Originally posted by maurizio13:
I only have one issue with the losses of HDB on it's
claimed sale of "subsidized" flats.
1) The majority of expenses incurred which resulted in the losses
is from loans made from the government to itself. The financial
impact of the government loan interest is around $1.5 billions,
which could have been the profits made on the "subsidized" flats
sale. It's one way of extracting the profits and showing to the
public that losses were made from the subsidized sales and indeed
"real subsidies" were given, therefore the huge losses.
Does it make sense to make a loan to myself and charge myself
interest? If I have control of ownership of Company A and Company
B, I can shift my profits around by charging higher interest for
Company A (higher profits) and shifting my profits to Company B
(lower profits). Ultimately, Company B which was suppose to be
making a loss, makes a hefty profit.
The "interest charges" paid by HDB to the government of $1.5
billions is alot alot alot of interest.
"FRS 27 - Intragroup balances should be eliminated in full (para
24).
To illustrate, assume that P Ltd gives a loan of $1,000,000 to its
subsidiary, S Ltd. In their respective balance sheets, P Ltd
correctly carries a loan receivable account, and S Ltd correctly
carries a loan payable account. However, in the consolidated
financial statement, [b]where P Ltd and S Ltd are treated as a
single economic entity, it does not make sense to show that the
entity borrows from or lend to itself. Thus, in the
consolidation process, the intra-group balances (that is, the
intra-group loan payable and receivable) should be eliminated in
full." (Ng, 2005)
Source: http://www.hdb.gov.sg/fi10/fi10297p.nsf/ImageView/FS0607/$file/HDB-fy06(FS).pdf
References:
1) E.J., Ng, A practical guide to financial reporting standards
(Singapore), 2005, CCH.
[/b]
Thanks for providing the account relating to HDB sale. However
to my mind, this accounts only reflect the interest incomes when
are extra profits made over the land and construction. If we add
this extra interest income HDB has made even more profits than
disclosed.
The HDB account does not include the land sale profits made from
lands by SLA which are taken into the consolidated account acquired
under the Land Acquisition Act with taxpayers' monies amounting to
S$20 billions for the period 1900-2000 alone.
Effectively lands are at zero value since lands were paid by
taxpayers. So when HDB flats are built on these acquired lands
government should be selling HDB flats to the taxpaying citizens at
cost of construction. If it sells so much as above construction
cost government will be making a profit.
If government sells the HDB flats at market value or close to
market value with a discount it will be making profit one more time
on the land. That is my case that government has been profiteering
and making double land from its citizens and HDB and minister Mah
are telling lies when they say government is subsidizing the public
housing.
