why we should (not) learn from Singapore's HDB experiences

Background:

Singapore has carried out one of the most extensive public housing programmes, transforming the city state’s society and landscape in few decades. While at the time of autonomy from the colonial government in 1959 slums and illegal squatter settlements were commonplace and urban poverty a main challenge, homelessness and substandard housing has virtually been eliminated. Although rapid economic growth has been a main contributing factor, the government’s progressive housing policy has channelled significant resources towards its Housing and Development Board (HDB). Since its establishment in 1960, the HDB has initiated the construction of more than 850,000 housing units (alongside commercial and industrial premises, schools and community facilities, and supporting infrastructure) (Yuen, 2005, 25). The proportion of Singapore’s population living in public housing lies around 85%, while an impressive 95% of these own their unit (Yuen, 2005, 5).

Singapore’s housing programme has widely been regarded a success since even the poorest income deciles enjoy access to affordable and quality public housing while heavy subsidization efforts seem sustainable both politically and economically. Nonetheless, when considering the wider applicability of lessons learnt, Singapore’s uniqueness in terms of its size, political cohesion and economic development pose a range of questions. The next section will review the crucial components that made housing policy a success while the last section will aim to extract policy lessons applicable to other contexts.

Singapore success factors:

At the time of the 1960 Housing and Development Act, public housing efforts initiated earlier had made little success – city slums were sprawling, access to basic services and expanding urban poverty posed main challenges. In this context, the newly elected government declared affordable and accessible housing for the poor a top priority. The achievement of this goal rests on a range of key factors:

Political commitment: Firm political commitment has been reflected in the resources devoted to housing as well as the comprehensive approach adopted. Housing has been embedded in a wider social and economic policy framework, while more concretely supportive legislative and political action ensured the feasibility of the HDB undertakings. Commitment has also been proven by the fact that resources have indeed benefited the urban poor and the society as a whole; rent-seeking, corruption or excessive transaction costs seem not to have been a problem in Singapore.

Pragmatic and effective policy implementation: Singapore stands out in its ability to translate planning into policy action almost immediately. Once planning decisions have been made, resources and legislation are mobilized quickly and lines of responsibility spelled out clearly. While a comprehensive planning process certainly supports this aim, two factors stand out:
Centralized housing authority: the HDB is responsible for all aspects of the public housing programme except for the setting of rental and sale prices (undertaken by the Ministry of National Development).
No political opposition: Singapore has a rather strong government facing neither an effective opposition party nor a strong culture of political activism.

Financial assistance: The question of affordable housing is just as relevant as availability when it comes to housing the poor. Since inclusion of the poorest groups was a main thrust of housing policy from the start, dwellings are heavily subsidized on a progressive basis. While low production costs were ensured by building small standardized units on a massive scale, rental rates are set according to households’ earning power and ability to pay. The deficit incurred by the HDB is fully covered by the government’s current budget in the form of grants while its National Development Fund also provides low-cost loans to the HDB (Third World Network, 18). Politically this is justified as a form of wealth redistribution. The sale of HDB units to private households is equally subsidized in order to promote the central objective of a home-owning society. To illustrate, in 2000 low-income households were charged $26-33 monthly rent for a one-room flat and $44-75 for a two-room flat (Yuen, 2005, 12).

Access to finance: In order to create a ‘property-owning democracy’ the government liberalized the Central Provident Fund (CPF) to provide access to finance. Under the 1968 Home Ownership Scheme CPF funds can be used to cover the 20% down-payment as well as mortgage repayments of HDB housing loans. These loans are available at low cost and since CPF savings are mobilized no reduction in disposable income occurs (Third World Network, 20). At the same time, sale prices are heavily discounted so that even households in the lowest income quintile are homeowners.

Land Acquisition: The provision of public housing on such massive scale is contingent upon the availability of land. In 1966 an amendment to the Land Acquisition granted the government powers to take possession of private land for public purposes and thereby both prevented speculation and established a sizable land bank. Since compensation is regulated to be kept at low cost with little fluctuation, the HDB can acquire public land from the government at low prices.

