A brother here in Perth was perplexed with the ever-mystery about whether 'HDB loses billions each year'. I admit sometime last year I contemplated about digging into the annual reports of HDB to find loopholes. I've since lost the desire to chup about Singapore stuff. Let them say what they want. Can we not, since our only source of media prostituted to serve only one customer? Recently, some blogger which too much time on his hands took on the task of ripping out the accounts of HDB. Bravo.
Not to my surprise, the chap found a lot of nitty gritty ambiguous items on the balance sheet that didn't explain clearly which black hole money had slipped into. I remembered reading through one of these casually a long time ago - when ex MND top man Mr Mah Bow Tan first coined the glorious gospel of HDB losing money. I was no accountant, nor financial auditor like my wife. I uncertainly wouldn't be able to spot as many red flags like the recent blogger did. However just as I predicted, as meticulous as the blogger was, the questionable items were relatively 'insignificant' as compared to the 'billions' of losses that the last two MND chiefs claimed HDB was suffering. A few million here and there unexplained, didn't make a billion. Not even close. With the amount of money we are talking about, they could have even put these money as 'write off' and no one would bat an eyelid.
Thus the conclusion wasn't anything new to most of us Singaporeans. We knew that long ago. The 'billions' were amounted owing to Singapore Land Authority. Basically, SLA charged a premium for land everywhere, not just Sentosa Cove. So despite HDB trying their means to cut down on construction costs, they will never make a 'profit'. Well, unless they sell you each unit of flat at an even more exorbitant price. Hmm. Are they trying to do that? You know what happens next when people from the SMRT start coming out to the press and cry about the company making losses right? Right. You know that. Clever boy. Clever girl.
So. How? HDB do make losses or do they not? That is up to your interpretation. Let me ask you a question. When you buy a HDB flat did you recall having to scour around for the best price on legal services like what we have to do in Australia (we call it settlement agents)? Well, obviously when we are not buying a landed property, we couldn't possibly scout for the most value-for-money builders and have to trust HDB to do that for us in our best interest. But how about stamp and legal fees? No you don't remember given the option to choose your legal firm. Never mind. Let's just assume we don't have a choice for simplicity sake.
Say, if the legal firm that HDB appointed to work on your legalities decided to increase their fees from a couple of thousand dollars to one million dollars each case. What's gonna happen? A current HDB BTO 4-room flat will cost around $1,350,000. So how can Singaporeans buy one of these to roost? Sure. If HDB can built flats making losses, Singaporeans can buy flats making losses. That is called passing the costs to the consumers, no? If HDB is willing to lend every Singaporean $1.35m to buy a flat, there will be plenty who will take it up. My 20 bucks is on the table. As we know, if the above (radical) illustration is true, we will never ever be able to sell the flat at a 'profit' we bought in today's market. There is no way you can avoid making a loss unless the market price increases above the interests that you incur every year. Going by the same line, can HDB ever 'make a profit?'
Just out of curiosity, I had been wondering about 2 things. Why isn't HDB bankrupt yet, after losing billions every year since AM1 (after Mah Bow Tan)? As far as I'm concerned, when a company makes a loss long enough, it goes into bankruptcy. HDB is immortal when it comes to this. 1337. Mystery number 2, SLA has not sued HDB at all after years of failing to collect bad debts. Well, if you run a business and have a customer that owes you billions of dollars a year - and doesn't pay back - you will personally rip the ass of their CEO open and pee on the wound. Not SLA. Cool guys. Yo, takin' it easy, bro?
Time to open up our minds, change the way we look at things and ask the right questions. Consider these. Can we accept the idea of NParks' CEO coming to public declaring that they make a few million dollars of losses each year - thus that broken park bench will not be repaired - unless you pay for it? What do you think of PUB declaring losses each year because they have not been able to collect enough money for selling utilities to you for years to cover their infrastructure investments such as water pipes and water treatment plants? Sounds ridiculous or not?
Why have Singaporeans never heard of HDB 'making losses' BM? (Before Mah Bow Tan) Did we have mysterious Egyptian building technology in the 70s and 80s to build flats on a 'profit' ? Last question. Are HDB and SLA government bodies or private companies? Let's put this right once and for all. Companies make profits and losses. Government bodies spend tax. That's it. HDB only make losses when shorties are high.
Hope this answers your question, brother.
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