Straits Times – 01 Mar 12

Summary:

• The subdued sentiment has forced CDL to halt marketing its premium project The Residences at W Singapore Sentosa Cove. (Forced? Developers are never forced to stop marketing their developments. They are profit-driven. It just means that it is not that profitable for them to sell this development and they have the holding capacity to stop marketing this development because they do not need to sell it below their ideal price. AND obviously, since they are holding it, it means that their long-term view of the property market is still very positive.)
• CDL director and executive chairman Kwek Leng Beng told a results briefing yesterday that the additional buyer’s stamp duty measure introduced last Dec was aimed at preventing a property bubble and it was not designed to crash the property market. (Yes, I will have to agree with this.)
• He added that the Government will likely review its various property measures if necessary: “The effect of the medicine cannot result in a cure overnight. It has to take time.”
• He also said that he is not worried about the health of the high-end sector because most developers have strong balance sheets and can afford to hold on and sell when better times return. (YES, this is the point that I have always emphasized to my clients. Developers can afford to hold on to their properties i.e. they are NOT SELLING, but they are BUYING. That is why, as an investor, your ability to hold a property is very important. Always invest in a market where you can hold onto the property.)
• “There is also a business model that some of the developers may be starting to think about… we don’t want to sell but keep it and get rental income… One day, the property will appreciate a lot,” noted Mr Kwek. (Take note of this: many developers like Far East are already doing that. My suggestions to investors are: spend a little bit more money to get a good property and keep it for residual income. You might even be able to pass it on to your children if you do it right.)
• CDL is equally optimistic about China. It already has 3 sites there an an additional $500 million has been allocated to CDL China subsidiary for acquisition opportunities. Mr Sherman Kwek, CDL China’s chief executive, noted that property cooling measures in China have enabled the group to find opportunities by tendering for prime sites at reasonable prices. (Noticed that they are buying and not selling at this point of time.)
• CDL reported a 32.2% drop in 4th quarter net profit to $163.2 million due to the absence of several one-off gains made in 2010. (Note: CDL is still making profits. It is just lesser, that’s all.)
• Revenue for the 3 mths to 31 Dec 2011 improved 7.4% to $721.5 million. Profit for the full year rose 1.9% from $784 million to $798.6 million, while revenue was up 5.7% to $3.28 billion. (Profits, profits and a lot of profits.)
• Quarterly earnings per share fell 33.3% to 17.2 cents but full-year earnings per share climbed slightly to 86.4 cents. Net asset value per share rose from $6.89 to $7.51.
• A divident of 13 cents per share, which includes a special final dividend, has been declared.

Summary:

• Charges that developers pay to enhance the use of a plot of land have finally been reduced or left flat for some sectors, as the slowing property market takes its toll (I think it’s more for the luxury prime areas, rather than the rest of Singapore.)
• The new development charges, which are reviewed every 6 mths, were released yesterday and reflect recent land and property values for the varying market segments.
• They take effect today and are applied when the value of a site is increased because of re-zoning or when a taller building can be erected following a change in the plot ration.
• Development charges for residential non-landed sector have been cut by 3% on average on the back of cautions land bids by developers in the past 6 mths.
• This is the first time the charges have come down in more than 2 years.
• The biggest drops – the cut was 14% – for the residential non-landed sector occurred in Punggol town and the Upper Serangoon Road area and the areas of Hougang, Upper Paya Lebar Road, Toa Payoh and Bishan.
• Charges on commercial land have been increased by 6% on average and 15% for hotel and hospital sector.
• But rates for commercial land in Sengkang and Seletar areas have shot up by 52%, likely due to the sale of a retail site in Sengkang West Ave, with a winning bid of $1,155 per sq ft per plot ratio in Jan. This bid is almost 300% more than the land cost implied by the previous development charge rate. (I am hardly surprised by this. More people are now moving to Sengkang and Punggol. And many residents who had previously refused to move there, upon staying there, now realized that it is actually very accessible because of the expressways, North-East Line, and LRT around the estate. In fact, many of my clients, especially the young couple, would rather stay in Punggol / Sengkang and get a car, than to stay in Redhill and not get a car. So, it’s just a different way of looking at life.)
• Rates for residential landed and industrial and warehousing uses were unchanged.
• Experts say that the drop in development-charge rates for non-landed residential use is inline with market expectations.
• “Despite healthy buying momentum in the mass market… factors including ample land supply, concerns of a slowing economy and the possible bearing of the additional buyer’s stamp duty on the market have resulted in developers becoming more cautions in bids,” said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

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Together with Henry Park Apartments, which is also up for collective sale at between S$170 million and S$180 million, the total value of properties that have come up for sale in October has hit close to S$5 billion.
Developers are looking at collective sales with some caution now and added that any sale will depend on the attributes of the site and the developer’s risk appetite as well as market sentiment.

Government Land Sales Programme is offering developers many alternative sites.

The 677,493 sq ft Laguna Park site with proximity to the seafront would be a key selling point for any new development. Based on the reserve price, the land price comes to about S$954 per square foot per plot ratio.

Laguna Park was put up for sale earlier this year with a reserve price of S$1.33 billion. But the tender closed without a successful bid.

While the downward revision of the reserve price suggests that sellers might be more motivated to sell now, new requirements for en bloc sales allow a development to be put up for sale for one year only after receiving 80 per cent approval from homeowners. When this lapses, sellers have to seek a new mandate. Within this year, no collective sale has been transacted at over S$200 million yet. Generally, the key will be the land price and quantum.

The 99,000 sq ft Henry Park site, based on its asking price, the land price works out to be S$1,216-S$1,287 per square foot per plot ratio.

Still, analyst does not believe that the slew of collective sale sites will mean land prices will fall. Some sellers may have lowered their asking prices but their reserve price has stayed the same.

Barring the worsening in the global economic situation, the property market here should remain stable.

Click here to read Jarene’s notes on this. You will need a Facebook account!

• HDB Resale Prices has increased by 3.8% as compared to the previous quarter
• Resale transactions fell by 10% from 6,581 cases in the second quarter to 5,903 cases in the third quarter.
• Overall increase from Q3 2011 is 11.6%, which is an all-time high, i.e. HDB resale prices has been increasing at an average of almost 3% per quarter.
• Since Q1 this year, the quarterly price increase has accelerated, despite HDB’s largest release of new flats this year and next.
• HDB may have increased the supply of new flats launched and it has attracted many first time buyers who are not in a hurry to buy since there is a waiting time of 3 years.
• Demand in the resale market is strong and continues to be strong because it is coming from first-timers and families that have immediate housing needs, singles, PRs, up-graders and down-graders. These buyers make up almost 80 per cent of the resale market.
• On the supply side, the crunch in the resale market continues to cause prices to go up, and this is worsened by the mindset that sellers add on a cash-over-valuation (COV) component despite increasing valuations. They are able to do this as supply is tight and demand is strong.
• Weakened resale transaction volumes is expected by ERA not solely because more buyers have crossed over to the BTO (build-to-order) market. The lack of supply and high prices have made it more difficult to conclude deals.
• HDB will launch 4,200 BTO flats for sale in various towns such as Bedok, Bukit Panjang, Hougang, Punggol and Yishun next month.
• Including units sold under the Sale of Balance Flats (SBF) Exercise in September 2011, HDB’s total flat supply for 2011 will be 28,000 units.
• For 2012, prospective flat buyers can look forward to another 25,000 BTO flats. HDB said more details on that will be given at the launch.
• One reason that the housing supply is tight is that some of the current policies do not incentivise HDB owners to sell.
• A 2003 rule allowing them to rent out their flat, has prompted upgraders to move to a private apartment while keeping their HDB for rental income. And last August, restrictions on dual home ownership meant that those who already own a private home and a HDB flat, were even more reluctant to sell their unit. High rentals have also encouraged owners to hang on to their flats.

Click here to read Jarene’s notes on this. You will need a Facebook account!

In this article, the author, Mr Goh mentioned that he had met up with some old friends who are property investors, and they were musing about their property investments in Singapore. His conclusions were that:

1. Making money from the property market is not as easy as it seems.
2. The local property market is like a roller coaster ride.
3. It’s about the timing: like the stock market, the property market moves in cycles and if you are caught in the wrong end of the cycle, it may take years before you see the price you paid for that dream home again.
4. Sometimes, on paper, it would seem like a hefty gain is made on your property but after deducting the interest paid on the mortgage and the sums spent over the years on repairs and maintenance, the returns does not seem to be a risk worth taking, considering the large outlay involved.
5. During bad times, condo rentals can plunge so badly that it was uneconomical for owners to let out the unit.
6. Getting into property investment is far easier than getting out of it.

How true are these statements?

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A stabilizing property market does not mean that the property prices will drop or remain constant. It just simply implies that property prices will climb at a steady, constant pace.

What is driving the property market?

One word can sum it all. FEAR.

With reports on many foreigners coming into Singapore to invest in properties, and stories of how affluent Chinese from China coming into Singapore and sweeping the property market effortlessly, it has caused many people to feel afraid that they might lose out. And whenever there is a report that the property market had slowed down due to a lower percentage rise in resale prices, many people rush in to buy.

PM Lee was implying mainly about the HDB property market. He mentioned that HDB is working building more HDB properties to meet the demand for HDB properties. How does it affect the private property market?