Economic growth: Arguably, affordable housing for the poorest households would not have been possible without parallel economic growth. The government has recognized this from the start and devoted much effort to promoting employment creation and sustainable growth. Importantly, the massive housing investments and expansion of the construction industry have contributed to economic growth.

Policy lessons:

The Singapore experience provides a rich case study involving both innovative and controversial policy measures. Due to the country’s specific environment, however, caution must be exercised when aiming to replicate its success.

Political commitment is certainly a prerequisite for successful housing policy. Particularly in developing countries improving the livelihoods of the urban poor is often not a priority due to the little political influence they have. Poor and rich countries alike should communicate to constituencies the positive externalities associated with housing the poor. At the same time mechanisms are needed to ensure transparent resource allocation.

Singapore’s high degree of political pragmatism is more controversial as democracies in general face a more diverse political reality. Nevertheless, some policy lessons can be drawn:

• Informed planning can greatly facilitate the implementation process.
• A process of constant review and policy refinement is crucial to enhance knowledge and programme quality.
• Good management and clear responsibility structures reduce transaction costs and duplication of efforts.
• The inclusion of all social groups enhances sustainability and reduces political opposition.

The high degree of subsidization might not be feasible in other countries as (i) housing competes with other sectors for government expenditure, (ii) developing countries in particular rely heavily on external funding, and (iii) ideological differences exist regarding the balance between state intervention and market forces. Nonetheless, three generalizations can be offered:

• Subsidies should be progressive so that the neediest receive the greatest share. There should thus be different housing categories, while their price should be proportionate to ability to pay. This implies the need to develop a mechanism of identifying and targeting the poor, a difficulty that developing countries might face.
• The level of government responsible for administration and maintenance should receive fund transfers from higher levels to make subsidization compatible with maintenance.
• Direct competition with other sectors for funds should be limited to enable long-term planning.

Access to finance is crucial to encourage ownership, making housing policy more sustainable in the long run:

• Security of tenure is crucial for reducing investment risks and encouraging home ownership, particularly in developing countries.
• In order to include the poor in the scheme, loans have to be accessible to low-income groups and should not significantly reduce disposable income.
• An upgrading scheme should ensure a filtering process which will raise overall quality of living.

Extensive acquisition of private land is a very controversial policy option not necessarily recommendable. Especially in poor countries with weak accountability structures such legislation opens opportunities of abuse. Points of learning are:

• Enforceable measures to prevent land speculation are needed.
• Transparency in both the use of public land and in the allocation of housing units fosters political support.
• The use of public land should be rationalized and brought in line with policy priorities.

It seems needless to say that the promotion of economic growth raises living standards and the demand for decent housing. Housing is one social policy sector which can be instrumental in distributing this wealth more equitably. It is also worth pointing out that economic growth raises tax revenues upon which public housing finance relies.

Conclusion:

Public housing in Singapore provides an exceptionally integrated and consistent approach towards policy formulation and implementation. Singapore cannot, however, serve as a housing policy blueprint but rather illustrates that the debate over public versus private provision is much less relevant than spelling out actual policy principles and guidelines.

Selamat dan Sukses...

Alhamdulillah, MPP 2006-2008 sudah menyelesaikan masa studinya, dan menghasilkan 4 orang bergelar MPP dari Indonesia yang akan lebih bersemangat dalam menyebarkan manfaat untuk masa depan Indonesia yang lebih baik.

Ahmad Hanafi Rais, S.Sos, MPP

Bachtiar Firdaus, S.T, MPP

Prelia Handarani Munandar, S.Sos, MPP

Mardiah Hayati, MPP

Selamat untuk para senior kami, ditunggu kontribusi luar biasanya...

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Saya ingin memfokuskan pembahasan kepada satu kelompok buruh yang merupakan saudari2 kita setanah air, domestic worker atau lebih sering disebut TKI/TKW, dan buat anak2 gaul Jakarta sering disebut pembokat. Lebih spesifik lagi, saya hanya akan membahas domestic worker yang ada di Singapore.

