SINGA Bill – Speech by Leon Perera

Delivered in Parliament on 10 May 2021

Mr Speaker sir, the Land Betterment Charge Bill has significant implications in shaping the future of development in our country. My Parliamentary colleague Mr Louis Chua will make an important speech subsequently, situating this Bill in the context of the government’s overall stance towards land sales and the treatment of the various revenue streams it thereby gains.

While I support the Bill, I will focus my speech on three broad areas which are mostly technical and clarificatory:

  • Greater transparency, information and consultation on this new land betterment charge regime;
  • Issues around concessionary relief and deferment of liability to pay, ensuring that we give incentives only to developments that are rightly and squarely in the public interest; and
  • Technical clarifications of interest to industry stakeholders.

Before I proceed, I declare my interest as the CEO of a research consultancy that undertakes work in a broad range of fields.


Firstly, on streamlining. This Bill brings together and streamlines 3 separate charges under a single Land Betterment Charge framework. By streamlining and combining these three charges into a single Land Betterment Charge, this could simplify the processes for stakeholders and iron out any earlier disputes of unfairness in the different calculation methods for the different charges. However, to unlock these benefits, there should be greater transparency, accountability and stakeholder consultation on how this new Land Betterment Charge regime actually works.

Calculation of Land Betterment Charge in relation to present regime

Under Clause 65 of the Bill, the Minister may make regulations to use the Table of Rates method. While we understand that the exact regulations will only be available at a later date, may I clarify broadly how the land betterment charges will be calculated, in relation to the existing regime of calculations of Development Charges, Temporary Development Levy and differential premium? Will it have elements of the existing regimes or will it be

a whole new system? Will there be greater alignment across existing regimes? My colleague Mr Louis Chua has asked similar questions in his speech.

Public consultation

Next, given the scale of changes set forth by this Bill, I was surprised that there were no Public Consultation results made available to the public or press release by the Ministry on the Bill. Industry stakeholders have expressed similar sentiments.

Has there been a Public Consultation conducted on these changes? If yes, can the Ministry make public its findings and if not, will the Ministry conduct one?

For legislation as nuanced as this, it would be beneficial to seek out a range of stakeholder’s feedback. We need to surface and address potential issues and pitfalls with stakeholders.

In case studies from other countries such as Australia and the UK, policy experts and think tanks have noted the complexity of land value capture taxation. For example, while the UK has had a long history of land value capture, it’s been of limited success. This was partially due to local authorities being burdened with the implementation of the policy without the necessary resources.

Who conducts valuations

Next, Clause 10(2) of the LBC bill allows for not just the Chief Valuer, but also “another individual… appointed by the Authority to ascertain the amount of land betterment charge by the Valuation method”.

This opens up questions around the possibility of bias and quality control.

Firstly, if a third party, say a private sector valuer, is now allowed to do the valuation, it is possible that there may a perceived or real conflict of interest if this party has developer clients. This may erode trust and support within the industry for the new regime.

Secondly, I would like to clarify how this would work if a third party is involved. Will only one valuation by a single third party be allowed? Will there be a second opinion? Will the Chief Valuer have the final say?

In other words, what controls will be introduced to check on the work of third party valuers under this Bill in respect of quality and the possibility of bias?

How will the LBC be returned to the community

Next, under Clause 5(a), the foremost purpose of this Bill is to “ensure the return to the community” of economic benefits reaped from development of land. However, it appears that the LBC would go into government revenues and be consolidated with other tax revenues for their general expenditure, instead of being earmarked for particular projects that benefit the community.

In many countries, similar charges are used to fund new or pay off existing infrastructure projects in the communities where the charges are collected. For example, construction of Hong Kong’s metro railway was funded solely from the sale of development rights around stations. Close to one third of London’s CrossRail is being funded by levies on nearby businesses.

How will the funds collected by the new LBC be used to return benefits to the community? Will these funds be earmarked for infrastructure works, for example? My Parliamentary colleague Mr Louis Chua has argued for greater clarity around this as well.

Calling for greater clarity around concessionary relief provisions and the use of these for heritage/arts spaces

Next, Clause 13 provides for concessionary relief if the development shows “desirability…in achieving economic development or maintaining the cultural, economic, physical and social wellbeing of the people of Singapore and the community in the area concerned”.

While it is understandable that this is worded in broad terms to cover a spectrum of possible developments that may fall under this, we should be wary of too broad a scope. We want to incentivise only developments that advance the public interest.

Could the Government provide concrete examples of the kinds of developments that would be eligible? What is the criteria for determining the eligibility for this relief? What are the guiding principles and what are the factors taken into consideration for determining the quantum of relief?

Right now, under Clause 13(1), the “Land Planning Minister may, after consulting the Minister, provide order in the Gazette for concessionary relief” of the land betterment charge.

In the case of competing interests, how will decisions be made? For example, in the cases of Mandai Park Developments and the Cross-Island Line, these developments may result in economic benefits, but may carry adverse environmental impacts.

Also, can the Government give itself concessionary relief? This appears to be the case from current rules. If so, how is the potential for conflict of interest managed? Can agencies and statutory boards seek concessionary relief and appeal decisions if concessionary relief is not obtained and if so, who hears such appeals?

Beyond environmental sustainability, which is mentioned in the Bill, I would like to encourage concessionary relief to be granted on the grounds of other public interests, such as conservation of heritage and arts spaces.

