CLC LECTURE

Working with Markets - Harnessing Market Forces and Private Sector for Development 19 October 2017

The term “working with markets” captures the fine balance of successful public-private collaboration.

Why is working with markets necessary in Singapore, and how has it shaped our development

landscape? What were the challenges and benefits, and how can we calibrate between public and

private involvement?

This CLC Lecture examines four aspects of working with markets in the context of land and

infrastructure development – transforming the physical landscape through the government land sales

programme; navigating the state-market relationship; building up the national infrastructure with

government-linked corporations; and pushing sustainable urban development with public-private

partnerships.

Lecture Segment

Mr Wu Wei Neng 00:00:12

Distinguished panellists, guests, colleagues, ladies and gentlemen, a

very good afternoon to all of you, warm welcome. I'm Wei Neng from

the Centre for Liveable Cities [CLC]. I'll be your emcee and moderator

for this afternoon.

00:01:00

Today we will be launching our latest Urban Systems Studies, entitled

Working with Markets - Harnessing Market Forces and Private Sector for

Development. So, before we begin today's event and lecture, I want to

invite Dr Limin Hee, Director, Centre for Liveable Cities, to give the

opening remarks for today's event. Dr Hee, please.

Dr Limin Hee 00:01:22

Today, almost every city and country in the world is convinced of the

need to foster a conducive economic environment, encourage market

competition, attract foreign investments, and enhance the ease of doing

business. Singapore has done well in this regard; it is ranked number two

out of 190 economies in the World Bank’s latest Doing Business Report.

But while we are all convinced of the need for partnership between

private and public sectors, there are many approaches and methods for

doing so.

Put simply, different countries work with markets in different ways, and

these strategies change and evolve over time. Economic development is

closely linked with both liveability and the built environment. In the early

decades, the government built up the essential conditions for economic

development: business and industrial parks, key infrastructure like ports

and airports, and quality institutions like the rule of law, a sound

education system and proactive trade and investment promotion

agencies.

In turn, public agencies leveraged on the private sector’s growing

innovative, technical and financial capabilities to provide services or

solutions which the government alone could not. Economic growth

provided jobs and enhanced Singaporeans’ quality of life and standard

of living. Most recently, urban rejuvenation and planning have

supported and encouraged growth in key sectors of the future economy.

The Marina Bay financial centre, one-north creative cluster, Jurong Lake

District, innovation district, and Punggol creative cluster provide world-

class facilities and space[s] for businesses and investors.

00:03:32

Writing in 2001, the Head of Singapore Civil Service, Mr. Lim Siong Guan,

co-authored a paper with Harvard Kennedy School lecturer, John

Thomas, on how markets were used to improve governance in

Singapore. They concluded that “What is absolutely key to

understanding Singapore's success in applying market systems to public

problems is the centrality of the state, in assessing, controlling and

regulating the market. The hallmark of Singapore's use of the market has

been strong government control and oversight.”

The short paragraph captures some of the many roles of policymakers

in engaging the market, as well as the balance between the private and

public sectors, which has not remained constant but [rather] shifted in

the decade since. Likewise, the phrase “working with markets” captures

the fine balance of successful public-private collaboration. It is a

partnership, and as with all partnerships, there are challenges, setbacks

and successes. Yet, there's no other way. Markets need government and

governments need market[s].

I trust that today's panel discussion will explore various interesting

perspectives and experiences of how the Singapore government has

worked with the market in areas such as land sales, resource pricing,

economic management and policy, government linked corporations and

private-public partnerships. The USS publication, Working with

Markets—Harnessing Market Forces and Private Sector for

Development, will also be launched after the panel discussion. I would

like to congratulate all those who have contributed to this book,

including all four of our panellists today, and to thank the many people

from both the private and public sectors who have contributed their

time, wisdom and assistance. They have shared their stories and

experiences with us generously, and without them, this book would not

have been possible. I look forward to a good and useful panel sharing

and discussion. Thank you.

Mr Wu Wei Neng 00:06:03

So, before we begin the lecture, I just want to introduce our four

panellists briefly. All of our four panellists have got vast experience in

the field of working with markets. We’re very pleased to have them with

us today; and they have also contributed significantly to our USS, so a

big thank you to all of you.

So, our first speaker for today is Mr Choy Chan Pong. He’s former Senior

Advisor in the Urban Redevelopment Authority [URA], and a Group

Director in URA, who was responsible for the planning and

implementation of the Government Land Sales [GLS] programme for

more than 20 years. He also introduced the auction method and the

reserve list system, oversaw the sale of the business and financial centre

site, and was involved in the sale of the integrated resort [IR] site at

Marina Bay.

Now, our second speaker is Miss Low Sin Leng, who is former Senior

Advisor and Executive Chairman of Sembcorp Development, and current

Chairman of the Nanyang Academy of Fine Arts [NAFA]. So, Miss Low

started her career in the government administrative service in

Singapore, and held key positions in various ministries, including trade

and industry, finance and education. She later joined Singapore Power

and Sembcorp industries, before serving as Executive Chairman and

Senior Advisor of Sembcorp Development.

Now, our third speaker is Er. Lau Joo Ming, the Senior Advisor of MOH

[Ministry of Health] Holdings and also a veteran of the Housing and

Development Board, the HDB. Er. Lau is an Adjunct Professor at the

Nanyang Technological University [NTU], and Board Member of National

Health Group; and so, he is also a member of the Panel of Experts of the

CLC.

Now, our last speaker, Professor Phang Sock Yong is Celia Moh Chair

Professor of Economics at SMU [Singapore Management University],

00:07:44

and also Vice Provost at SMU. She has researched and published widely

on housing issues, transport and also public-private partnerships [PPP].

So, we'll start off the session today with short remarks from each of our

panellists, followed by a panel discussion and then we'll open [the floor]

for questions and comments from the audience. So, kindly please hold

your questions until the Q&A [question and answer] session later. Thank

you. And may I please invite Mr Choy to deliver your remarks, please.

Thank you.

Mr Choy Chan Pong 00:08:12

00:09:44

Good afternoon, ladies and gentlemen. The Government Land Sales

programme, or GLS as it is commonly called, is a planned effort by the

Singapore government to sell state land for private-sector development.

It is meant to leverage off [sic on] the private sector’s expertise, ideas

and financial resources to achieve important planning, development

and economic goals. The programme started in 1967, so now it is

already 50 years old.

The GLS programme has a couple of important national objectives.

Firstly, it is to ensure that there is sufficient supply of properties to meet

market demand and support economic growth. In Singapore we have

the distinct situation where the government owned [sic owns] most of

the developable land. So, the GLS is very important in meeting the

demand for properties, but it is not just a numbers game. Sites are also

selected strategically to facilitate the fiscal development of Singapore

along [with] the key planning and development objectives as laid out in

the concept plan and the master plan of Singapore.

GLS: Growth & Development in Singapore

Now, the data on the slide shows the importance of the GLS programme

to the development of Singapore. Over the past 50 years, the

government has sold more than 1,600 parcels of land, totalling more

than 1,200 hectares; and in terms of contribution, it has contributed to

more than 50% of hotel rooms, 40% of office space, almost 50% of shop

space and about 40% of private housing.

00:10:20

Now, the Singapore economy and the property market had [sic has]

obviously evolved over the last 50 years. Accordingly, the Singapore

development plans, as well as the Government Land Sales programme,

had to evolve along the same lines. When the programme started in

1967 and for the first three years, the focus was on the renewal of the

city centre. Example of the site[s] sold then were for the development

of places like the People[’s] Park Centre, Marina House and the

International Plaza.

And at that time, Singapore needed tourism infrastructure very badly to

support the growth of the tourism industry then. So, sites had to be sold

for the development of hotels—we needed a lot of hotels then. So, for

example, in Havelock Road, sites were sold for the Kings Hotel, Miramar

Hotel and the Apollo Hotel. And in the Kallang area, sites were sold for

the development of recreational facilities like the Wonderland

Amusement Park, the Leisure Dome and the Kallang Theatre.