All things constant, it should lead to a stabilizing effect on private property market as well. There will probably be short periods of time where HDB property market is not moving, but private property market is moving and vice versa. This will be due to new buyers (buying for their own usage) buying the more value-for-money properties at that moment in time. Whenever private property prices are deemed as too expensive, these buyers will switch back to buying HDB properties again and vice-versa.

With the “new average” combined income of $10,000 per month, there will be price resistance whenever property prices cross the $1 – $1.2 million mark. Developers know this – hence, the existence of Mickey Mouse apartments. I would expect new developments …..

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A Summary of URA’s regulations:

1. Holding Period for Seller’s Stamp Duties from 3 years to 4 years

2. Seller’s Stamp Duties imposed on properties bought after 14 Jan 2011:

- properties that are sold within:

• 0 – 1st Year of Purchase: 16% of selling price
• 1st – 2nd Year of Purchase: 12% of selling price
• 2nd – 3rd Year of Purchase: 8% of selling price
• 3rd – 4th Year of Purchase: 4% of selling price
• after 4th Year of Purchase: 0%

3. Loan to Value (LTV) limit on housing loan granted by financial institutions regulated by MAS for residential property purchasers who are not individuals is lowered to 50%.

“With effect from 14 January 20117, an LTV limit of 50% will apply to all residential property purchasers who are not individuals. This includes corporations, trusts and collective investment schemes, among others. The 50% LTV limit for housing loans will also apply to joint property purchases by an individual and a purchaser who is not an individual.

‘Purchasers who are not individuals’ refer to purchasers who are not natural persons.  These include but are not limited to corporations, trusts and collective investment schemes.

The 50% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011. ” Source: URA

4. LTV limit on housing loans granted by financial institutions regulated by MAS lowered from the current 70% to 60% for residential property purchasers who are individuals with one or more outstanding housing loans at the time of the new housing purchase.

- effective from 14 Jan 2011

- for borrowers who are individuals and have one or more outstanding housing loans (whether from HDB or a financial institution regulated by MAS) at the time of applying for a housing loan for the new property purchase.

However , for housing loans granted by financial institutions for private residential properties, Executive Condominiums, HUDC flats and HDB flats (including DBSS flats):

- borrowers who can show evidence that they have sold their existing properties will not be subject to the lower LTV limit when they buy a new property.

- If existing property is a private property, he can show a signed Sale & Purchase (S&P) agreement with the IRAS certificate showing that stamp duty has been paid on it.

- If the existing property is a HDB flat, he can show HDB’s approval letter to sell the flat, that HDB will issue within 2 weeks of the First Appointment.

- These borrowers will still be able to borrow at an 80% LTV from financial institutions.

- Borrowers without any outstanding housing loans continue to have a LTV cap of 80%.

Loans granted by HDB for HDB flats (including DBSS flats) will still have a LTV cap of 90%.

- HDB loans are offered to eligible Singapore citizens buying their first homes or right-sizing their flats to meet their housing needs.

- HDB loan applicants are required to utilise all the balance in their CPF Ordinary Account before HDB loans will be granted.

- Those taking a second concessionary HDB loan must use the CPF refund and 50% of the cash proceeds from the sale of their previous flat before they are granted an HDB loan.

- This is to ensure that eligible buyers, especially first-time buyers, purchase public housing in a financially prudent manner.

Additional Information:

1. The date of purchase for computation of the holding period for SSD shall be the date when a buyer (i.e. Buyer A) exercises the option to purchase the property, or signs the sale and purchase agreement, whichever is earlier. The date of sale of the property shall be the date when the subsequent buyer (i.e. Buyer B) exercises the option to purchase the property from Buyer A, or signs the sale and purchase agreement, whichever is earlier.
2. SSD is to be paid within 14 days of the execution of the Agreement (i.e. exercise of Option or signing of Agreement). If the Agreement is executed overseas, upon receipt of the Agreement in Singapore, the SSD must be paid within 30 days.
3. The 50% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.
4. The 60% LTV limit will apply to transactions where the date on which the option to purchase (OTP) was granted falls on or after 14 January 2011; or if there is no OTP, where the date of the Sale & Purchase agreement falls on or after 14 January 2011.

Source: URA

A former MGS girl herself, she feels it’s a bit ‘weird’ to be going back to her alma mater, but at least the two classroom spaces she has taken won’t be filled with desks and chairs. ‘We know the photographers who have studios there, so it’ll be fun to be neighbours with them. We’re looking forward to working at a place with creative buzz,’ adds Ms Lee.

Will such creative clusters work in the long run? As long as the balance between businesses and the arts is maintained, reckons Ho Kee Lam, the CEO of Traffic Pte Ltd which manages Red Dot Traffic, a colonial building in Maxwell Road which used to be the Traffic Police’s headquarters until 1999. ‘The anchor tenant for this building is actually Red Dot Museum, the second in the world after the first one in Germany. ‘We decided to create a cluster of creative businesses around the museum and the design awards we have, as we hoped it would stimulate the product design sector,’ Mr Ho explains.

(SINGAPORE) The buzz that has surrounded changes in the CPF scheme was given a new direction yesterday, when Manpower Minister Ng Eng Hen highlighted a significant move in the offing.

But Dr Ng pointed out that CPF members who invest on their own typically receive less than the 2.5 per cent interest guaranteed in the OA by CPF.

Said business consultant Wong Kai Hong, 53: ‘I’m not very happy, but we have to face reality. I still feel very young…Look on the positive side. You stand a better chance of living beyond 80 now.’

And this is the way for us to sustain our exceptional performance. This is why we are here today, because we have made these changes. So we are sitting in a strong position. We can tackle all the difficult problems which come our way, however difficult they may be, and we can move forward as one nation.

Tonight, I will focus on one major challenge for Singapore, which is the widening income gap and discuss several issues which are related to this: education, the ageing population and housing.

We know why the income gap is widening. We’ve discussed this many times, you’ve read all about it in the papers – globalisation, technology and cut-throat competition. This is the way the world is going and Singapore is getting carried along with it.

So if you look at the spectrum, at the lower end, hundreds of billions of unskilled workers in China, India, Vietnam, and there’ll be other countries, too, entering the global workforce, holding down wages. In the middle to higher end where you have skills – secretaries, clerks, professionals – IT is automating simple jobs. You don’t need a typist anymore, you need an office manager. So, the premium is on education and skills – simple things which the computer or the robots can do. If you’re competing against a robot you’re in trouble. You have to have skills and the ability to do things and think and the knowledge to do things which the computers and robots cannot do. So the premium on education has gone up sharply.

Somebody did a study in Singapore and we found that for every year longer you go to school, you can expect your wages to go up by 14 per cent. So six years in school, then when you go to poly or university, the increase is even steeper for university education, per year of education. So the premium on education is very high and the ladder is there and it’s steepening.

But this goes all the way to the top and at the very top of the distribution there’s fierce competition, in all fields. In sports, if you want to watch golf you want to see Tiger Woods, or if you want to watch tennis you want to see Roger Federer. They are the best. If your company hiring a CEO you want the best candidate. And you will try very hard to get the best candidate because the second-best candidate if he cost your company half a per cent in profits, for a big company that may be several million dollars. So you try hard to get the best. If you’re looking for a lawyer to fight your legal case for you, you will want to go for the best lawyer, not the cheapest one.

So the result is winner takes all. The top incomes are zooming up, the second-highest incomes, the gap is widening. So it’s not just between the top and the middle but even at the top it’s stretching out. Tiger Woods earns US$100 million a year (prizes and endorsements). The number two player in the world, most people here won’t know who’s the number two player in the work, which is the point. He’s Jim Furyk. He earns much less. And the number two earner in the world who is Phil Mickelson, he earns about half of Tiger Woods. So even at the top between number one and number two, the gap widens. The best and the rest.

So, at the bottom, in the middle, at the top, incomes are stretching out. But there’s one more reason why income gap worries us and this is the ageing population. Many of the poor people are likely to be elderly and even working people who are not poor, if they have not provided enough for their old age, when they retire and they have no source of income, when their savings run out, they will become poor and will face difficulties.

So this is what’s happening to us. It’s happening all over the world to developed economies. What can we do about it? The first overall strategy is to grow our economy, generate the resources to tackle these problems to help those in need. Without resources, you can talk, you can sympathise, you can feel the pain, you can’t solve the problem.

Ageing is a very difficult problem to solve. There are not easy solutions but I’ll talk about this later at length.

For the income distribution at the lower end, we emphasise training, skills upgrading, job redesign so as to raise the productivity of low-income workers, get them to be able to get into better jobs, better paying jobs, help them to earn more. And this is what NTUC is doing through job redesign.

In addition to this, we have programmes like Workfare we transfer to the low income, but not without conditions just as a hong bao, on condition you work, you make the effort, well I’m prepared to match you and I’ll help to top up your savings a little bit towards your take-home pay. But if you make the effort, we will help make your life better.

So at the bottom, we have a strategy. At the top it’s good that people are doing well. The incomes may look large but we cannot hold these incomes down nor can we levy higher income taxes to tax them away, because if you try to do that, particularly in a small and open country like Singapore, the talent will leave, the economy will lose vitality, many others will suffer. And right now we are prospering

because we have brought income taxes down, because we have welcomed talent, because we have attracted businesses which come here and thrive in Spore. So they’ve done well for themselves and our economy has boomed. One hundred and ten thousand jobs created first half of this year.