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Sebenarnya masih banyak polemik yang ada dalam permasalahan domestic worker, terutama para TKW disini. Terlalu banyak bahkan… dan kita Cuma bisa menguraikannya satu persatu… cuma bisa menguraikannya tidak menyelesaikannya, karena lebih banyak yang tidak peduli…

foto saudari2 kita yang sedang menikmati one day off,
labrador park, diadakan oleh mujahidah learning center.

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Hidayat (lebih dikenal sebagai matnur), salah satu rekan kami akan mengikuti program pertukaran mahasiswa ke School of Public Policy and Management, Tsinghua University, Beijing smester depan....

Selamat dan Semoga Sukses.

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"Jika tidak, saya akan minta izin Presiden untuk menggelar malam amal guna menggalang dana. Istana Gebang akan kita beli dan kemudian diserahkan kepada pemerintah untuk mengelolanya, demi kepentingan sejarah buat anak-cucu," tandas Adhyaksa.

membaca hal ini tentu saja hati saya tergelitik. sebegitukah nilai rumah masa kecil bung karno, sehingga kita merasa terhina ketika ada swasta atau orang malaysia yang ingin membelinya? mengingat nilai yang ditawarkan cucu bung karno untuk harga rumah seluas 1.4 ha ini cukup besar yakni Rp 50M. dikabarkan pula pak wali kota blitar siap membeli rumah tersebut apabila harganya sesuai dengan NJOP, yakni 15-20 M dengan dana APBD.

pak pejabat yang terhormat, apakah benar uang itu lebih bermanfaat untuk membeli rumah masa kecil bung karno? dibandingkan dengan meningkatkan mutu pendidikan di kota blitar? atau membiayai RSUD yang sudah sekarat? atau menyalurkannya untuk peningkatan ekonomi warga Blitar?

masalah lainnya, kita tidak pernah terhina ketika ada ibu2 hamil mati kelaparan, orang2 dipedesaan makin nasi aking, petani masih saja miskin, nelayan tidak bisa melau krn tak sanggup beli bensin,para guru dan murid bersekongkol berbagi jawaban ujian nasional, politisi berbondong2 masuk bui...

entahlah, klo di film2 horor, bung karno setelah mengetahui hal ini pasti bangkit dari kuburnya...

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hari ini saya cukup bisa merasakan kemewahan yg jrg dinikmati... menonton TV Indonesia. kebetulan tadi di metro TV ada siaran langsung debat calon gubernur jawa barat...
krn 4 bulan terakhir ini sangat gencar mengikuti prosesi pilpres di amerika, maka ekspektasi saya secara jelas terlalu berlebihan menyamakan debat capres partai demokrat antara obama dan hillary dengan debat dan berdebatnya agum-danny-herriawan... dimulai dari mengawang2nya program2 kerja yang ingin mereka laksanakan dan tidak jelasnya langkah2 yg mereka tawarkan sebagai solusi, keberadaan tim huray dan persoalan diferensiasi diantara kandidat perihal personal maupun kebijakan.

Production Sharing, Industrial Adjustments and Wage: an Indonesian Case

Imelda Maidir

executive summary

Indonesia provides a stark example that the social outcomes of the adjustment process attendant to increased economic integration and globalization leave much to be desired. On the one hand, Indonesia appears to have been a spectacular success in terms of the dramatic shift in the structure of its exports with probably the East Asian country currently most dependent on technology intensive products, primarily semiconductors. On the other hand, the country’s manufacturing sector has in fact failed to generate employment and growth for the whole economy, with one of the lowest shares of manufacturing to total employment and output in the region. Indeed, the share of manufacturing to total employment declined in the 1990s at the same time that the share of manufactured products dominated Indonesian exports. This explains in part the failure of Indonesia to have a large decline in poverty incidence, considering that the manufacturing sector tends to provide more remunerative wages than the informal sector in the services industry, especially retailing, where a substantial increase in employment occurred.