Moving over [sic on] to the next few years, 1970 to 1974, there were

problems of constraints in supply of labour as well as raw material. So,

the Government Land Sales programme slowed down and the focus

shifted to the sale of sites to develop commercial centres to house

resettled businesses; and development like Colombo Court and Selegie

House came about.

And after that, when things got back to normal, the city centre renewal

continued with the sale of sites for high-quality landmark office buildings

such as the OUB Centre, OCBC Centre, the Gateway, and Marina Square.

Moving on to 1983 to the [19]90s, the period saw the beginning of

efforts to conserve built heritage through the government land sales

programme. Examples were the sale of shop houses in Chinatown,

Kampong Glam, Little India and Tanjong Pagar. And there were also sale

of sites for the conservation of the Raffles Hotel extension, Clarke Quay,

Chijmes and China Square.

00:13:08

00:14:27

Now, the 1991 concept plan featured a key planning strategy in a

decentralization of commercial centres away from the city. So, through

the GLS programme, the focus was on the sale of sites to develop the

Tampines Regional Centre and the Novena Fringe Centre. And in the

1990s, we also saw a sharp rise in a demand for private housing. So, the

government land sales programme was ramped up to increase the

supply of private housing. One good example is the conversion of

Tanjong Rhu from shipyards to prime waterfront private housing.

From the 2000 to now, the focus has shifted to the development of new

growth centres. Now, the most significant of this is Marina Bay. And sites

were sold there, and you [can] now see the results in the form of the

Marina Bay Financial Centre, Marina Bay Sands and The Sail. This was

followed by the development of other growth centres like Jurong Lake

District, Paya Lebar and Woodlands.

Rejuvenation of Orchard Road

Another focus was the rejuvenation of Orchard Road, and we saw over

the… between year 2000 to 2010, the sale of sites for the development

of ION, Orchard Central and 313 Somerset. Now, right from the start,

the government knew that for the programme to be successful, it was

important to gain [the] investors’ confidence. Therefore, in planning and

conducting the government land sales, we made sure of the following.

Firstly, we need to understand the market well. And in understanding

the mock market, we made sure that the focus of the programme

shifted with changes in the market[’s] trends and needs. But we also

knew that the market is not perfect—there are market failures and

various kind[s] of market imperfections. So, in designing the government

land sale processes and policies, we had to make sure that there would

be control [factors] to pre-empt market failures and imperfections, such

as speculation and land hoarding.

00:15:43

Next, we made sure that the programme had clarity and transparency.

That's why we announced the programme…the details of a programme

way ahead of time; we made sure that the sale conditions were very

clear; and the evaluation process in award of sites was unambiguous.

And finally, we made sure that the development of…on the sites sold by

the government was hassle-free. All the services were brought to the

boundaries of the sites, all the planning parameters were clearly sought

out—in fact, URA went as far as to apply for outline planning permission

for every site, so that when you buy a site you already have planning

approval. So, this is a way [in which] we made sure that the investors

have confidence in a programme.

And finally, we made sure that we constantly innovate to keep up with

changes in the market and the market needs. One example is the

introduction of the reserve list and the confirm list. And we also

introduced new methods to sell land beyond tender; we introduced

auction; we introduced a two-envelope process where we varied

concept and design together with a price; we also had fixed price tender

for the two integrated resort where we fixed the price of the land and

only evaluated the proposals, so that we get the best proposal for that

two IRs.

And one of innovations is [sic was] the master developer approach

through which we sold the Marina Bay financial centre—because it [sic

was] such a large site, we need[ed] to help the developer mitigate the

risk, allowing him to [do] phase development. And to do that, we

introduced the option payment scheme for the sale. On the other end

of the scale, we also sold subdivided landed parcel[s] so that we can [sic

could] have more participation in the government land sales, where

smaller developers can [sic could] also take part.

So in conclusion, I would say that our government land sales is one of its

kind in the world, mainly because of the following features. What we

00:18:09

had is [sic was] that we had a close link to planning and development

objectives. The program [was] market-based and market-oriented in its

planning and implementation. We emphasise[d] a lot on transparency

and clarity, and finally, we constantly innovate[d] to keep up with

market needs and trends. Thank you.

Ms Low Sin Leng 00:18:33

Good afternoon everybody, thank you for attending this, and let me just

walk [us] through [these questions] very quickly: Over the past years,

how did Singapore[’s] government navigate this state and market

relationship? And what were the external forces that in a way, make [sic

made] [the] government adjust modify these policies and approach? In

the early years—1950s to [19]70s, from colonial to independence—I

remember Dr Goh Keng Swee, the former Deputy Prime Minister was

very clear that job creation and public-housing were two very major

priorities.

So for job creation, EDB [Economic Development Board] was established

in 1961 to promote industrialisation and economic growth. And HDB

was also formed to undertake public-housing. At that time, [the]

government set up quite a lot of statutory boards, which is quite unique

in public administration as compared to other countries. As you all

know, [a] stat board is a[n] autonomy [sic autonomous] agency.

Although still oversight [sic overseen] by a Ministry, it has its own

flexibility and freedom of action within its portfolio and areas of

responsibility.

It is [sic was] also during that time that [the] government established

state-owned companies. At that time, state-owned companies were

solely owned by [the] government and very frequently, under respective

ministries. They were to provide essential services to economic and

national development. For example, that time, the so-called MINDEF

[Ministry of Defence] company, was under Ministry for Defence, and JTC

[Jurong Town Corporation] was under Ministry of Trade and Industry, so

on and so forth.

00:20:51

00:22:54

1960s & 70s: Four Economic Pillars

Then in the 1960s to 70s, four economic pillars were identified as most

important to propel Singapore's economic growth. First and foremost,

manufacturing; second, shipbuilding, tourism and trade. For tourism,

like STB [Singapore Tourism Board], Singapore Tourism Promotion

Board [then STPB], which is the stat board was spearheading the tourist

promotion. Shipbuilding, state-owned enterprises like Jurong Shipyard,

Sembawang Shipyard, Keppel Shipyard, all sorts of marine [companies]

were formed. And for trade promotion, Trade Development Board [TDB]

[was formed], but Trade Development Board subsequently became IE

[International Enterprise] and now, IE has been just merged with SPRING

[Standards, Productivity and Innovations Board].

[The] government was very, very clear that markets need to be tapped

[on]. But they also took a very pragmatic and eclectic approach. They

never failed to interfere if the market didn't deliver results. And at the

same time, [the] government started using very competitive bidding

process[es] and price tenders for the procurement of works and

services. Just now, you already heard Mr Choy talk about bidding for

land sales. That is a[n example of] revenue bidding—where the

government generally awards the tender [to] whoever bids the highest

price for any piece of land. For services and work [tenders], issued by

say PUB [Public Utilities Board] to build power plant[s], it is really

awarded to [the] private sector [company] who can provide the most

cost competitive power plant or water treatment plant. And HDB

[Housing & Development Board], they issued quite a lot of public

tender[s] for public housing project[s].

1980s and 90s: Rethinking the Private Sector

In the 1980s and ‘90s, there was a rethinking of the role of [the] private

sector in the economy. [In] 1985, Singapore, faced [her] first economic

recession and there was a very high level economic committee formed

in 1986. The conclusion of the committee was mainly lean[ing] towards

00:23:20

00:25:01

market liberalisation, privatisation and a mindset of [sic that] perhaps,

the state should retreat from commercial activities. The economy at that

time was viewed to be larger already, [the] private sector is [sic was]

already more developed. Then shortly after, Public Sector Divestment

Committee came up with a report and identified that GLCs—

Government-Linked Companies—should be earmarked for divestment.