But although we can’t force the incomes down or tax them away, those who have succeeded have to show that they care for their fellow citizens, for example, through philanthropy. It’s happening in the US. A lot of the new wealth, people who are rich, instead of just spending it or living extravagant lifestyles, they are setting up foundations, doing good works. And here too many Singaporeans are donating generously to good causes. So our universities NUS, NTU and SMU, they have received contributions, donations for endowments to many projects. And the universities have a scheme to have endowed professorships. So professorships named after people. And we’ve collected contributions, they have collected contributions widely. Groups have mobilised in order to pass the hat around and between the universities, they have nearly 80 endowed professorships. I think the contributions add up to a few hundred million dollars. So Singaporeans have been making these donations, small ones and a few big ones too. Sometimes we have buildings and faculties named after the donors or after the foundations. So we have the Lee Kong Chian School of Business in SMU. NUS has the Yong Loo Lin School of Medicine. And we’ve got hospitals named after people – Tan Tock Seng from long ago. Recently the Khoo Teck Puat Foundation has made a very generous donation. So Yishun will have the Khoo Teck Puat Hospital coming up soon. And others like Mr Sim Wong Hoo have also made generous donations. More people should do this, according to your means, and from your heart, because collectively these individual responses make our society more much compassionate, much more cohesive.

In the middle of the income distribution for the vast majority of Singaporeans, our policies must enable them to do well, and provide them with many opportunities to move ahead along many paths. One major strategy is home ownership through the HDB. It’s the best form of social welfare for citizens because it gives every Singaporean a stake in Singapore’s success. I have some new plans for HDB which I will show you later.

Another major strategy is education. I told you just now how the payoff on education is going up and therefore this is the best way to level up our society. Our aim is to give every child a top rate education. Therefore our emphasis is on the quality of all our schools in Singapore, including all of the neighbourhood schools and

not just on a few top schools. We are building a high base in all these schools but they are not all the same. We want each one to develop its own special area of expertise and have its own passion, its own approach.

MOE has worked hard at this. I would say they have given you four more things. First more, freedom for principals and teachers to experiment, so you can try out new ideas. Second more, resources for schools with good ideas so that if you succeed, well, we will help you build on that success. Third more, opportunities for needy students thru’ the Opportunity Funds. And fourth more, it’s more learning less teaching.

When we first talked about more learning less teaching or teach less, learn more, sceptics asked, I am sure you will teach less, are you sure they will learn more. But we can see it happening now because there’s tremendous energies and enthusiasm in many schools and I talked to Tharman, I visited some of these schools recently to see for myself. And I’ll tell you about two of them.

One is Jurong Secondary School in Taman Jurong. The students showed me many projects but the one which I’ll share with you is their DVD – it’s not a disk, it’s what they do, digital video and drama. Secondary school students. They learn, they master the skills, then they use this in their language classes. So I attended a CL class, Chinese language, Sec 2. The teachers had assigned the students to read a novel. The novel was The Little Prince, in fact, it’s a French novel but they read the Chinese version of it, for a holiday assignment. After reading the novel, the students wrote a script to act it out. Then the students acted it out in the digital video studio. So complete with mikes, blue screen behind. So you can put anything you like, not just a fixed screen like this one down here. And the students managed the cameras, the students managed the monitors, the students controlled everything. After that, they were going to make the video, the class watched the acting, the performance, then they interviewed the actors which are their classmates and they asked the actors why did you do this, why did you trust that man, why did you draw this picture and show him and so on and discussed what they learnt, in Mandarin. It’s not bad. I spent 2 hours with the school. The students interviewed me in front of the blue screen. I felt quite nervous and before I left, they presented me with a DVD. This is Jurong Secondary School, I think there are many others like them.

Then I went to a primary school. Mayflower Primary School in Ang Mo Kio. Actually it’s in Yio Chu Kang, Sen Han Thong’s ward now but used to be Ang Mo Kio.

I went to open it, about 2000, came back to see what happened, some of the old teachers were still there.

The teachers were focused not just on grades but on character, moral values, social skills. They got the students to work in groups so all of the classrooms, you don’t see rows of desks and chairs. You see clusters of desks and chairs and parent volunteers involved for many of the programmes, actively. This is Mayflower Primary School in the heartlands. The teachers were full of spirit and passion. They are committed to teaching every child, they have conviction and pride in what they are doing. How do I know? Because several of them have school aged children and they’ve put their children into Mayflower Primary School. And you can see the difference in the children. So I didn’t quiz the children, I quizzed the teachers. I decided to ask them, I said, in Singapore, students are famous for staying quiet in class and they never speak up. Have you been able to get the students to speak up? I was greatly cheered by the reply because the reply was, the problem is how to get them to stop talking.

So they had a solution: group work, one student wears a badge “Noise manager”. They put up a full-scale musical – Our Time to Shine. I saw them rehearsing, I didn’t watch the musical, but Seng Han Thong attended the musical just before National Day and he e-mailed me. It moved him to e-mail me because I have said in my message that we will have a new Singapore with our own unique identity and a can-do, never-say-die spirit. So Seng Han Thong heard my message and he sent me this message, after watching the show.

“It was by our very own It was by our very own Ang Mo Kio heartland neighbourhood school, Mayflower Primary School, that has the same spirit of “can-do and never say die.” I felt very proud to see many of our Ang Mo Kio little boys and girls performing confidently on the stage. They acted professionally, they sang happily and they danced gracefully.

“I turned my head back and encountered many familiar faces. These are the parents and grandparents who might not believe that one day their children and grandchildren could perform so well on the big stage. I saw smiling and proud faces all around.

“It was indeed an occasion that made one realise that Singapore is a City of Possibilities.”

Many more exciting things are happening in schools all over Singapore but this is our fundamental approach to uplift all Singaporeans. Whichever school you go

to, whatever your home background, we will help you develop our talents to the full. The ladders are steep but we will provide you many ladders to success and help you climb up as high as you can.

All this depends on a very high quality teaching force, good teachers, principals, MOE staff, dedicated and passionate about teaching. And this is what we have and this what our future depends on. We have 28,000 teachers and principals in Singapore. I can’t bring them all into this hall but I’ve invited a few here tonight to represent all 28,000 of them and I’d like them to stand so we can salute you.

Before I move on, I’d like to talk about just one aspect of our school education and that is language skills.

Many older Singaporeans can understand and speak Malay and Bahasa Indonesia, including many older non-Malays. But in the younger generation, too few. It’s because we’ve made English the lingua franca and don’t live in kampungs, you live in HDB flats that mingling is in English. But we need more people to be familiar with the languages, maybe not totally fluent but chit-chat, understand the gist without translation. So you can chatak-chatak, a bit more advanced bual-bual. If you’re in Indonesia at least obrol. I think that’s the right word. Then we can interact with our neighbours in their language, work together on opportunities and deal with whatever issues arise from time to time.

We’re not changing our mother tongue policy but we must encourage more non-Malays to learn Malay in addition to their mother tongue. Therefore, we are going to have two new initiatives in our secondary schools. First the Malay Special Programme to study Malay as a third language. It’s there already in all the schools but not very popular. So we’re going to introduce incentives to encourage more students to do the Malay Special Programme. Singaporeans like incentives, so we’re going to have small incentives – two bonus points for JC admission and a few more things. And similarly we’ll have the incentives for non-Chinese students who are doing the Chinese Special Programme, in other words Chinese as a third language, and hopefully more non-Chinese will take that up too.

We will also introduce a Regional Studies Programme in a few secondary schools. That means probably three or four of them. Good schools offer scholarships for this programme, probably about 100 a year. So what will be in the Regional Studies Programme? First, the Malay special programme, learn Malay as a 3rd language. Secondly, also learn about SE Asian neighbours. And you can have immersion visits, exchanges & so on. It would be good if one of the schools can offer

Bahasa Indonesia instead of Malay. And from our preliminary soundings it looks like there will be some one school which is interested.

Beyond the schools, we aim to get every student into post-secondary education, and as many as possible into tertiary institutions. We have invested very heavily in our ITE, in our polytechnics, in our universities. I’ve shown you some of the things they have been doing. I’ll give you a little more this evening. But because of our investments, we’ve increased the intakes year by year and we’ve increased the upgrading, more students progressing from ITE to poly, more students going from poly to university, more students going into the entire post-secondary and tertiary sector.

And with good schools, more and more students want to go up and want to go to university. So this year particularly if you have been reading the newspapers, you will see that many parents and many students fretted about their university admission. They got reasonable grades, maybe even above average, but not quite good enough to get into the subject in the university which they wanted to. So they blame it on dragon babies. But it’s not because of dragon babies. Firstly the dragon was very small. Secondly even with more dragon babies we actually expanded the university intake more than proportionately so that a bigger proportion go to university this year than last year. But of course an even bigger proportion want to go who couldn’t get into the place they want, and so the anxieties are still there.

