You people ah, give you subsidy and you ask me how much the thing cost and say actually is not subsidy. Must I always explain that just because it is a subsidy does not mean I don't make a profit? This is called The Singapore Subsidy.
From the ST Dec 20, 2005:
NKF said it saved patients more than $3.5 million by offering them lower drug prices and subsidies. This was not true. It made close to $1 million each year, in 2003 and 2004, in gross profit from the sale of such drugs.
The gross profit margin worked out to almost 40 per cent each year. And that was because NKF did not pass on the rebates it got on its bulk purchase of medicine.
For example, it said one drug cost $25. It gave patients a $13 discount and charged them $12. But NKF paid only $8.20 for the drug. It pocketed a 46 per cent profit.
From the ST 21 Dec 2005:
Instead, Mr Subramaniam, the accountant, said the way the NKF treated the definition of subsidy and the way KPMG did were from"different perspectives".
The NKF defined subsidy as the difference between the amount a patient would pay for treatement and drugs elsewhere in Singapore and the amount they paid the NKF. "In my understanding of NKF's view, subsidy must be tested against the market rate and not the net amount incurred."
From the ST Aug 6, 2004:
HDB pricing keeps new flats affordable to most Singaporeans
I REFER to the letters, 'What goes into pricing of HDB flats' (ST, July 23) by Mr Hiong Kum Meng and 'Subsidy should be based on flat's building cost' (ST, July 27) by Mr Mohamed Rafiq Hamjah.
Mr Hiong concluded that the increase in HDB resale prices has outstripped wage growth, based on a comparison of changes in the Resale Price Index with changes in average nominal wages between 1993 and 2003.
We would like to explain that resale flats are transacted in the open market on a willing buyer-willing seller basis. The prices are not set by HDB. Prices can fluctuate, depending on factors such as the economic outlook, employment situation and sentiments in the property market.
What is important is that HDB prices its new flats so that the majority of Singaporeans can afford one. From 1993 to 2003, the prices of new four-room flats increased by 2.6 per cent per annum, below the annual increase of 5.3 per cent in average wages cited by Mr Hiong. New-flat prices did not rise as steeply as resale-flat prices, because HDB prices new flats below their equivalent market price, that is, at a subsidy.
Mr Mohamed asked why HDB's subsidy for new flats is related to the market price and not the building cost of a flat. Today, first-time HDB flat buyers can buy either resale or new flats. Those who opt to buy resale flats from the open market can take up a housing grant of $30,000 or $40,000, which allows them to enjoy a discount off the market price of the flat.
Those who opt to buy new flats from HDB also enjoy a discount off the equivalent market price of the flat.
The difference between what the buyer pays HDB for his flat and what it is actually worth in the market is a direct and real subsidy provided by HDB to the buyer.
Like the housing grant for resale flats, the provision of such a market-related subsidy in the case of new flats has enabled HDB to keep its flats affordable for the majority of Singaporeans.
DESMOND WONG
Deputy Director (Marketing & Planning)
for Director (Estate Administration & Property)
Housing & Development Board