And the rationales were: first, [the] government [was] to withdraw from

commercial activities; second, we want to broaden and deepen the

Singapore stock market; third, to avoid or reduce competition with the

private sector. So, quite a number of GLCs were floated on the stock

exchange—they become listed companies, no longer 100% owned by

government.

And it was also at that time [where] quite a lot of consolidation [was

done]. A lot of companies—like MINDEF companies, like Singapore

Technology, whatever it is—[were] no longer under respective

ministries like Ministry of Defence or Ministry of Trade and Industry.

They were all grouped together under Ministry of Finance and under

Temasek Holdings for overall assessment control and monitoring. So, it

paved a way for a broader and bigger role for the private sector. And by

listing the GLC on the stock exchange, it allowed Singaporean citizen[s]

to own share[s] in the GLCs.

2000s to 2010s: Globalisation & Innovation

[In] late 2000 to 2010s, government wanted the market to work better,

so there was a period of heightened global and regional economic

volatility. As you know, [from] 1997 to ’98, Asian economic and financial

crisis, and the 9/11 terrorist attack [happened]. A new economic review

committee was formed [in] 2001, and they realised the need for

Singapore to embrace the reality of globalisation, tap [on] global

networks and the markets, strengthen the local entrepreneurs and

SMEs [small and medium enterprises], and build [a] knowledge

innovation-based economy.

00:25:41

So there was a shift—further shift towards greater private sector

participation in government project[s]. And SMEs were very much

encouraged and promoted. Throughout these many years of economic

development, Singapore[’s] government has always viewed [the] private

sector—be it local or overseas, MNCs [multinational corporations] in

particular—as a key partner to work together [with] to develop the

Singapore economy.

So, basically, working with markets is a key determinant of success in

Singapore’s economic development. [The] government wanted to

embrace the market thinking and encourage private sector participation

in all the public sector development projects. There were two key

aspects of working with markets. First, the engagement and partnership

with private enterprise[s] through public-private partnership—PPP. And

second, harnessing the market forces through [a] competitive pricing

and bidding system, to allocate and set prices for the scarce resources

in Singapore.

Indeed, on and after 2004, Ministry of Finance formally introduced PPP

as a specialised mode of procurement for government development

project[s] that exceeded 50 million. I was told through another source

that it was introduced and implemented as a mandatory requirement.

But lately, [in] the last two years, Ministry of Finance relax[ed] it and

make [sic made] it no longer mandatory—as a preferred [option] rather

than a mandatory mode of procurement. And there is reason behind it.

It’s because [for] public-private sector partnerships, [if] you look at it

positively, there are a lot of benefits to the government because it

maximise[s] value for money. Why? Because [the] private sector,

generally, is very profit-driven. Private sector’s bottom line is the key.

So, they will think of ways and means, particularly innovation, to cut

costs [and] maximise efficiency. It will also deepen and widen private

sector capability. Last but not least, although [this is] never the

Government of Singapore’s top priority—because Singapore’s

00:28:25

government is very rich—but it does and it did lessen some of the

financial burden for a big project.

The role or expansion of private sector has changed quite significantly.

From simply financing, and designing of resources using particular items

of infrastructure through the tender process, to also managing,

operating, maintaining and owning that asset; from multiple private

sector [companies] handling different part[s] of an infrastructure

development project to [being] integrated into one single service

provider. And the size of the project and the risk-taking prospect has

also changed significantly.

What are the examples? I listed [some] here, you can see that quite a

lot were from PUB—desalination plant, NEWater, waste and energy

plant, and Singapore Sports Hub—which was the biggest project by far;

the biggest PPP project issued by Singapore government.

But let’s not forget, the government holds ultimate responsibility for

ensuring the service quality and delivery, although the ownership of the

PPP resided with the private sector.

So, in my view, the key determinant for the successful PPP, [is that] you

have to align the interests, you have to complement your capabilities,

you have to have efficient execution by the private sector and…very

importantly, effective monitoring by the public, meaning by the

government.

Last but not least, very appropriate risk sharing [is necessary]. So [the]

private sector can only take that much of a risk, you need transparency,

clarity, [and the] public sector [will] have to bear the regulatory and

political risk[s]—only then, can the PPP be successful.

I will stop here. Thank you. (Applause)

Er. Lau Joo Ming 00:30:25 00:31:18

This is the present HDB. You can see my fingerprints—in a way before I

left HDB, I was involved in this. This is the past HDB. You can see my

fingerprints or my footprints. The reason why I said that is the

government will go after me because I was the Chief Structural Engineer

then.

So, HDB in the past, when you look at this, we did almost everything:

From [being a] master planner, master developer, consultant,

contractor, supplier, [and] so on. We built towns, flats, amenities, land

reclamation, construction resources, essential services. Now, [if] you

look at the logo—Just Do It—it was invented by HDB.

HDB’s Role: Multi-Functional

I tried to simplify, through this picture, to show you the stakeholder[s].

So [if] you look at the developer, we are the master developer. From the

day HDB was formed, we have been a master developer—so this role [is

one that you should] never give up, [if] you are running a government.

Don’t give up. Then next one is the consultant. Okay, we are [sic were]

the consultant all the while since [sic until] now. Although we liberalised,

I’ll tell you why we are still the consultant [later]. R&D is the

government’s…or is HDB’s responsibility. So that one we are [sic were]

involved [in] all the while. Then I show [the] contractor with all the dots

signs, [meaning that when] it’s the right time to come in, we come in;

when it’s the right time to go out, we go out. Similarly, as a supplier.

So you see the outcome, from a squatter to [a] HDB town and [sic with]

facilities. We are not just building a town, we continue to upgrade;

whether it’s upgrading the flats or the lifts, and then where the land has

potential, we do the SERS [Selective En bloc Redevelopment Scheme],

and then you see in the newer area[s], we now go into the living

environment.

HDB[’s] mission never changed. We have corporate meetings, the three

statements remain. If you are a businessman, I can tell you it provides

00:32:44

confidence for the business community. The next thing is all the while,

we have been transforming from a labour intensive [industry] to a

modern one. And then we nurture, retain and develop the stakeholder;

because [even] if the stakeholder is not ready, he will continue to be

there. But once [sic before] you leave, [you must] make sure the system

is there.

And the last one is [to] promote economic growth and jobs. So HDB, on

the contractor part… I mentioned to you we transformed from a labour

intensive industry to a modern industry. All the while, we are [sic have

been] committed to upgrade the construction industry, through

advancement of construction technology, management of building

resources and the development of professional expertise and know-

how. At one time [sic point], we even set up [a] company to show the

contractor how to do it. So for a long while, actually, HDB is [sic was] a

contractor and all the contractors were sub-contractors because

basically, they just do this.

Now the next area—so I showed to you, this is what we do—Why are

we doing it? Because we want to improve workers’ productivity, we

want to reduce the dependence of [sic on] foreign worker[s], improve

construction image and improve construction quality. So, I mean, this

slide shows us [that] we do a lot of thing[s]. Today, BCA [Building &

Construction Authority] is the contractor and all the contractor are the

sub-contractors. They impose a lot of rules [on] how to build and so on.

Now, resources are important. Why is it important? You must

remember, Singapore is a very poor country. We only can build with

what we have. So for example, say concreting material—granite, sand—

we have to set up a granite quarry, set up a sand quarry. And for your

information, 600,000 flat[s] were built with Singapore granite [and] we

only started to import [granite] lately. So either we do it within HDB or

we actually use the government-linked companies like RDC [Resources

Development Corporation] to manage all our quarries.

00:34:56

So these are some pictures. Now, we also know that the contractors are

very weak and we cannot rely on workers when we want to improve

quality. So we even rent[ed] metal formwork—we rent[ed] all the

formwork and rented them to the contractor—so this is to improve

quality.