I think there are also many polytechnic graduates who hope to go on to get degrees. Right now about 15% of the poly graduates go on to NUS or NTU or SMU. And there are many more who are getting degrees by other routes, including many who go abroad. Our estimate is maybe half the poly students eventually get a degree, in fact quite soon after graduation. And some of them go abroad because we don’t have enough places in Singapore. One MP told me, Matthias, he visited house to house, met a couple, a bit sore because their two kids did well in poly. Then he sent them overseas to Australia for university education. They graduated. Now they are working there, they haven’t come back. So two old folks alone at home feeling bereft, empty nest.

I think there must be many more parents like that. So we should expand our university places in Singapore. But we should not just do it heedlessly, willy-nilly. We should make sure that students get a good education and are equipped with valuable skills which are going to be useful to them. We have to be careful because some countries have produced large numbers of graduates without regard for either the

quality or the employment opportunities. Lots of universities. Some of them paper printing machines. And so they face big problems – graduates unemployed, or underemployed. It’s better not to have graduated but to have a good job, than to have graduated with a skill which is not useful and then you spend your time feeling unhappy.

Today in Singapore nearly one quarter of every cohort get subsidised education in our three state-funded universities (NTU, NUS and SMU). We aim to raise this now to 30% of the cohort in publicly-funded universities by 2015. We set a new target. From now to 2015 we have eight years, we will push it up from now 23% to 30%. And this means we will have 2,400 more university places each year for our students. This also means that we should build a fourth publicly funded university. I see Prof Lim Pin, the old Vice Chancellor smiling in the audience.

But I think it is the right thing to do because the existing universities are already rather large. We shouldn’t expand them further. We need to develop a new fourth institution with its own character, unique strengths, different from NUS or NTU or SMU. Just as when SMU came along, it was not just NUS or NTU but something different and now it has got its own character and its own pulling power. We may not limit ourselves to just one new institution. We could open more than one route. I’ve asked Lui Tuck Yew to chair a committee to study how we can expand the university sector. I’ve also found him an advisor to the committee who’s Dr Tony Tan and we will decide within a year on the best way to proceed.

With these changes in our schools and higher education, Singaporeans can look forward to more opportunities to receiving a first class education, more pathways to success.

Another factor in our widening income gap is our ageing population. We have one of the fastest ageing populations in the world. Why? Reason No. 1, not enough babies. I’m not discussing this anymore tonight. Nike says, just do it. But the second reason is Singaporeans are living longer.

I had a conversation some time ago with Father Michael Arro. He’s a Roman Catholic priest in the Church of St Teresa. Some of you may know him, a very nice old gentleman. He’s been here a long time. He came from France to Singapore 50 years ago. He told me this. He said, when first he came to Singapore, his parishioners would retire at 55 and he would conduct their funeral services around the age of 60. So about 5, 6 years after they retired, well, they passed on. Now, he said, people retire at 62 and they live till about 80 which means about 20 years of

retirement. Father Arro was spot on because after I talked to him, I went to look up the statistics and in 1957, 50 years ago, the average life expectancy in Singapore was just 61 years old. Today, the average life expectancy is 80 years old and many people will live longer than 80, to 90 or 100 and beyond. So I looked up some more statistics. Ninety and above, do you know how many people? 9,000 in Singapore. 100 and above, MM said few dozens so I went to check. Vast under-estimate. 500 people, 100 and above. I asked the registry, are you sure? Your records up to date? They said yes, we check from time to time.

So recently on CNA you may have watched a programme, The New Old. Featured a lady, Sister Teresa Hsu, social worker, 110 years old. Still walking, still active, still visiting some of her old needy people whom she was helping. And she’s not the oldest. There are some people who are older than her in Singapore. So I said, what about people who are 120 years old. So the staff told me, we don’t know because when you reach 120, the computer assumes that you forgot to report something and transfers you to a different file. But one day, may be there’ll be somebody who is 120 years old and we’ll have to change our computer program.

The CNA programme The New Old also showed Professor Ann Wee, aged 81. She’s here with us this evening. I invited her here because of something she said.

She says, “I describe myself as an OPWA, an Old Person With Attitude. I drive, I work, I go to see students, I take care of my garden, my life. I am fully alive to the world. And she said, she aims for a “rectangular life”, and she explained, a happy and meaningful life for as long as you live and when the time comes, let it be fast and painless.

So the aim is not to live forever but to have a good life and a good death, what the Hokkiens in Singapore call “ho see”. It’s a reality which we have to face. The Japanese have the same philosophy. They look for three major components of a happy life – ample eating, leisurely sleeping and a quick death. And they have special temples where people go to pray for this. It’s called pokkuri dera – temples which bless longevity and painless death. And these pokkuri dera is very popular in Japan. So the next time I go to Japan I’ll visit one.

What will Singapore be like, say in 2020? To find out, I visited Radin Mas, Sam Tan’s ward.

Radin Mas has 17 per cent of its population aged 65 and above, one in six. Singapore as a whole is around one in 12. But by 2020, Singapore will be like Radin Mas, one in six, so I went for a preview. I’ll show you some pictures of the preview.

These are some of the people I met in Radin Mas, old folks celebrating a birthday party which the grassroots organises for them once a month, having a good time. If you add up their years on stage, I think it’s quite a big number. They stay active. The RC organises many activities. This one they are doing Wai Dan Gong, so shivering away, but not just exercise, also socialising, keeping in touch with each other.

Sam Tan organised and just started a Project Golden Service because he found all these old folks, to help them to pick up skills to do something useful, and earn some pocket money. So they did very interesting things – calligraphy, others dong haircuts. This one, very fancy ketupat. And the next one, two old ladies stitching quilts, in their 70s. And I asked them, “Where do you do this?” They said, “Go down to the old folks centre.” They speak Cantonese. So I said, “You go down to sew the quilts.” So they said, “No, no, we go down. First, we keng gai, keng gai.” That means chit-chat with our friends, socialise, then afterwards we can sew a quilt. They don’t really need to make the quilt but it’s something productive and useful for them to do together.

I also met a few and talked with a few other ladies. Two of them are here. The one in the middle, this one in black and red is an old resident of mine from Teck Ghee. I’d helped her, so when I went down she came down to say hello to me. She had had a rough time. She’d had been unwell, she’d had back problems, spinal operation, wheelchair-bound. Then when she moved to Radin Mas, she joined a religious group, she made friends, chants and meditates daily, exercises, regained her strength. Now she’s walking again with a walking stick, as you can see. But she’s active again.

And she said, “I have something to look forward to – chatting with my friends, thinking of new things to do, all the time getting stronger.” But she asked me one very sharp question. She said, “My CPF runs out this year. What happens after that?” She’s 68 years old. So I told her, “Man man lei.” Slowly, we are working on this problem, which we’ll talk about later.

The other lady you will not believe. Mdm Lee Siew Lan. How old is she? She’s 91. She’s still working as a cleaner in Redhill Market. How did she get the job? She was friends of the hawkers. Hawkers introduced her to the cleaning contractor. So courtesy of NTUC’s job re-design programme, proper equipment, trolleys, garments and so on, so she’s productive. So she told us, she says, she didn’t tell me this, she told Sam Tan this. She says officially she earns $800, but actually she moonlights a

little bit, helping out hawkers cut vegetables, jaga the stall. And she’s fiercely independent. She said: “When people give me free things, I don’t accept. Why, when I can afford to pay? But if they say OK, you are a friend, we give you a discount, then I think ‘OK, friends can accept kindness.” So this is the spirit you want in just in 91-year-olds but in 51-year-olds and 31-year-olds and 21-year-olds too.

I also met Mdm Loke Tai Hoe, the samsui lady. She’s chatting here with Lui Tuck Yew who dressed to match. She came to Singapore. She’s now 81 years old. She came to Spore. No, she’s older than 81 years old, 89 years old. She came to Spore when she was 18. Her husband came first, brought her over. She started working as a samsui woman, finished at about 60 plus, carried on working until she was 79. She brought up 10 children. Her husband has died now. So she lives with four of her unmarried children in Radin Mas.

As Singaporeans grow older, need to give them more help. In Radin Mas, the flats are fitted out for elderly living. So you have the panic buttons and cables to call for help, flat floors, handle bars and so on. And downstairs there’s a VWO. So social workers and RC volunteers will visit the old folks regularly, help them look after them. And all the old folks are very grateful. So I talked to them individually and I asked them: “How do you manage?” And they all said: “德教” because many of them are Cantonese. So 德教 is de jiao. It means Thye Hua Kwan Moral Society, which is the VWO which is looking after them. So there’s a tremendous sense of gratitude and obligation and sense that somebody cares and is looking after them.

I was very happy to see that they are active, healthy, and cared for by the community. But I was also worried that more and more elderly are living by themselves, because the best solution is still the family, stay with your children or at least have children staying nearby who can visit regularly and who can help you with something if you need some help.

Radin Mas is a glimpse of our future. All wards have senior citizens like these. In fact Radin Mas is not the oldest one. The oldest one is Kreta Ayer-Kim Seng, Lily Neo’s ward, in Jalan Besar GRC. And it has one in four residents above 65.

Now by 2020, all of us will have quite a lot more white hair and our whole society will have to make adjustments. The government is very seized with this issue. Boon Heng is working on it full time. I talked about this earlier in Chinese earlier, covered several aspects, but there’s one more important aspect, which is savings for old age.