In short, ensuring smooth industrial adjustment and at the same time engendering favorable social outcomes is clearly not an easy task; indeed, this invariably involves active engagement of the stakeholders in the labor market; i.e., labor, management and the government, in terms of refining the regulatory environment in the workplace, improvement in the investment climate and economic governance, and stronger cooperative mechanisms between labor and management toward productivity improvement and productivity sharing. Moreover, ensuring inclusive growth in the face of relentless competition domestically and abroad may necessitate affirmative government interventions in order for the less endowed to be able to reap the benefits of globalization and growth.

This study, in particular, addresses the impact of greater economic integration and market competition that increase the pressures for industrial upgrading to wage. It poses the following questions: First, what lessons can be learned for the design of policies for furthering increased worker welfare from the experiences of industry adjustment and firm adjustment in Indonesia. Second, how the industrial relations environment and labor laws and institutions can be improved in order to have smoother industrial adjustment and upgrading process while at the same time facilitating increase in workers welfare. Lastly, what overall trade and development strategies contribute well to increase in wages consistent with the rise in labor productivity.

There has been a growing debate regarding the extent to which workers have benefited from recent trends in the global economy. Although increased globalization in the form of production sharing and foreign direct investment, global sourcing activities of MNCs, has led to strong output growth in some economies, the extent to which these gains have been passed on to workers in the form of improved wages and earnings is questionable; rather globalization has been blamed for the deteriorating position of low-skilled workers globally.

Given the contending views, the impact of export-oriented MNCs, as a reliable measure of production sharing, on real wages in developing countries manufacturing remains very much an empirical issue. However, one threat to validity in establishing empirical regression model is misspecification model, owing to omitted of irrelevant variables to explain the relationship of the phenomenon. Literature review can be done to summarize the contending theory around the explanatory variable that associated with the phenomenon. Nevertheless, there remains subjectivity in the reviewing the literature (Stanley, 1989). Besides, through literature review we might find difficulty in understanding the magnitude of a certain relation.

Through meta-regression analysis we attempt to estimate the empirical magnitude of the association between the global sourcing of MNCs and wage in a more objective and structural way to complement our literature review in determining the explanatory variable that associate with the phenomenon of interest. Empirical results on the impact of the export-oriented MNCs on wage in several researches were varied. The source of the variations could be the choice of measurements, study design, characteristics of the sample or number of observation. Through meta-analysis, we attempt to identify the source of variation and its impact on the regression model. These results, however, solely develop support for hypothesis that merit further testing. Therefore, it is necessary to conduct an econometrics analysis to ensure the robustness of the results. The methodology is to estimate a fully specified inter-industry wage growth regression which incorporates foreign ownership with separately export orientation.

There is a potential endogeneity problem in estimating equation, with exporting history (EXPORT_t-1) being the endogenous variable. EXPORT_t-1 is likely endogenous because there is strong persistence in the variable correlates with ε_it. Previous studies (e.g. Roberts and Tybout 1997; Campa 2004) found a very strong effect from the previous years’ exporting status on the current decision to export. Another important statistical issue regarding estimation of model is “sample censoring”. The dependent variables, AVGWAGE, can only be calculated for pairs of plants that remained as exporters in _t and _t-1. Therefore, the sample is likely to be truncated, particularly during the peak of the crisis, and estimating equation on the selected sample may lead to biased estimates.

The main data set for the quantitative analysis is the annual manufacturing surveys of medium- and large-scale establishments (Statistik Industry, or SI), panel data, from 1980 to 2004.

As major problems of panel design, the survey obtains an initial representative sample of respondents at set intervals over an extended time. As such, panel establishments may drop out of the survey, and the repeated observations may influence their behavior.

This study adopts firm-level survey, and in-depth interview, as the data collection strategy to answer research-policy questions. Special attention is given to the factors that cannot be represented by some variables extracted from the secondary data. The interview, in particular, asked the following topics: industrial upgrading and transfer mechanism to workers; and the problems that company faces in industrial adjustments related to wage restraining effects. Determining the counterfactual, however, may be at the heart of core problem in this project design. It is, however, quite tricky to net out the impact of global sourcing activities of MNCs from the counterfactual conditions that are likely to be influenced by contemporaneous events, selection bias, and contamination. Hence the findings should be treated carefully, since they can offer no grounds for establishing reliability of generality of findings