The next one I [will] go into is [being a] consultant. If you are just a

consultant, I think it’s not good enough, you just get a job and do it. For

us, it’s…we’re not just mak[ing] sure that we are the consultant—we

have to more or less evolve the design into something that’s not only

safe, not only nice, so [sic but] we try to move to something that’s more

advanced. And through this, we actually set up the pre-fab system, [to]

make it a more buildable system.

So in a way, we transformed conventional building design to our own

pre-fab system—[and] not only that, we made sure that our design had

a total quality control system from design, construction, to

maintenance. We had to pay attention to living quality, strive for zero

defect[s] and minimum maintenance. So this is what we do. In other

words, we even taught the contractor[s] how to have a proper quality

control system. So today, I must say our contractors are now building all

the condo[miniums] because HDB taught them how to build it.

Now next, I go into R&D. To me, R&D is actually very important—as an

agency, you must look into this. So, in the early years, we tried to invest

in R&D to achieve excellence in design [and] construction maintenance

so as to deliver a housing programme. We invested very heavily in the

R&D, in concrete technology and pre-fab. Today, we move into

something more sexy, which is sustainability. So our R&D lab changed a

little bit. We actually have what you call a “master lab”. Master lab

means to say, in [the] R&D centre, we get multi-disciplinary people in

[to] look at the idea or project, and try to do it in the master lab. If it

goes wrong, [it] doesn’t matter, just throw it away. Then we try to bring

it into a living lab—living lab means [an] actual place we are building,

00:37:06

and then we replicate. Now, [in the] same manner, we can actually bring

it beyond Singapore. So we come [sic came] up with this beautiful chart

and these are the areas we focus on.

Now, I just want to tell you that now, the way we grow companies is a

little bit different from the past. We are no longer desperate to deliver

flats. So for example, in the green trip that we do [sic did], we become

[sic became] the facilitator. Because of HDB’s scale, we could combine

everything and actually call a tender. So this is a local company called

Sunseap: In the beginning when we call[ed], we aggregate[d] together,

they came in through the normal bidding [process] and they are [sic

were] able to get the job, project. Then as we went along, we actually

thought that [it] should not just be [the] government paying the money,

how about the private sector coming in with money [as well]? So we

came up with the PPP model. And today, they are easily doing project[s]

which are probably able to provide energy for the whole of Toa Payoh

town—[through] the two project[s] that they are doing now.

So, I come to my last point. My last point is—in case you got distracted

by my slide[s]—I just want to summarise what I said. So, the first point I

am trying to say [sic make is] the stakeholder or the market must grow

with us. Remember, the stakeholder or the market must grow with us.

They are very important—[the] stakeholder. In the beginning, let’s says

now you are developing country, you have to build up your capacity,

capability, and we have to do the job. So since HDB was set up to provide

housing, we have to do the job. Don’t try to be very pure [and say] we’re

just going to do the job; Go be brave enough, set up vanguard entities.

Be [a] game changer, go for something that is more [of a] quantum leap.

Add value stream, share the risk. And I think importantly, is you must

invest in R&D to ensure that the engine serving us remains competitive

and innovative.

So the question for you to ponder [on] in case you all don’t know how

to ask question[s], the big question is: Why should government

00:39:10

intervene? What are the pitfalls? What are the desired outcomes? And

then some of you [after] listening to me, you may want to call me [a]

hero or call me [a] villain. So there must be a time to go in and a time to

come out; sometimes we stay too long and then you [will] want to curse

and swear at us. But when you look back, you say we did the right thing,

but [the] only thing [was] we stay[ed] too long. Thank you.

Prof Phang Sock Yong 00:39:35

I’m going to be speaking on the topic of PPPs and I'm sure you all

recognise that photo there of Singapore’s largest and most iconic PPP

project, the Sports Hub.

Well, where do we place the sports hub? [For] PPPs, the options are

varied, they are found in sectors where the government needs either

money or expertise—or both—and once you’ve engage a private sector

partner to be involved. So the Sports Hub is an example of a complex

Design-Build-Finance-Operate [DBFO] concession, where the private

sector participation is on the high side. There are simpler models such

as Management and Maintenance contracts, Operations and

Maintenance concessions—so the MRT [Mass Rapid Transit] lines, for

example, come under Operations and Maintenance concessions. A PPP

is a long-term contract—[and] for the Sports Hub, it’s 25 years. And it is

a contract which specifies output [and] performance outcomes over the

project life cycle. So, again, using the Sports Hub as an example, the

Sports Hub cost 1.33 billion dollars to build—no small amount. And the

funds required came from about 15 parties: four equity providers plus

11 lenders. So just that process of getting all these people together, that

involved quite [a] high transaction cost.

So through a PPP, there’s opportunity for more efficient allocation of

risks, and risks that are better managed by the private sector can be

transferred and this will reduce cost and increase efficiency. Okay, as Mr

Lau has mentioned, if a [sic the] risk allocation is inappropriate, it can

cause a PPP to be either inefficient or become unsustainable.

00:41:30

The private sector recovers the cost of the investment from future

payment streams which can be from the public sector partners, from

the users, or a combination of the two. And therein also lies the risk for

the private sector partner—as to how the payment stream is structured

and how it can adjust over time. Then, as the length of the PPP can be

many years, there’s also a need for provisions to amend the terms, or

change the scope of the contract along the way. So lawyers therefore

play a very important role and legal fees for such contracts can be very

high.

PPPs are found in several infrastructure sectors and here I have a list of

the sectors that are important for urban development: ICT [Infocomm

Technology], power, solid waste disposal etc. So the US actually has a

very long history of relying on private sector provision for telecoms and

power— AT&T’s history dates back to the 19th Century—and municipal

as well as social services. Cities have engaged with the private sector for

urban redevelopment projects while some US [United States] ports and

airports are operated through PPPs. A “G” there stands for government.

The US Government stays out of the business of developing housing and

commercial real estate generally, while public buses and urban rail are

mostly operated by regional and local governments.

The UK [United Kingdom] began the implementation of a massive

privatisation programme in the 1980s under Margaret Thatcher. So the

term PPP became popularly used only from 1997, when Tony Blair’s

Labour Government was seeking a third way for infrastructure provision.

The red dot there, for UK Urban Rail, denotes the failure of the urban

tube PPPs.

In Singapore, we moved to privatise the telecoms sector in the 1990s,

and the power sector in the 2000s. These privatisation exercises

followed models first used in the US, adapted by the UK and exported

to other countries. These are actually regulated privatised sectors,

[which are] not typically considered PPPs. There was a flurry of

00:43:53

Singapore PPPs in the first half of [the] 2000s in waste disposal [and] the

water sector led by PUB. The project kick-off for Sports Hub happened

only in 2004. However, Singapore’s public sector has remained a

dominant player in the port and airport sector, in urban redevelopment,

in housing, industrial and business park sectors. [The] “M” there is for

mixed government and private involvement.

The previous three speakers have elaborated much on the deep

expertise of the Singapore government in working with markets in these

sectors. And this is an expertise which is not generally found elsewhere

in other countries. The limited number of PPPs though, in Singapore has

not been an obstacle for Singapore companies going global to be the

private partner in projects overseas. There are numerous players in the

ICT and power sectors, and the technology in these sectors move very

rapidly—the competition is very intense—so Singapore companies are

not that well represented in these countries overseas in these sectors.

I’ve coloured the port and airport sectors for Singapore: companies

going overseas is blue because this is a blue ocean space for PSA [Port

of Singapore Authority] and Changi. PSA and Changi are everywhere;

their overseas revenue now is [a] very substantial part of the company’s

revenue. They are corporatised companies—they are still 100% owned

by the government and these two companies expanded their global

footprints. Their experiences actually show that there is no need for

privatisation of ownership. They are still 100% government-owned

companies and [at the same time,] they are the private partner of PPPs

overseas.