REACH – Amy Khor now chairman – did a consultation exercise on active ageing. They did many forums and they got lots of feedback and she distilled it down and sent me the report. Amongst all the different feedback, two thorny issues consistently came up. One was employment opportunities for older workers – in other words, working longer. And two, having sufficient funds for old age. And that means CPF savings. And I want to focus on these issues next.

The best way to be all right in old age and to have enough savings is to stay employed and to work longer because with longer lifespans you cannot retire at 55 and live until 80 or 85 or 90. As lifespans go up, you have to work longer and then have not too long a period of retirement at the end of your life.

Countries around the world, US, UK, Japan, even America, are trying to get their people to work longer and to receive state pensions later. They are trying to push it to the, it’s now, many of them are in their 60s or early 60s, they’re trying to push it to mid to late 60s. In fact, they think that they have to push it all the way into 70s or at least until 70 but it’s politically very difficult, it takes a very long time.

We also have to make this adjustment. We don’t expect Singaporeans all to work to the 80s and 90s like Mdm Lee and Mdm Loke but to retire at 55 or even at 62 is too early.

Lim Swee Say told us this story. He’s not here tonight, he is rushing home from America and his flights got disrupted because of bad weather so he sends his apologies but he told us this story and like Jurong Secondary School, I made a little script out of it. So I will read this:

Lim Swee Say on a walkabout, he said, I talked to a resident at the market. He was healthy looking.

So Lim Swee Say says: How old are you? Resident says: 72. So Lim Swee Say says: Wow. You are looking healthy for your age. Are you still working? So resident says: No. I retired a long time ago, when I was 55.

So Lim Swee Say said: 55! Why did you retire so young? And the resident says: Because I didn’t know I was going to live so long!

Now, so our challenge is how to get more people in their 60s working. I discussed this with the union leaders and this is also their foremost concern, how to get more people working because they tell me that workers themselves want to continue working and are putting pressure on the union leaders to work out arrangements with the employers. And I think this is a tremendous plus, that they

do want to work. But we need to enable them to do this and to enable more of them to do this. How do we do that?

I think that in Singapore there are 3 ways. Education, legislation and incentives. Well, let me start with education, just briefly because I’ve talked a lot about this before. We have to change mindsets for both the employers and the workers. We’ve got to get the employers to recognise the value of older workers, deploy them effectively and make the most of their abilities and strengths. And enlightened employers are starting to do this, like SBS Transit is hiring back some retired bus drivers as service mentors to guide the new drivers. The workers also have to adjust and they have to be prepared to change gears after 62, to accept lower pay and lighter work, to accept lower appointments so that younger ones can move up because otherwise if you have the oldest ones at the most senior jobs, then our whole system will be like a mountain with greyer and greyer hair at the top of the mountain, and that’s not the way to be full of dynamism and vibrancy. So companies like SingPower, they have senior technicians, they retire, they are reemployed as technicians. So somebody else can be promoted to be senior technicians, can move up. So education is the first step.

The second step is legislation, to send a clear signal to employers and to the public, to the workers, that we are serious about this, that this is a major problem for us, we have to do something about it. People often ask, why don’t we just pass a law, raise the retirement age. It’s straightforward. You just pass the law. What the government says will happen. But our experience shows us that what the Government says if you say it unwisely may not happen, and just raising the retirement age may not solve the problem, may make it worse.

Today, the legal retirement age is 62. But not everybody works till 62. Among the women, many have left the workforce much earlier, 30s and 40s, when they had children, when they set up their households, they dropped out of the workforce. Among the men, only two-thirds are working at 62. Two-thirds is not bad. But even then, one-third have retired before reaching 62 despite the legal retirement age.

So if we just raised the retirement age beyond 62, either it doesn’t work and people drop out anyway or employers say, “This is going to be a burden to me. If I am looking at an older worker, I better not take the risk of employing him and then I may be stuck with him till he’s 65.” So I think we cannot just push the retirement age up. The better approach which we are pursuing is to legislate for re-employment. Retire at 62 but re-employ, continue working beyond 62, year to year, but continue

working as long as you can. It’s more flexible for both the employers and the employees, not necessarily the same job, not necessarily the same pay. Doesn’t mean that you will definitely get a job but employer has to make an offer and you take into account the worker’s performance, his health, his preferences and the company’s needs and both sides work out a win-win arrangement usually year to year.

This is what the Japanese have done but they only took this step after a very long period of preparation. And this is what we are going to do also.

So we are going to pass a Re-employment Act to take effect by 2012, in fact Jan 1, 2012, and we will retire employers to offer re-employment to workers who reach the retirement age, which is right now 62. As a first step, re-employment up to 65, then later we push this up to 67. So in other words, come 1 Jan, 2012, employers have to offer re-employment up to 65 years old.

So that’s legislation. But to buttress the legislation, we’ll have incentives. And the incentive should be to encourage older people to work and to encourage employers to hire older people, both sides. So one tool which we now have to achieve this is Workfare, Workfare income supplement which we introduced this year because with Workfare there’s a subsidy, if you employ the person you get that grant from the Government. So if person wants to work, employer wants to hire him.

We’re already tilted Workfare in favour of older workers. When we designed it, we did it so that 35 years old, you start getting something, 45 years old you get the full rate. But we can go further than that and we can have further higher tiers for the older workers in their 50s and 60s to strengthen the incentive so that when the employer looks at the worker, he calculates between an older man and a younger man, I think the older man has this extra little edge, and between an older worker and a foreign worker, foreign worker you pay levy, older worker he gets Workfare. So that’s an additional leg up for the older worker.

We had planned to introduce these additional tiers for the older workers when we review the Workfare Scheme after a few years, after it has been implemented and we get some experience with it. But I think this year we are making major changes – legislation, CPF – better not wait, let’s move now.

So we will push the Workfare up to have higher tiers for the older workers, starting above 55, up to double the payout for the younger workers. So, for example, if you look at a worker who’s 60 years old, earning a thousand dollars a month today, he will get $100 a month from Workfare today, same as a 45-year-old because it’s

$1,200 a year, so $100 a month – 10 per cent of his salary in Workfare. When we revise the scheme we will double this to give him $200 a month. If he’s earning 1,000, it’s $200 a month, which is 20% of his salary. Not all in cash, some in CPF, but it will make a big difference because it will mean more take-home pay, more CPF contributions. It will encourage the employer to hire him and it will encourage him to go and work.

These are proposals which came up from the unions and which were recommended by the Tripartite Committee on Employability of Older Workers which Gan Kim Yong chaired. We are implementing them now. I think it will raise the employment rate for the older Singaporeans, and help them to save more for old age. And this is a core part of our programme to help old people take care of themselves.

Now I come to CPF. The CPF system underpins our whole social security arrangements. It’s a very good system which has served us well. It’s funded by contributions from workers and from employers, fully funded and not paid for out of taxes, like social security in America or in Britain. So each person saves for his own and provides enough for his old age.

It meets three key needs – housing, medical, retirement – which are the three key things everybody has to think about. But we have to adjust and bring the CPF system up to date. When CPF started, life expectancy was 60, 61. Now it’s 80 years old. So we need to make three changes: Firstly improve the returns on the CPF savings; secondly, draw down the CPF savings later so that they will last longer; and thirdly to cover the risk of living longer than expected.

The first question is how to increase the returns on the CPF savings? CPFpays interest – right now it’s 2.5% on the Ordinary Account, 4% on the rest, Special Account, Medisave Account, Retirement Accounts. Its interest rate is like a savings account in the bank, only it’s better. Interest rate is higher and it’s safer. It’s totally risk-free, balances guaranteed by the government. Sometimes the returns are lower than buying shares, but sometimes shares can lose you a lot of money. And shares you make big, you lose big. And like recently in one week you can see your value go down 10, 15%. If all our CPF members were on the stock market, I think a lot of hearts will go “gidibok, gidibok” every night. So it’s not part of our system. Those who want higher returns, can accept higher risks, you can invest your CPF money yourself, we have a scheme, it’s called the CPF Investment Scheme. But although it’s called the CPF Investment Scheme, it means you invest your own money and take the risks.

I think we must improve the returns on the CPF. And I think our main focus should be to help the lower- and the middle-income groups. In other words, the people who don’t have so much money in the CPF. How much money do they have? Well, if you look at the active accounts, people who are working and contributing regularly, half of the active accounts have $45,000 or less. It’s not a huge amount but it does include younger workers just starting to save. So understandably they will have less. So if you look at just the older workers they have a bit more. But still if you have $45,000, you’re not poor but I would not think it is wise to strongly encourage you to go and play the stock market. So why? First, you don’t have enough savings. Secondly, you may not have the expertise. Thirdly, you should not expose yourself to excessive risks and in fact, quite a number of the people who have invested on their own and bought shares have not done so very well and probably would have done better if they had left the money in the CPF.

