DC Hikes Will Help Boost Infrastructure, Says Mah

Sources : The Business Times, Thu, Jul 23, 2007

He reiterates that the 40% increase was not to cool the property market

(SINGAPORE) National Development Minister Mah Bow Tan yesterday pointed out that not all en bloc sales will be affected by the development charge (DC) hike announced last week and reiterated that the main aim of the hike was not to cool the property market.

The government raised DC rates by 40 per cent last Wednesday, to 70 per cent from 50 per cent of the appreciation in land value arising from enhancing the use of a site.

Mr Mah told Channel NewsAsia: 'When you look at the different en bloc sales, you'll realise that some en bloc sales actually do not incur development charge at all, partly because they are actually able already to develop up to a higher intensity. So, the government doesn't have to go in and change the planning parameters.'

The minister added that the impact on en bloc sales would be minimal and reiterated that the DC hike was to 'take some of that increase in value to go and improve the infrastructure'. 'Because you know when you increase the plot ratio - build more flats, build to a higher level - you need to provide the infrastructure. So that's what the development charge is. You could say it's a tax on the increase in the value as a result of government action.'

The government had earlier explained that the DC increase was to enable more equitable sharing of gains between land owners and the state.

Mr Mah noted that the recession in 1985 had led the government to reduce the DC, but with the property market recovery, the government has decided 'it's timely for us to go back to the original'.

The minister also said that the government would continue to monitor the property market and release more land via the government's land sales programme if required.

Meanwhile, he expects an amply supply of properties in all categories to be available over the next two or three years to ease the current shortage.