The same [applies] for GLCs involved in urban development projects

globally. Surbana Jurong claims HDB’s experience as its own. On its

website, it says that it has planned 26 townships and it has housed 80%

of Singapore’s population. So besides Surbana Jurong, we have other

Temasek companies in the urban development space like MapleTree,

Capitaland, Ascendas Singapore, Sembawang Corp—and these are all

literally all over the world.

00:46:30

I [shall] move on to another sector which is much more mixed in terms

of results and PPP design. For urban rail PPPs, running rail operations as

we kept being told are very complex tasks. So in this sector, I look to

Hong Kong as an example of a very highly successful urban rail

corporation. MTR [Mass Transit Railway] was listed on the Hong Kong

Stock Exchange in 2000—the same year that SMRT was listed. Its share

price has increased five times since. MTR is now in various cities such as

London, Stockholm, Australia—Sydney and cities in China. But you must

remember that [the] Hong Kong MTR was structured very differently

from Singapore’s train operators—they were just operating on

maintenance concessions. MTR is a super vertically integrated rail plus

property company that builds rail infrastructure, operates trains,

develops and manages real estate. So this very super integrated PPP

design has enabled MTR to grow from operating a local metro-network

to become a global rail giant.

This quote is from the book that was made in the context of problems

encountered by the Sports Hub PPP, “The more services you put

together that are coordinated under a PPP, the harder it becomes to

identify [whether] a private sector partner [is] able to deliver all the

requirements.” So this is true of all complex DBFO projects. There are

trade-offs between integration—how much to bundle in one PPP—and

the efficiencies and synergies which may be lost if you split them up into

too many components. And when such efficiencies and synergies are

lost, the difference in performance can be very significant. So integrated

DBFO PPPs with multiple difficult-to-measure performance specs

[specifications] are a lot more complex than simple, single output PPPs,

such as a power plant, or a desalination water project.

So understandably, the risk and returns are correspondingly greater. So,

in this complex space, if you can make it as in Hong Kong MTR, the

competition is less intense because the players there are much fewer.

So [for] Singapore’s urban development companies, GLCs, I think they

have done well because they are one of the few entities operating in this

00:49:13

00:49:13

space, where the experience of doing this engagement with market[s]

and how to help markets work better is not present in say, US and UK—

the deep experience is not there.

Broad Principles for PPP Stategies

So, what are the broad principles that Singapore should adopt for its PPP

strategy? The objectives for each PPP is not the same, but whatever the

objective, it must be very clear. Are you in it to get financing or for know-

how, et cetera? So, domestically, the Singapore government has

sufficient funds and there’s less need for PPPs as a source of finance. In

fact, when I was giving another PPP presentation, someone said that

Singapore didn’t need PPPs, because PPP is a poor man’s option. I didn’t

quite agree, but there are good reasons why we might also want to

pursue some local PPPs. One is for cost savings or value for money,

because in some sectors, economies of scale and expertise are lacking

in Singapore. We are after all a small country and a medium-sized city,

and the markets for some areas are much more developed in other

countries—so, foreign expertise and technology is needed, and such

cost savings may not be that easy to acquire by other means.

A second reason for doing PPPs could be that it’s an investment in

learning from strategic partners in order to provide Singapore

companies, including financial institutions, business consultancies,

lawyers, [and] accountants with the expertise and networks.

And the third reason might be a bit more controversial, we look at the

Sports Hub—it’s an iconic project; it will help anchor Singapore’s

ambition to be Asia’s infrastructure hub, or infrastructure exchange. So,

it’s kind of a showpiece for PPP involvement. After all, it did win the Asia

Pacific PPP deal of the year in 2010, and more recently, the Global Asia

Pacific Best Refinancing Deal; so there are other pluses of that particular

project.

00:51:15

So Singapore companies have leveraged on their domestic experience

and competitive advantage in the areas that Singapore is well-known

for—Changi is the world’s best airport, Singapore port is one of the

world’s busiest; the HDB wins international awards for being the world’s

most successful integrated township developer, and JTC MapleTree has

developed deep experience in logistics and running the industrial parks.

So, these are the experience[s] from which you can leverage [on] to

successfully enter more complex infrastructure PPPs overseas as a

private partner. While opportunities for scaling up domestically is

limited by our small size, PPPs in Asia’s rapid urbanisation allows for

scaling up globally. So you see, this is the phase of PPP for Singapore—

perhaps it’s not in Singapore that we are best known for PPPs, but you

see Singapore townships: Vivo City’s, business parks, Raffles City’s,

CapitaLand Malls—all appearing in cities across China, India, [and]

Southeast Asia.

This is…maybe the phase of Singapore’s brand going global in the form

of PPPs, filling the infrastructure gap and contributing to sustainable

urban development in Asia. These are complex, large PPPs [where the]

potential returns are high, [but] so are the uncertainties and risks. So I

guess we need to tread with care. Thank you.

Panel and Q&A Segment

Mr Wu Wei Neng 00:52:56

We’ve seen that play out in various areas that our speakers have

touched on: the resource development with land, allocating a very

scarce and valuable resource in Singapore; various forms of economic

partnerships with public housing, relationships between statutory

boards and the economy, and private-public partnerships in general.

So, [I] just want to pick up on Er Lau’s example of the heroes and villains

which we all found very entertaining. He mentioned that [the]

00:53:23

government actually intervenes because it wants to be a hero, it wants

to do good for the economy, to do good for the country. But sometimes

when then government intervenes too much or intervenes [for] too

long, the government can be seen as a villain. So, just picking up on that,

just like to ask the panel: how should does the government or how should

the government figure out when to intervene and when not to intervene?

Maybe I’ll ask Er Lau to sort of pick up on that [and build up on] what he

mentioned a bit earlier first, and then maybe any of the other panellists

who want to chip in can also do so.

Er Lau Joo Ming 00:53:54

I don't see my enemies in the audience. So my enemies will call me [a]

villain. But I see some of my friends over there, they’ll call me [a] hero.

So let me just give you a very simple example on the construction

method. In the past we used to build using timber formwork. Timber

formwork would require skilled carpenters, so if you look at some of the

older flats, you’ll probably know the reason why it’s not so straight.

So we came up with this thing called the metal formwork, which is

modular—it come in modular pieces and you can assemble it like Lego.

By moving to this modular thing, we de-skilled the carpenter[s]. We do

not need [sic no longer needed] the plasterer[s] and so on, and we

bought the form and set a kind of price [for them] to rent the form from

us. In the beginning, the contractors, they had never seen such things

before, the suppliers had never seen such things before, so they more

or less employed this method. As time went by, they found that, “Why

not...instead of buying the form [from you], why don’t you supply the

form?” But we carried on for quite a long while—because ultimately we

look at it differently. I had to deliver the building programme [and] every

building programme is a political commitment. So I cannot [sic could

not] allow some of these market forces to come in.

Now for this metal form, looking back, I probably ran it for too long, and

became a villain—but in the beginning I was a hero. Everybody said,

“Whoa, you really came up with something very good.” So this is just a

00:55:47

simple example. I mean there are many examples [of things] I

implemented, some of them I must say that in the beginning we taught

them, then [sic but] after some time they [began to] feel that actually, if

you inject some market forces, they can become competitive. So that

was what I meant.

Okay, maybe another one—for example, say consultants. For a long

while, HDB never allowed any consultants to do the design—whether it

was structural architecture, for a really long while. And to the

consultants outside—my friend, I don't know whether they [are] still

around—they think [that] they are better architects! Why is HDB holding

it [sic the job]? So they complained, complained, [and] complained. So

in this case, my chief architect, Tony [Tan/Tai?] was a villain.

Ms Low Sin Leng 00:56:40

I think HDB is a very unique example because I can’t think of any other

country in the world where more than 80% of the people live in a HDB

flat. Therefore [the] government, when [they] undertook this particular

massive public housing programme, [they] had the economies of scale.