So what should we do? I think the solution should be to enhance the existing risk-free framework for the CPF balances. We’ll have the CPF board pay higher interest but up to a cap. How much higher interest? One percentage point more. Where should we set the cap? We’ve studied this carefully. I think what we should do is to say $20,000 in your ordinary account but taking all your accounts together, up to $60,000, combined, ordinary, special, medisave, retirement, altogether we will pay higher interest on $60,000 but not more than 20 of that should be in your ordinary account because the ordinary account is more liquid. You can use it for housing and so on. So this way, more than half of the active members will get full benefit, one percentage point more on all of their balances. And you have this higher returns, you can still use your money for housing, you can still use your medisave account for medical expenses but we will put one restriction, there has to be a catch and the catch is, you will not take out this part of the money to invest in the CPF investment scheme because this is long-term money and you leave it with us and we will treat it like retirement funds and we will give you the higher interest rate.

Beyond the $60,000, we keep the status quo. For the ordinary account, it’s the same formula as now. So for the HDB, which I think all of you would be interested to know, will also be the same formula as now. For the special account, we are making adjustment to change the basis of the special account from the present one to a long-term rate. It will mean a little bit less now but probably more on average over the long term. But these are details which we will explain fully later. The main message is, one percentage point more on up to $60,000. If you have

more than 60k, what do I say to you? I say, if you have more than 60k, you should be able to look after yourself because you’ve accumulated this, you should be able to invest your money beyond the first 60k, the CPFIS is there, have a care, take good advice, invest it for the long term. But you have enough so that if it goes up a bit, down a bit from day to day, you don’t have to panic and if you take it over 5, 10, 15 years, well, you maybe can do a little bit better.

Now one percentage point may not sound like a lot of money but it makes a big difference. If you take a young man who starts work today, 21 years old, earning $1700 a month and then over the years, he buys a 4-room flat, so he draws down some of his CPF but meanwhile, all the money in his CPF is accumulating higher interest year by year, 1 per cent more, then compound it. Over 35 years, by the time he retires at 55, that will mean he has $20,000 more interest than he would have earned under the present system. And that means one quarter more interest than before. It’s a lot of money. It’s going to cost the government a lot of money. It’s going to cost the government $700 million a year, just for starters and over the next probably 10, 15 years as the CPF balances increase, members save more, I think the balances attracting this high interest will grow and the cost to the govt will grow. How much is this? $700 million year after year. Today, our HDB subsidy, Ministry of Finance pays HDB every year for the whole building programme, it’s $750 million. So this is like one more HDB scheme. But we’ve done our sums carefully to make sure that this is a reasonable rate to pay on CPF balances and is a rate which the Government can afford because it’s most important. You cannot just suka-suka write any number, must be properly justified and must pass muster and inspection by the Elected President, which is the way we have done it. And we’ve briefed the President. It’s the right thing to do to help lower and middle income Singaporeans to save enough for old age, and is a reassurance to everyone that when you grow old, the CPF will be one major pillar to help you see through your retirement needs.

So that’s the first major change to the CPF – higher interest rate subject to a cap and rules.

The second question is how to make CPF savings last for your life expectancy, which means up to 80 years old.

Today, we already have some rules. At 55 you set aside the Minimum Sum, then you can take out the rest. Minimum Sum is going up and the rules for setting aside are getting tighter but basically you must set aside the Minimum Sum.

We settled this in the last round of CPF changes. So my first message is: no change to the rules at 55 to what has already been settled. This remains. It was settled in 2003 and will continue. But right now, after you have put aside your Minimum Sum and put it into your retirement account, you start to draw down your Minimum Sum when you are 62 years old. Monthly payments supposed to last 20 years. But actually if you don’t have enough CPF it may not last 20 years. So 62 + 20 is 82. So 62 years old is when you start to draw your Minimum Sum and that is called the Draw Down Age for the Minimum Sum. But is 62 is the right age to start drawing down?

I told you what Madam Ng said to me just now and her problem. She says, “What happens when my CPF runs out?” Even with a higher interest rate which we are paying, if we start drawing down the CPF too early, the money is going to run out too soon. And if we start later, the Minimum Sum will last longer. You may think that 62 to 82 is long enough, but many people are going to live beyond 82. So if we can push off the draw down by one year at the front end, then that one year’s money which is saved and which stays in your CPF and accumulates interest, including +1 per cent for 20 years, by the time you reach the tail end of your 20 years, that will have multiplied and doubled. So you’ll have two more years’ worth at the tail in order to last you longer.

So we have to make some adjustment to the Draw Down Age because 82 on average you may live that but many will live beyond and I think especially many women will live beyond because the women’s life expectancy will be longer than the men’s life expectancy.

So, we are legislating for re-employment until 65. We are pushing hard for people to work into their 60s until 65. Therefore, Draw Down Age should also go to 65 because you are working, you’ve worked till 65, when you stop working probably at 65, then you start drawing down. If you can continue working beyond 65, well, then you get both.

So, we will raise this Draw Down Age from 62 to 65 but not in one shot, progressively over a number of years. In 2012, the Re-employment Act will kick in and we will start to raise the Draw Down Age in 2012 from 62 to 63 and then every two years we’ll push it up another one, so it will reach 65 by 2018. So that means if the draw down age is 65 and you draw it down over 20 years, 65 plus 20 means last till you are 85 years old, which I think is better.

How will this Impact different age groups one by one? First of all, those who are nearly 62 years old and going to draw either tomorrow or next year, you’re okay, we’re not disturbing you. You will have made your plans, you may want to go on holiday, go ahead.

But those who are slightly younger – that means 57 years old and below – we will disrupt your plans just a little bit by one year. Those who are not approaching 62 years old yet – that means 53 and below – I think you can take the full adjustment. We’ll push your draw down age up to 65. You’ve got nearly 10 years to continue re-skilling and for us to change the laws & everything else to make sure that when you get to that age, it will be easier for you to find a job and work till 65.

The press will carry the table tomorrow. I will not show you the table but that is the gist of it.

I’ve explained this at length because I know this is not so popular. As ST did a survey last week about CPF, they asked people, do you want higher CPF returns? Yes, CPF returns are too low. Do you want to work longer? Yes we want to work longer. Are you worried about saving for retirement? Yes, I’m very worried I may not have enough. So how about delaying the draw down age? Huge numbers said no. They know the problem but they want to draw down now. But we have no choice. People are living longer, we have to work longer, and we’ve got to start drawing on the reserves later. Therefore we have to start moving now. Not move all the way now but start moving now. And we will get there in good time.

Of course se also have some incentives in this, and the government knows that older workers are affected by this deferment in the draw down age. Older workers meaning those who are in their 50s. So we will give them something a little bit extra. We will pay a one-off bonus. In fact we’ll have two kinds of one-off bonuses. One is a one-off bonus interest to pay into their Retirement Accounts of people whose draw down age has been pushed forward. So from 62 to 63 to 64 to 65. If you are affected by that in the 50s age group, we will give you what we call a “D-Bonus” (D for Deferment), one-off, because we’re only doing this once.

But if you are not pushed to 65 yet, if your draw down age is not pushed to 65 yet, but you think you can continue working and you’re not desperate for the CPF money and you want it to leave it till longer so that it will last longer when you grow old, I think you also deserve something. So we will also give you a bonus, smaller, but we’ll call this a V-Bonus” (Voluntary Deferment Bonus”). I didn’t bring the details

with me today. They are in Ng Eng Hen’s pocket and he will announce them all when he goes to Parliament and explains the scheme.

The third question to ask is what if you live longer than expected? This is the risk that the CPF will run out. This is what the insurance people call “longevity risk”. Normally you think of dying as a risk, but here living is a risk. Financially it is. So the question is, what do you do? We’ve made the problem less because when you push the draw down age and the money lasts till 85 instead of 82, well then it is three years later into your 80s, so that’s good. But quite a number of people are still going to live beyond 85, some 90, some 100. Not everybody but quite a number will. So what happens to them? You don’t want to be left destitute right at the end of your life.

Other pension schemes also face this same problem and one solution which they use is what they call annuities, which is a kind of insurance. You buy insurance, you take a lump sum, you give it to the insurance company, they invest it for you and then they pay you a monthly sum as long as you live, even to 100 or whatever. But of course if you die early, then they stop paying you earlier. And on average, it works out.

In Switzerland for example, they have a scheme like this. Individual savings go up to 65 so it’s like, similar to CPF, go up to 65. When you reach 65, you take out the individual savings and you have to buy an annuity, compulsory. And then you draw on the annuity for the rest of your life.

Now our CPF also allows annuities. We allow people to take their minimum sum, convert it into an annuity instead of just drawing out every month until the money runs out. It’s a voluntary scheme, not a compulsory scheme but very few people take it up. I think it’s partly because Singaporeans don’t understand annuities, don’t understand why they need them. It’s also because frankly speaking, the returns have not been very attractive, the costs have been high but despite these limitations, we do need annuities as part of our old age planning.

So we will make some form of annuity compulsory for CPF members. It won’t apply immediately to this cohort about to retire but we’ll apply it to people who are now below 50 years old. So that will give us some time, we can study the problem, consult industry, educate CPF members and work out the detailed scheme and we want to have some flexibility into the scheme so that you can have an annuity which is tailored to your needs.

These are 3 major changes to the CPF. Higher CPF interest, 1 per cent more on $60,000, later drawdown age, push from 62 to 65 by 2018 and compulsory annuities for those who are now below 50 years old. I’ve only outlined the big picture and the key points. I’ve omitted many of the details. Ng Eng Hen will make a full presentation. When Parliament meets, he’ll make a ministerial statement in September.

