Ministry of Finance's shocking U-turn on "public feedback"

Posted: August 22, 2009 by fievel in Labels: ,

With my last blog post on how our government has failed to rein in inflation, especially in property prices and a UBS research report that Singapore has become the second most expensive city in Asia (overtaking Hongkong in costs but not salary), barely out for a day, I woke up this morning to Straits Times' double whammy (and counter intuitive) reports of "No Sales Gain Tax Change" and "Homes more affordable".

In the first report, splashed across the front page of ST, the government announces that they are backing out of a recently proposed properties gains tax law due to "salient public feedback"...
....WHOA...wait a minute! Since when has public opinion really figured in the decision process of this ruling party? I mean, if that is truely the case, then we will not have their $2million annual salary still firmly in place.

It is no wonder that the congratulatory notes for this pro-speculative move came from Steven Choo, the Chief Executive of Real Estate Development Association of Singapore (REDAS), and Tan Tiong Cheng, Chairman of Knight Frank, a real estate company, but why are the papers publishing such one-sided views on the papers. In the capital markets, this is akin to a portfolio manager singing his own book. If a vacuum cleaner salesman tells you that his vacuum cleaners are the best you will have doubted his words, but why the lack of discern here with property players?

Another question came to my mind - being in the capital markets give me perspectives stemming mostly from the trading industry - there is a watchdog in capital markets to prevent stock brokers front running the customers, and to ensure fair practices in the markets, and they are in turn watched over by an independent board - who is there to watch over our property markets? Who is there to watch over decision makers? Who is there to watch over the Ministry of Finance? What if a particular decision maker becomes corrupt and makes decision tainted by personal gains and benefits?

$2 million dollars is a lot of money for an individual's salary, but for a greedy individual, it will not be enough to prevent corruption. A chinese saying goes, "Man is so greedy, if he were a snake, he would try to devour an elephant."

I will follow up with a detailed post next on why average property prices at 19 times the average citizen's annual salary is a horrible state of affairs and it is shocking to read in our national papers that it is deemed to be ok, just because we can benchmark it to worse times (40x salary) back in the 1997 bubble. Shocking...just shocking...


  1. Anonymous says:

    Speculation is good. Helps developers and certain investors make money.

  1. Fievel says:

    I don't know what to say to that, anon@242pm...
    Yeah it is tough because if you are a homeowner you would be cheering the prices on its way up as well, and I wouldnt blame you. But an over speculated housing market is bad too because it will eventually end up in a burst bubble, and that will hurt you too. Right now, our housing market rally is certainly not grounded on economic fundamentals, and so there will be 2 likely scenarios;
    1) The broad US economy does not fare as well as everyone is hoping in the next few quarters and sentiments takes a U-turn and this bubble, on hindsight, will make the govt, Mr Mah and MOF all look absolutely stupid because it was so obviously staring in their face
    2) The US economy gradually recovers inflation becomes the next big battle they have to fight due to the quantitative easing already unleashed, as such they raise interest rates and the speculators in Singapore, unable to find higher rentals to meet the higher mortgage payments(since we have already now priced in a recovery), go to the market and what do we have? We have a Great Singapore Sales on the properties.

  1. Anonymous says:

    In the first place, to ask for public opinion on need to be taxed is silly and inappropriate bec you will only attract those property owners who own many properties, speculators, agents and highly paid stable civil servants and developers and those with property interests to oppose strongly. Who want to be taxed? So these groups will be very vocal and you see the votes are about 60 to 4 in opposing. It is clear the government wants to prop up the property markets as they have such an enormous stake in S$, assets and investments in Marina area and stamp duty/revenues to lose out. If the government has the people interest at heart, they should start to cool the speculative property market now. It is such a sad state of affair now in Singapore. We are all analytical enough to see and observe.

  1. Fievel says:

    Yes, I think it is yet another time the people of Singapore gets a cheap excuse for an unpopular decision,almost as if they feel we are getting dumb and dumber.

  1. Anonymous says:

    frankly, i think the PAP dont give a damn or bother on public opinion or not, they just wayang wayang and enjoy, you know what i mean. They know they sure to win, whichever side of the coin you toss. "You want you challenge me in the GRC, you sure to lose". The single seats are all bull shits as they are embedded and entrenched in strong grassroots. The two tiny oppositions are ineffective. This is a very sad state of affair in this country. We have to live with it and many SIngaporeans just live with it with many foreigners and PRs are happy with it.

  1. Fievel says:

    Like you and many other friends, I also don't think Singapore will get a fair electoral system anytime in the near future...but we must stand by our refusal to be taken as fools, as mere digits. Elitism should not be allowed to fester freely this way.

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