But even then, over the years as a state, we have to retreat from the

market and help the private sectors grow. Otherwise too much power

will be concentrated on just one particular—either authority or

statutory board—which doesn't allow many flowers to flourish, many

ideas to be groomed.

HDB is a classic example. In the old days, we used to say everywhere

look the same. You go to the town, you get lost because they all look the

same. Then DBSS [Design, Build and Sell Scheme] was introduced. You

can see, within a certain kind of framework, you do allow private

architects to design things a little more interestingly.

Anyway, leaving aside HDB, I would like to say that when [the]

government works with the market, we must recognise that both [the]

government and the market are not perfect. Therefore, we must be very

candid and assess who is capable of doing what. I remember in the mid-

1970s, there was this heat about privatization—everything market can

00:58:18

do better, government should withdrew [sic withdraw]. We even talked

about hospital[s], maybe we should privatise all the hospitals. The late

Sim Kee Boon who was a very senior Perm Sec, during one very closed-

door discussion among the Admin Officers—Administrative Officers, he

stood up and he said, “Singapore’s statutory boards, many of them have

done a wonderful job to help build the Singapore economy: PSA, HDB,

PUB, CAAS. So please, I urge all of you, as young and enthusiastic

Administrative Officers, don't always think that the private sector can

always do better than the public sector. It all depends.”

And in Singapore, because our public sector, our government, luckily, is

very upright, non-corrupted. Therefore, when they plan and execute,

they can do things well. Now having said that, some people ask me,

during some other lectures, was it a mistake to privatize so many GLC?

Would it have been better if all the GLC are…continued to be owned by

government? I said, yes and no. Sometimes we make little mistakes. I

must say that SMRT was a mistake because the formula, just [was] not

sustainable.

But other things wise [sic that aside], it was a successful story. DBS Land

merged with Pidemco to form CapitaLand. CapitaLand therefore have a

strong foundation homebase, but with that, they venture overseas. Now

CapitaLand is pretty successful in China, in Vietnam and elsewhere. This

is…[an example of] propel[ing] our GLC to go overseas. I can also

mention about SembCorp which was a merger of ST [Singapore

Technologies] and Sembawang. You can talk about Keppel. We have all

gone regional and even global. So the privatisation of some GLCs has

actually spun-off further and derived benefits for the country.

However, [there are] certain things [that the] government should

continue to do, because they have been doing well. And we need not

always follow other people[’s] example. I would be very sad if we said

that, “Oh, private sector can run better schools so government schools,

please withdraw and let the private sector run the schools.” No.

01:01:06

Singapore private schools are not necessarily better than public schools.

In fact, we all know the public schools, the government schools are much

better. Why? Because educating our young generation is the

responsibility of [the] government.

[For] public housing, especially [if] you want to provide affordable

housing, it has to be in the hand of government. Of course, you must be

smart enough to work with the market so that [if there are] certain

things [that the] market does better, you [can] let them do. If you can

incentivise a private sector to set up factories just to provide you the

tiles that you need because you give them a contract that is sustainable,

they will do things and they do things efficiently. In fact, big developer

do it that way also. They will give long-term contracts to another

business partner, so that they can be focused and deliver the goods with

quality and timely deliveries to them. So [the] public and private sector

have to be very realistic about who can do what. If the interest is not

aligned…private sector is profit maximisation, and you give me a

contract, I can earn more, I earn more. But I must deliver whatever you

specify, whatever you expect.

The public sector must bear in mind that you cannot have the cake and

eat it. You cannot say that I privatise SMRT, then I don't have to bear the

political burden of regulating the fare. You can’t. The train fare is a

political decision. If you want to make the train fare affordable, even to

the extent of subsidising it, you have to bear the responsibility! That’s

why I think the formula can’t work and therefore they now changed the

formula. When I assigned the contract to the private sector, like the

water desalination, the waste-to-energy, the seawater desalination, the

NEWater [projects], why do they work? Because you take that

regulatory risk from the private sector. You told the private sector, you

don’t worry about how much I charge the citizen[s] on the water tariff—

that’s my business. If I choose to subsidise the citizens, [it has] nothing

to do with you. I am your take-or-pay single buyer. You deliver the water

01:03:30

promptly with this kind of quantity per day, with this kind of water

quality, and you tell me how much I must pay you.

Then all of us, [in the] private sector, we bid on that understanding. Very

transparent. I don’t have to worry about the water tariff [moving] up

and down. That’s your political decision. I just say, this is my production

cost, this is my financing cost, this is my profit expectation, so I want to

charge you $X per metre cube of water, that’s all. We compete on that

transparent basis. It works. But if you come to a much more complex

project where you expect the private sector to have all the capability,

it’s difficult.

Mr Wu Wei Neng 01:04:08

One thing that I do want to pick up and, please indulge me on this, is

really on this question of the private sector[’s] perspectives. We’ve been

talking a lot about government and how government can work with the

private sectors. So if we flip that around, there are also a lot of challenges

for the private sector working with government. So sometimes it’s not

easy to work with the government as well, from the perspective of a

private firm. So maybe how can governments address and reduce these

challenges while still being impartial and still being objective? How can

we make it easier for the private sector to work with us?

Just because you’ve spoken a lot about sort of how government can

engage the private sector more effectively—so how we can build

systems and how sometimes we rely on the private sector for

capabilities—but on the other hand, we’ve also interviewed a lot of

private sector people for this book, and sometimes the feedback we get

from the private sector people is that sometimes it’s difficult to work with

the government. Because the government might have different

requirements or the government might have multiple regulations. So

what’s your perspective on some of that from the government point of

view?

Mr Choy Chan Pong 01:05:07

I think it’s very important for the private sector to give feedback.

Because the government may come up with various regulations and

controls and so on from their perspective. I have talked to some private

sector people before, and they can be unhappy about various things that

the government is doing. For example, say [in] the education industry,

the private education industry. I’ve heard complaints from a lot of

private education operators who say that Ministry of Education is really

ridiculous in the way they certify and audit companies for certification,

and the kind of processes [that] they make these firms go through—the

cost of it, the time taken and so on, is so overbearing—that it probably

will drag them down, you know?

Then I always tell these people, why don’t you give feedback to the

officials in Ministry of Education who are doing this. Because from my

point of view...someone just asked me, how long have I been in the

government, I said, 45 years. And throughout these 45 years, I have

always been under the impression about [sic of] myself and my

colleague that we always try to do our best for the government, for the

people, in the work area that we work on. So to me, if Ministry of

Education is being unreasonable and being difficult with the private

school operators to the extent that they are all thinking of giving up, to

me, if they give feedback, I’m sure Ministry of Education will respond in

a responsible manner.

But my friend said, no! If we were to give feedback and this and that, we

will be marked down. And it’s a matter of life and death for us because

if the officials mark us down, [and] we don’t get our certification—

whether the one-year or the four-year certification—we’re dead. We

have invested so much [that] if we don’t get certification, we just got [sic

have] to close straightaway. Therefore, we dare not make the officials

angry. I still don’t understand that and don’t believe that; and I’m still

encouraging these people to give feedback. But I don’t know if they may

be right. I can only speak for myself and my fellow colleagues whom I

worked with for 45 years, that we are always there to listen, and always

there to try and do our best. So I will encourage the private sector to

always give feedback when you think things are not fair, not reasonable,

01:07:43

not right. And then work together with the government officials to come

up with the best solution to whatever problems there are.

Er. Lau Joo Ming 01:07:51

First I must tell you, when I was sharing just now, I was sharing based on

the past HDB. So the formula we’re adopting will have to change with

time. For example, now if we are to apply the same formula in HDB, it

probably doesn’t [sic won’t] work. I actually love the private sector. The

private sector will bring in the money, the private sector will have a bit

of discipline on the timing. So in mega projects, I think we leave it to my

friend[s]—don’t mind I call him Mr Architect, Mr Engineer—then we

design everything and then we try to procure it. [But] we probably won’t

get the best. So for mega projects today, we promote what we call Early

Contractor Involvement.