These changes will bring our CPF system up to date but they are not going to solve our problem for all time because our needs change, the demographic trends change, we have to continually update the system and make sure it’s adapted not to today’s requirements or the requirements at the time we make the change but to the requirements 15 or 20 years beyond that. And in particular, 65 cannot be the stopping point. We are getting there first, intermediate target. When we get there, we will look and set a new target and the new target needs to be at least 67, both for the reemployment age and for the drawdown age. And if we make these changes in good time, then we can assure Singaporeans of peace of mind in your golden years.

Besides CPF savings, one other major policy we have is housing. Housing is both to narrow the income gap and also to build a nest egg for your old age because when we help you to buy a house and give you something which is valuable, which is rooted in Singapore, when Singapore grows, property values go up, your flat value goes up. And when the government has surpluses, we upgrade your flats, neighbourhoods, new towns, maintain the value. So if you look at the 3-room flats today, if you had bought a 3-room flat in the early 1970s, it would have cost you maybe $8000. Today, the 3-room flat is worth $160,000, some places more. It’s been a fabulous investment, you’ve had a house to live in, you’ve got a nest egg which will see you through your retirement, provided you don’t cash out and go on holiday. But if you take care of it well, you have through this HDB home ownership, you have participated in the growth of Singapore, bought shares in Singapore and backed this Singapore Inc. and made it succeed.

There are three parts of this housing issue which we should think about: the front end – helping people to buy the flat; the middle – maintaining and enhancing the value of the flat all the years you are living in it; and then at the tail end – monetising the flat for your old age. And we have policies for each of these pieces.

At the front end, buying the flat is already a great privilege. Non-citizens cannot buy. If you are a citizen, you buy. But if you are a low income citizen, we give

you more help to buy the HDB flats. And that’s why we introduced the additional housing grant last year so that although everybody buys the same flat, if you are less well-off, your subsidy is bigger, if you’re more well-off, your subsidy is less. And when we give you more subsidy, we gave it to you through your CPF so that if you sell your flat, it goes back to your CPF and it’s preserved either for your next flat or for old age, which I think is a good way to do it.

The additional housing grant has been a good scheme. I think we’ll enhance it further. Right now the grant, maximum amount is $20,000. We will increase the maximum amount to $30,000. Now, a three-room flat new from HDB today cost you about $120,000, so $30,000 on that is a lot of money. We will also raise the household income ceiling for getting this housing grant. Now the ceiling is $3,000 for household income. We’ll push it to $4,000 for household income, and that we we’ll cover about half of all the households in Singapore. So, I think through the additional housing grant, we can give more help to low income Singaporeans buying flats.

At the tail end, we will make it easier for people to monetise their flats, to convert it into a stream of income. If you have big flat, you can rent it out or rent out one room or you can downgrade. You have more choices. But I think the two- and three-room flats, if you live in a two- and three-room flats, which you have bought, and especially if you’ve had only one bite of the cherry, I think you are deserving of some extra help.

So for this group, the Government will help them to unlock the value of their flats. Right now they can sell it and move into a studio apartment, 30-year lease. But we will introduce a new alternative, new scheme. Instead of letting you move out of a flat and going into a new place for 30 years, we’ll just let you stay in your flat and take back the tail of your lease and leave you with 30 years lease on your present flat, and we would pay you for the tail of the lease and you can get some money out, a lump sum up-front, and then the rest paying to CPF some form of annuity, monthly payments for the rest of your life. I think people who have bought small flats, people who have had one bite of the cherry, you all know what that means. And people who are 62 and above, you shouldn’t be doing this if you are 50 years old, but 62 and above, I think we should allow you to do this. Thirty years lease is quite long but we are also studying what happens if it turns out that 30 years is not long enough and have some arrangement if you live longer. MND is studying this.

Today, I want to focus on the middle part of this HDB housing issue, which is enhancing the value of your home through upgrading and estate renewal, enhancing your home, enhancing your neighbourhood.

We have many upgrading programmes, so many initials. But the most popular one is the LUP (Lift Upgrading Programme. We’ve made this a priority because of our ageing population and we will complete the LUP programme for all the flats which can take the lifts by 2014, which is only seven years from now.

We also have schemes for private estates. I know the MPs with private estates remind me from time to time that we sometimes forget them. But we do have schemes. We have the Estate Upgrading Programme for major upgrading works. And many estates have enjoyed the EUP. But even then private estates sometimes feel like they are stepchildren, neglected. So I asked Lim Hwee Hua who has a close interest in this because of Serangoon Gardens to chair a committee to see what we could do for private estates. And she’s come up with some recommendations which the government has accepted. First of all, we will revamp the Estate Upgrading Programme. So we will bring together all the pieces, coordinate all the works and make one big bang, whether it’s drains, whether it’s lights, whether it’s the streets, whether it’s carparks, whether it’s parks. We’ll bring it together and make one good EUP with impact.

Secondly, there is something called CIPC (Community Improvement Project Committee funding), CIPC funds which we use, advisers can use for doing not very big projects in their own areas but responsive to the residents’ needs. It can be a playground, it can be a little covered walkway, it could be a barbecue pit or something like that. Small scale but timely. And up to now the CIPC has only been an HDB scheme. So we will now extend the CIPC, same terms, to private estates. Lim Hwee Hua will tell you some more about the details later on.

Most Singaporeans live in public housing, and this is HDB’s mission. So we’re continually finding ways to improve our public housing and to meet new needs and expectations. So from Toa Payoh to Ang Mo Kio, to Bishan, to Pasir Ris, to Sengkang, each new estate has been an improvement on the previous one.

The next new estate is Punggol. We started Punggol 21 in 1998. Every time I visit Punggol they remind me. But we had to slow down because of the financial crisis. But now the demand is picking up again, I think it’s time to get things back on track. But not just back on the old tracks. We’ve had time to study and to improve and upgrade the plan. So this is Punggol 21+. I’ll start by showing you a satellite

image. This is like Google Earth from outer space. Where is Punggol? We can zoom in, and this is what it looks like today. So you can see quite a lot of empty space not yet developed. These are the parts which have already been built. So we will now build on them, starting by damming up the mouths of the two rivers. This is Sungei Punggol, this is Sungei Serangoon. And we will dam up the mouths of the rivers so that we have a freshwater lake like the marina is going to be a freshwater lake. Then we’ll build a waterway to join up the two rivers so that you have a water feature, big one.

Then we’ll build on both sides of the waterway starting with the town centre, which is around here on the west side but continuing all along the water. Now we’ll fly in for a closer look. So you can see the waterway, the island, the roads, the houses. The best views and the best houses are the ones facing the waterway and we show you one view from inside one of these flats. I’m not selling them yet. If you look outside, it’ll be blue and green in lots of places because we’ll have trees, plants, shrubbery, by the water, on top of car parks, on top of buildings, make it cool, make it eco-friendly, green. Good place to live.

Among the early areas to be developed will be the town centre, which will be on the waterfront and they’ll have malls, retail outlets, food, al fresco dining by the water. Punggol 21 is going to take some years to build because this is, I think, altogether about 18,000 flats, public, some private. But akan datang, you can already see something coming up upstream of Punggol 21 in Anchorvale, Sengkang, Ang Mo Kio GRC. I’ll show you what it is.

This is Anchorvale community centre. Actually it should be called Anchorvale country club. The CC is here. This part is the sports complex so there’s a sports complex inside here, 4 swimming pools, 1, 2, 3, 4. Football field. I suppose this is a grandstand and waterway so you can have water sports. And this site, this land is not the other side of Punggol River. This land is a floating island, courtesy of MEWR and PUB, Active, Beautiful and Clean Waters programme. This is about to happen. It doesn’t quite look like that yet but the buildings are already up. I was there last week and had a look at it and Lam Pin Min assures me that by the end of the year, it will be working. So that is a preview of what Punggol 21+ will look like.

But let me show you, go back to outerspace again, and show you Punggol 21 after it is built with the dams, with the houses and this is a very high resolution picture so if you zoom in, the coastline is going to be a lot to do with the life of Punggol 21. If you zoom in this picture, something is happening on the coastline. So

be careful, somebody is watching you from up there. Canoeing, we may have a promenade where people can go for a walk, bring their old folks, jog, babies, or chilli crabs. The old Punggol Point which all of you will remember and have great nostalgia, this is something which we will bring back, al fresco dining and lifestyle. It’s going to be part of the new 21+ Punggol, the face of the new Singapore, a city with fun and buzz, not just in Punggol but you take the train, you go down downtown to the IRs. But even with the fun and buzz, retaining our present image, clean, green, safe island, this is Singapore. And it’s quite important that we keep that brand recognition even as we acquire new attributes and new lifestyles. So this is the new new estates.

