financing their home ownership aspiration.
Affordability is, therefore, not resolved by providing subsidies alone. Nor will subsidising help to keep costs down. Affordability is relative to the income earning capacity of the people. Sporadic efforts should give way to concerted commitment that set aside political divides. Given the distribution of power within our Federal Constitution, the respective state governments should be better equipped to drive the housing initiative through with Federal Government as the main driver.
Singapore has taken the entire lifetime of the late Lee to achieve a 90% homeownership, among other economic initiatives to build a nation.
With the aim to become a high income nation as early as 2018 as suggested by the Prime Minister, the Government will require a better strategy on both housing the people and to spur economic growth in order to secure a roof over the heads of its fast expanding 30 million population. - The Star
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