The contractor will come—I mean let’s say the design is being done—

the contractor, together with design team will probably come up with

alternative design [through] value engineering and try to make the

project more efficient. So this is one way to bring the private...because

now we have to work together, rather than just procure in a very

traditional manner. Then the simple project which I’ve gone through is,

remember the one on the solar, which is something new? Right, so the

government pays the money, so I try to aggregate—so instead of buying

for say, a project, I now buy for more project. Of course, the cost will go

down.

Then I start to bring in…why don’t you finance the project, and then all

the energy you harvest, you make it. So in a way once some of these

projects become bankable, then the formula will change. But I must also

say that it depends on what stage you are [in]. So just now, my sharing

was...I was sharing on HDB during the pioneering years. During the

pioneer years, it was different. I have [sic had] to get my...either my

division [to] run a quarry, or I get a government-linked company who is

just going to do it. But we had to do it in such a way that we don’t hollow

up such that nobody [else] could do it. We had to do it such that those

people involved, the local fellow, will more or less grow with us—and

01:10:10

we actually earmark that sooner or later, they will take over. So whether

it’s Pidemco Land [and] so on, they are slowly built up. But when it

come[s] to a point to let go, it’s like a bird—let go, don’t hold too long.

Mr Wu Wei Neng 01:10:22

Shall we open our questions and comments to the audience, please?

Just two quick, small requests: Please state your name and organization

when asking questions or giving comments. And also, let’s keep our

questions short and sharp. Please raise your hand, our ushers will come

around with the mic[rophone]s.

AUD1 01:10:36

I’m Bruno Wildermuth, I’m a retired consultant. Actually, I used to be

primarily in transport planning but I am very interested these days in

other aspects of urban development; and increasingly, we are

emphasising sustainability. There are two points that are inter-related

that I’d like to point out. One, for instance is HDB so far has failed to

provide centralised air-conditioning although [when] you go to any HDB

building, you see that every household has put in their own air-

conditioning installation. Now, everybody knows that centralised air-

conditioning uses about a third of the power or the energy, and it’s

cheaper, definitely, for everybody in the long run. But it costs so little

more initially.

Similarly, quite related, you look at any office building in Singapore,

they’re all air-conditioned, all day long, 24 hours. Do they have double-

glazing? No. Why not? A developer told me when I asked him, well, the

benefits go to the end-users; it costs me more as a developer. So these

are two examples where despite the private-government partnership,

we have failed to move in the direction where we clearly need to move.

Mr Wu Wei Neng 01:12:17

So thanks for those observations. Maybe I can just distill it: I think the

first point is really on HDB and the role it should take in maybe specifying

some of the building technologies or maybe for efficiency. The second

point maybe in terms...because you’re talking about private office

buildings, so maybe in terms of the role of the state [in] regulating maybe

energy efficiency, use of double-glazing for buildings perhaps? But any

01:12:41 points that any of our panelists would like to address on those

comments regardless of what I’ve just said?

Ms Low Sin Leng 01:12:47

Let me explain, in the old days, we couldn’t and we wouldn’t air-

condition the HDB flats because of the affordability. At that time, it was

meant to provide affordable—that means cheap housing to all the

citizen. Therefore, you can understand [why]. And [the] government has

left it to the individual to say whether you are rich enough to want to

make life more comfortable to [sic for] yourself. If you do, then you [can]

install your own air-condition[er], right?

Therefore, in the early year, you can see that only the five-room flats

and maybe the four-room [flats], and definitely maybe the ECs

[executive condominium], they all air-conditioned their own room. But

the one-room, two-room [flats], very few [of them are] air-conditioned.

But maybe you are right. Today, things are very different. Maybe

affordability has risen a bit. And so almost everybody would like to have

an air-con[ditioner]—I think the majority would like to have air-con

rather than minority. So the question is, why wouldn’t HDB consider

maybe providing the centralized air-conditioning? If you buy private

condominium, it’s all centralized air-conditioning, correct? Is it also not?

So there must be [a] more efficient way of solving this problem. What

HDB did very well was, for example, [they] centralised the gas delivery

so it was built from day one. So [in] all HDB flats, in fact you can buy gas

directly without having to lay your own gas pipe. Good question.

Er. Lau Joo Ming 01:14:22

In fact I mentioned to you, remember, I began with the present HDB

slide and I said I got a fingerprint there. Then I show the past [of HDB]

and said I’m responsible so [for] this question, I am responsible. So let

me give you a bit [of explanation]—in fact [when] I came here, I didn’t

want to wear a coat but they said to look presentable, [you have to]

wear a coat. Now, so let me remind you, Singapore is in the tropic, so

our design is always passive. Now, you look at HDB, we’ve more or less

designed in such a way that’s north-south [facing]. If you lose your

bearing, look at our building, north-south. You walk north, you go to

01:15:00

Woodlands, you walk south, you come here. So we designed our

building more or less [to have] cross-ventilation. In other words, your

living room, your bedroom, your kitchen, you don’t need air-

conditioning.

Of course, as the country progressed, they want to have air-

conditioning. So [if] you look at HDB flats, actually they do put split

unit[s]. But do they turn [them] on? That is another question. But I can

tell you, because we have the record of the HDB bills, the kind of energy

bills [and] actually it’s not very high; they only turn [them] on when the

weather is hot like [it is] today. So in a way, don’t...when you see the air-

con, it doesn’t mean the whole building needs air-conditioning. So the

fundamental thing in sustainability is we must reduce energy—

centralising energy, whether it’s an engineering solution or a likeability

solution, I really don’t know.

But I tell you, I got a flat in Trellis Tower, with some centralised thing

[air-conditioning system]. After 10, 20 years, it broke down and I didn’t

know who to find so finally I put [in] a split air-con. Centralisation has

some other technical problems. So the point I’m trying to tell you is, our

design is a passive design, we designed that cross-ventilation. Of course,

[if] you want to put air-conditioning, by all means. If you want to turn on

your air-conditioner, by all means. But you pay for it. So for most HDB

flats, in terms of energy, they are quite prudent in their use.

The next thing you talked about glass—whether you use double-glazing

or not—I think we should look at it as a whole. For this area where BCA

legislates, they have what you call this platinum one, where I think they

put in some kind of e-glazing, which is probably an alternative to double-

glazing. So we don’t stop designers from putting double-glazing, as long

as they can cut down the energy. I must say that by and large, [for] the

built environment, there’s a strong arm from the government to make

sure that the energy [usage in buildings] built today is very efficient. The

challenge is to go back to the older buildings.

01:17:19

The government has set a target that 80% of all the building would need

to achieve some kind of “green” kind of level. So your point is relevant.

In today’s world, sustainability is important, we have to look at

resources—especially in Singapore [where] there’s nothing, there’s only

this small piece of land where the people are growing, so we really got

to make sure that we use lesser energy, to reduce our waste and think

of an efficient way to make sure the liveable environment is liveable.

AUD2 01:17:49

Speaking from a perspective of a Singapore citizen, I used to live in a

private condominium, and when I purchased the apartment, the air-

conditioner came with the private condominium, and I have [sic had] no

chance to choose the brand of the air-conditioning that I wanted. And it

came with a brand called York which most of us probably never heard

of—and I was pretty angry about it but I have [sic had] no choice but to

accept it.

But now I’m living in a HDB flat and if future HDB [flats] were to be built

with a central cooling system, I would feel that the government has

overstepped too much into the private market because they would

deprive me of my choice of choosing exactly what I want. Maybe I don’t

even need air-conditioning because HDB has built the house in such a

way that is north-south aligned so there’s breeze inside. And I would also

want to have the choice of choosing my own brand of air-conditioning.