Now let me talk about the old estates in case you think that there is no place for old estates in Singapore. The old estates also have great potential. We are redeveloping selected sites within these estates one by one but where we can clear a big piece of land, then we can transform the whole area and make it like a new new estate, plus. I give you one example which will happen not too long in the future and that’s Dawson Estate in Queenstown. I go back to the satellite map to show you where it is. It’s in Queenstown. Just to get your orientation, it’s next to the Queenstown MRT station. This is Commonwealth Ave, this is Alexandra Road, this is Margaret Drive. It already has had some SERS programmes which we were doing quietly. One of them has been rebuilt here, this is Forfar Heights, new SERS blocks, and there are some other new developments in the area, like this one here, which is Clarence Ville. But, if you can see, there’s lots of empty space as well as a long Alexandra Canal which goes through it. So it’s not like Punggol Waterway but there’s a linear feature there. And we are going to start with three precincts, HDB precincts, one, two, three, and the canal which we have covered over and we are making it a linear park. So there’s enough space here for about 10,000 flats, mix of HDB and some private housing.

I’ll show you what the park is to look like. This is where it is. And the precincts will be integrated with the park, like that. These are sketches which have been put up by prize-winning architect firms, including some young, very talent architects. This is at one end of the park, and I have another picture at the other end. This is public housing, not condominium. It is quite a change from what Dawson, Margaret Drive used to look like before, SIT flats, 1956. Some of your will remember it. And you will also remember some of the landmarks there fondly, like the Plaza near the town centre and the old wet market along Commonwealth Drive. We will keep these because it gives you a sense of history and place and we will integrate

this into the new design. So you can see the wet market doesn’t look like a wet market anymore, but it will retain the memories and the character of the place, be like the new new towns but that’s something extra about it which will bring people back.

The third piece are the middle-aged estates. People always talk about the sandwich class. This is a sandwich flat, not new, not old but middle-aged. We’ve had two key programmes to upgrade these – the Main Upgrading Programme and the Interim Upgrading Programme. We’ve been doing this since 1990, 17 years now. Many residents have benefited from them. I think it’s time to upgrade the upgrading programme.

So to do that we’ve had Grace Fu chairing the Forum for HDB Heartware over the last one year. And she’s received many requests and feedback, and now we have improved versions of the upgrading programme which I will present to you now.

First, the Interim Upgrading Programme which spruces up the neighbourhood in each precinct with the IUP. We will replace that with a Neighbourhood Renewal Programme. It’s not just a change of name because the difference is the IUP used to be for individual precincts but the Neighbourhood Renewal Programme, we’ll get two or three precincts together, bigger area, larger scale, we can plan more and better facilities. We’ll still have standard items like the barbecue pits, community gardens, reflexology footpaths, covered walkways and so on, but now we can also consider non-standard items like a street soccer court which is very popular, or a skating park, which is also quite popular. We already have them in Bedok and Orchard, so it can be something like this. And when the children get going, I think it’ll be a lot of fun. Quite a thrill for young people and maybe for their grandparents watching.

But it’s up to the residents to decide what you want. We won’t decide it. We’ll have a budget, a menu. You have a Town Council meet, Town Hall meeting, residents get involved. You decide what you want for your own communities. That’s the new IUP. It’s the Neighbourhood Renewal Programme.

For the individual flats, we will replace the Main Upgrading Programme which is what we now have with a new project called the Home Improvement Programme (HIP). It’s more hip. It took feedback from focus groups and the most popular requests were the practical ones. They want practical improvements within their flat – spalling concrete, please fix that; toilets leaking, bathroom floor leaking, soil stack leaking, please fix that. Entrance doors and grille gates, please replace that. So here I’ve shown you. You can see the spalling concrete here and the soil stack. These are

the things which residents often bring to MPs when they come for MPS to show that their flats need some work done to them.

So with the HIP, we will fix this. So good ceiling, good toilets, good doors. These are the practical things which people want for the Home Improvement Programme.

All of these upgrading projects will cover many many flats and it will be in housing estates all over Spore. So what I’d like to do now is to show you how all these pieces fit together. This is a map of Spore showing all the housing estates on it, HDB housing estates. So you can see Tampines here, Pasir Ris, Yishun. Woodlands, Jurong, Queenstown. I’ll first show you where the Main Upgrading Programme projects have been. Each dot is one precinct. So we’ve got precincts all over Spore and there are about 100,000 flats which have benefited from the Main Upgrading Programme. These are flats which were built 1980 and before. About half of them have already had the MUP or in progress. The other half have not had the MUP yet. We will now bring them onto the Home Improvement Programme. So these are the light blue dots, another 100,000 flats. If you look carefully you probably can see where your own precinct is.

But I think that we should bring the Home Improvement Programme to a younger batch of flats, because 1980 is a long time ago, the flats have grown older since then. And after 1980, in the early ’80s up to, say, 1986, these were years when HDB built many many flats every year, peak construction. Some years we built 50,000 flats. And unfortunately I would say the QC sometimes not quite up to today’s standards. So a lot of complaints. It’s been 25 years. The wear and tear is starting to show. We fixed it over the years but I think what we should do is to extend the Home Improvement Programme to another batch of flats, those built 1986 and before. And I will show you where they are. Two hundred thousand more houses will get the HIP. Red spots all over Spore, like measles but good ones.

Now you will see that many of these red spots are in about four or five housing estates, like Tampines here, Hougang, Yishun, Bukit Batok, Jurong East, because these were the estates which were built in the early 1980s. So they are the ones which are of this age group. So we will pilot this Home Improvement Programme with two of these estates – which will be Tampines and Yishun as pilot projects. And I fully expect the pilot project to work and then we can extend it to the other flats as well. This is 200,000 flats here.

But the flats which are slightly younger than these, up to say 1989, I think they should also get something. So the Neighbourhood Renewal Programme I think we should extend the age limit and push it to 1989. And I’ll show you the programme in green dots. So the conclusion is, you have spots all over Spore and nearly every housing estate is covered. There are a few housing estates which are not covered which are in darker brown – Sembawang, Chua Chu Kang, Sengkang, Punggol, Pasir Ris. It’s because they are too young, built in the 1990s and after. But their turn will come. No need for upgrading yet, but provided Singapore continues to grow and we have the resources and the surpluses to continue this programme, we will have future upgrading programmes and we will progressively extend it to them as well. How will our estates look like after all the upgrading, I asked HDB. They said, I’ll get our computers to show you. So we have a video clip of what the new look housing estate will be like. This will be a first-class living environment, greenery, water, homes coming up, integrated with it. You see the homes coming up in the background. Parks, people, life, community. So we can draw our communities closer together, foster a sense of belonging. No other city in the world can do this. Public housing that’s attractive, that’s affordable, that’s appealing, that gives a quality home for every citizen and gives you an asset which will appreciate in value and also help to provide for your old age. But in Singapore we can do it, provided we make the effort, work hard together, systematically we will upgrade and renew our homes. We will remake the whole city. It will take us 20, 30 years but eventually, the whole country will be transformed. And this is what Singaporeans will call home.

It’s a lot to promise. It’s something which we can deliver. I think that we ought to give an acknowledgement to the people who put in the work to make this happen. First of all, HDB. But to make the video, HDB can’t do it alone. We had a very powerful team, Nanyang Polytechnic School of Interactive & Digital Media. I think my 2 experts are here. Can you take a bow?

Tonight, I’ve focused on the widening income gap and especially on ageing. I’ve explained our major strategies to tackle this, upgrading, education, working longer, improving CPF, upgrading and renewing our housing estates and our whole city. I’ve brought them all together tonight so that Singaporeans can understand the whole picture. These are difficult challenges but we will work out solutions for each one of them, one by one. Singapore’s strength lies in our people, dedicated workers and capable leaders, not just individual stars or a few top bodies but a cohesive society and a strong Singapore team, each person giving his best for the nation,

doing things together that none of us could have achieved on our own. This is our greatest asset and this is the secret of our success.

We are all set to surge ahead. After SARS, we estimated Singapore’s sustainable growth at 3 to 5 per cent. We were a little bit conservative but we thought it was realistic. In the light of the last few years, MTI has reviewed these numbers and we’ve concluded that we should go for a higher target. So we are raising our growth estimate to 4 to 6 per cent for the next 5 to 10 years. At our stage of our development, for Singapore, this is a very ambitious target. Very few countries have done it, maybe Japan until it ran into problems in the 90s but not the European countries, not even America. But I think we can do it provided we continue to adapt, stay open, remain competitive and ride the wave. Then we will grow, with the whole of Asia and not just based on what we have on this little island in Singapore, physically here. For the next few years, conditions are very favourable. We should strive to do better than 4 to 6 per cent. The wind is filling our sails, let’s catch the wind, set the course ahead and go for it.

Last year, our sailors at the Asian Games in Doha came home with 5 gold medals. I watched the final keelboat match against India. I’m sure many of you would have done so even though it was about two o’clock Singapore time, AM. Both teams used identical boats, but Singapore won. What made the difference? Our team, the five-man crew – Justin Wong, Renfred and Roy Tay, Ivan Tan and their skipper Teo Wee Chin. Their abilities and their skills, their training and their teamwork, their determination and their will – never give up, think coolly under pressure, battle tenaciously and prevail. And they are here tonight.

This is the Singapore spirit which will see us through as we remake our nation and build our home together. Whatever the challenges, we’ll tackle them one by one and sail through. Over the next decade, we have a unique opportunity to transform Singapore. Together, let’s make this truly a City of Possibilities, and a home for all of us.

Goodnight.

(SINGAPORE) It is at the heart of Singapore’s retail sector, but with an estimated 1.5 million visitors flocking to Orchard Road every week, it could do with some serious help.