AUD3 01:18:47

My name is Keng Liang. I actually worked overseas for quite a while,

probably 10-over years and I lived in Shanghai and Bangkok. So I’m

pretty well aware of what is going [on] outside as a consultant, and [I]

also worked with some global branded companies. So I thought [that]

outside…I saw that things don’t work all the time, most of the time. Even

in places like China or in Thailand. But I wonder why we feel so negative

about what we have achieved so much [in], especially our housing, our

land sales, our privatised efforts in many ways—I think we can consider

ourselves something that everyone looks forward [sic up] to learn from.

I mean today when we come together, I can sense a bit of pessimism, a

bit of negative sentiments of [sic towards] what we have done. We

01:19:43

should be coming together to celebrate what we have achieved. So my

question is that we should look forward [to] what is ahead of us. I think

the government is thinking more about the master developers, [a]

consolidation of certain consultants to make it a bigger player to

compete in the international markets; and also [with] cases now with

foreign players, like the Chinese developers [that] come in in a big way

to snatch our land, and things like that—they compete very hard with

our local developers, there’s a lot of disruption out there. Competition

is getting a bit tougher for our consultants?

So to leverage on market efforts, the government has probably got to

play a very different role than before. I want to know from the panels

how we could strategise some kind of leveraging on our own private

consultants and industry players, so that we can compete more

effectively, and we can make a better home for Singapore. Thank you.

AUD4 01:20:47

Hello, I’m a visiting researcher at CLC and my question was about when

you all spoke about how the governmental sector can work better with

the private sector to make it easier for private developers. Now I was

wondering what you all thought about current incentives that the

government puts out to developers, like GFA [gross floor area] incentives

to shape developments to fit with the master plans and conceptual plans.

I was wondering if you think the current way that the public sector creates

incentives is working? And if not, what would you suggest to modify it?

Mr Wu Wei Neng 01:21:23

Okay, thank you, and a question on the current incentives for developers,

whether these are adequate or whether these need to change. Any of

our panelists? Please feel free.

Mr Choy Chan Pong 01:21:32

Unfortunately, I’ve not taken on that role of growing [the capability of

consultants or developers to compete overseas]. You see in the area of

government land sales, the national objective of getting development

done [is] getting Singapore developed so that we can improve the built

environment in Singapore, so that we can attract investment, so that we

can support the economy and so on—those were the pressing issues

that we have faced over the last 50 years.

01:21:57

Unfortunately, URA never took upon itself to—except for other areas,

the redevelopment control and so on—but in the area of land sales, it

had never been the objective of trying to grow the capability of

consultants or developers to compete overseas. I suppose it is a by-

product, as Ms Low has said; the fact that CapitaLand has grown from

Pidemco Land into the world-player that it is today is...I mean

government land sales definitely contributed to that because with the

land sales, they got into development, they honed their development

skills, their design capability and so on. And they were able to go

overseas with their experience in Singapore. But it was never our

objective or mission to think of a way to get developers together so that

they can grow. It’s a by-product, so to speak. So when you address it to

me now, I don’t really have a ready answer with respect to that.

Prof Phang Sock Yong 01:23:10

I think the question about consultants and growing; strategizing to

compete internationally, I think that is actually what Temasek is doing in

terms of [the] merging of Surbana Consultancy with Jurong and the real

estate companies in the Temasek stable of companies—that enlarged

entity is much more able to compete globally against big players

internationally. So I see it as one strategic move in that direction. But

should they be doing more of it and what are the risks of entering such

big projects in so many countries all over the world—that’s something

which, well, it’s for Temasek to address.

The other issue about GFA and master planning, Mr Choy talked about

GLCs. But in GLCs land sales framework, the GFA is already incorporated,

the government gets the benefit of the increase in GFA ratios from the

land sales proceeds. I think the question may be in relation to the en

bloc sales that are going on now, where there’s an increase in the GFA

from the master plan and the benefit goes to a small group of private

landowners, property owners in the area who are able to reap the

benefit of the change in planning parameter from the change in land

density usage. So this creates incentives for all these en bloc sales that

01:24:36

are going on now. So the issue is well, in the past, we used to do

wipeouts of land gains using the Land Acquisition Act. Now with this,

land use planners are with just a change in density ratio or land use,

giving these windfalls to lucky landowners. So that is an issue which I

think planners will have to address.

Mr Choy Chan Pong 01:25:00

Sorry, I missed that. Now I know why everybody is looking at me. Now

this thing about increasing plot ratio, and giving rise to this windfall

through en bloc redevelopment, let me say that it was a once-off thing

in the 90s. In the 90s, when they were doing what they call the

development guide plans [DGP], after the Concept Plan 1991, we

realized that really the plot ratio in a lot of areas in Singapore is [sic was]

just too low. And if we were going to have a growth in population, as we

are seeing now—in fact the growth in population that we have seen over

the last 10 years far surpassed any imagination that we had in the 1990s.

When we were doing the planning in 1990s, we were not thinking of five

million by 2010. But it happened. But even without knowing that, we

were already knowing [sic aware] that we had to intensify the plot ratios

so as to be able to accommodate not only the people, but accommodate

the businesses, the factories and the schools. So we needed more built-

up areas to be able to accommodate all the activities that would come

about with population growth and economic growth. So that’s the

reason for this up in plot ratio.

So it was across the board and many people benefited from it. Good luck

to them. But it had to be done—It’s done—Some people benefited,

some did not. From now on, I don’t think you’ll be seeing this kind of

plot ratio increase anymore. But nevertheless, we were discussing even

before this session, despite the fact that there’s no plot ratio increase,

there is still scope for en bloc redevelopment, because people are now

willing to live in smaller flats. And when you go into smaller flats, [the]

per square metre price is higher. So the developers see this, and they

are willing to buy a development and rebuild the development into

smaller flats and there’s value to be gained. And if that is the case, again

01:27:09 this is the market, we cannot fight against it, we cannot be envious of

the people who benefitted from it. But in terms of government upping

plot ratio, I’m no longer in URA, like Engineer Lau is no longer in HDB, I

can’t speak for URA, but through my understanding, it’s not going to

happen again.

Mr Wu Wei Neng 01:36:38

So from what our speakers have said today, we can draw out two main

threads of working with the market. The first being working with private

firms and the private sector. The second, as Ms Low said, also working

with the price mechanism or using prices to allocate good and services. I

want to just share an observation by our Executive Director, Mr Khoo

Teng Chye—he can’t be with us today but—when we interviewed him,

he said, “as the government, we have to work with the market but we

can’t oversimplify and leave everything to the market.” Sometimes

there’s a temptation to say, there’s a functioning market here so I leave

it to the market. Too often, leaving things to the market means I

privatize everything, I call for tender for everything.

But Mr Khoo mentioned, it’s not so simple, and that’s not what our

urban pioneers did. Working with the market means you have to go out

there, understand and talk to firms, understand the market, persuade

them to do what is necessary, and find ways to create successful

outcomes for Singapore.

So our four panelists have all focused on pragmatic, eclectic and

adaptive ways in which the government has worked with the market and

have shared their experiences of the various ways in which they have

done that through their various domains of expertise. So please join me

in thanking all of them for a very good sharing session. (Applause).

[Transcript ends at 01:28:43]

LECTURE INFORMATION

TITLE

Working with Markets - Harnessing Market Forces and Private Sector for Development

SPEAKER

Mr Choy Chan Pong

Former Senior Adviser, Urban Redevelopment Authority

PANELLISTS

Ms Low Sin Leng

Former Senior Advisor and Executive Chairman, Sembcorp Development; Chairman, Nanyang Academy of

Fine Arts

Er. Lau Joo Ming

Senior Adviser, MOH Holdings

Prof. Phang Sock Yong

Celia Moh Chair Professor & Vice Provost, Singapore Management University

DATE

19 October 2017

LOCATION

URA Function Hall

DURATION

1 Hour 28 Minutes 52 Seconds

Note:

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