Last October, when URA proposed Golden Mile Complex for conservation, to ensure that this move would not inhibit a future collective sale, they offered developers additional planning incentives, including a one-third increase in floor area with a waiver of part of its development charge. This was a good use of the flexibility of the DC policy tool to incentivise developers to come onboard and ensure that the conserved building remains economically viable.

A conservation expert, Professor Yeo Kang Shua, has termed these incentives as “unprecedented” and signalling that the “costs of revitalisation are reduced or subsidised by the state to safeguard the common good of the country’s architectural heritage”

Does the LBC include such flexibility as well? Would the government consider providing such planning incentives to development proposals for other heritage buildings?

Deferment of liability to pay due to charity status

Clause 20(2)(a) provides for a deferment to be made if “the taxable person is a charitable institution and the land will be used wholly or mainly for charitable purposes (whether of the taxable person or of that person and other charitable institutions”

This is a positive step and will help offset the costs of running charities, so that more of their resources can be channeled towards worthy causes.

However, I have a few clarifications to seek. Firstly, can we include organisations with IPC (Institutions of a Public Character) status to be covered by this provision? There may be organisations that have IPC status and work for the public good, but are officially not registered as a charity, but as a society, for example.

Secondly, more clarity on the criteria for eligibility for this would be beneficial.

To take one illustration, in 2015, when the Singapore Weightlifting Federation (SWF) moved into the Jubilee Industrial Building that is slated for industrial use, they had to pay a TDL estimated at S$34,000 a year to use the space for sports-related purposes. With annual funding at that time of less than S$70,000 from Sport Singapore, and annual rental estimated at S$72,000 for the Jubilee Industrial Building space, they were unable to pay the TDL. They had appealed URA’s decision, but did not succeed. However, in 2009, the SWF had successfully applied for a waiver of the TDL when it moved from Mountbatten Community Club to Kallang, but this time, their request was rejected. At that time, the weightlifting community was worried about the future of their sport in the country, given rising costs and red tape. We ought to protect the future of sports in Singapore, along with other worthy causes.

Technical clarifications

Lastly, sir, I would like to raise some points of technical clarification.

Firstly, on stamp duty: as the LBC is a tax, as seen in Clause 7 of the Bill, will stamp duty be additionally leviable on the payment of LBC to the relevant authorities? If leviable, how do we reconcile this with the general position that tax is not levied on payments of tax, or, in other words, that there should be no tax on tax? Under the current regime, stamp duty is leviable on DP paid to the relevant authorities when enhancing or intensifying the use of land.

Next, on renewal of state leases: The definition of ‘chargeable consent’ (Clause 3 of the bill) does not appear to capture the renewal of the leasehold tenure of State Leases (e.g. 99-year-leases). It is not clear as to whether or not the LBC applies to renewals, hence I would like to ask for clarification on this point.

Next, under the current regime, the DP is typically only payable on the acceptance of the offer made by the relevant competent authorities with regard to the proposed enhancements of a land parcel. The Proposed Enhancement is formalised by way of a contractual agreement between the developer and the relevant competent authority (e.g. SLA) by way of an offer made by the competent authority (the “Offer”) and acceptance of the terms thereof by the developer (e.g. differential premium payable, deadline for acceptance of the Offer, etc). As part of the terms, differential premium is typically required to be paid on acceptance of the Offer.

Under the LBC, Clause 24(4) of Bill, however, LBC is payable at the end of one month after a liability order is issued by SLA (unless otherwise stated).

When a case of “proposed enhancement” is raised under the LBC, it seems that a liability order will be issued by the SLA after one of the following dates:

  • the date that a planning permission or conservation permission (as the case may be) is granted in respect of the development of the land; and
    • the date where the competent authority or Land Planning Minister notifies Singapore Land Authority that the competent authority or the Land Planning Minister (as the case may be) intends to grant final permission under Clause 17(4) of the Planning Act 1998.

This means that the payment of LBC could be at an earlier stage than DP (the current regime) since under DP, the offer and acceptance happens months after the grant of planning permission is issued.

It is not clear at what stage under the proposed regime would the applicant become aware of the different conditions they would be subjected to as the offer is being made, and whether or not they will be able to refuse, reject or discontinue the proposed development after being granted provisional permission, planning permission or conservation permission. I seek clarification on this point.

Next, will the SLA introduce guidelines or a requirement that all changes of use applications include an undertaking that the TDL has been discussed between landlord and tenant?

Under the new bill, the land owner with material interest in the land is by default liable to pay the LBC, providing clarity compared to the previous situation where landlords and tenants sometimes dispute the paying of the TDL. While this is a good step, it would be helpful to have guidelines or a requirement that the landlord and tenant discuss this.

Anecdotal evidence suggests that in certain cases, the tenant was made to bear the cost of the TDL, although the landlord also benefited from the change in land use permission by way of charging higher rents to the tenant. This risks an inequitable situation.

Deferment of liability to pay LBC for small businesses due to Covid-19 related hardships for hard-hit sectors

Lastly, sir – right now the Minister is able to decide to defer liability to pay on a case-by- case basis. Can there be more specific criteria that would render a business immediately eligible for such deferment? For example, can we consider deferment due to tenants (small businesses) finding it difficult to pay TDL, especially those hard-hit by the pandemic?

I noted that under Clause 14, the Minister can remit, in whole or in part, any land betterment charge where the minister is satisfied of certain conditions, including if a natural person liable to pay has suffered a loss or is in such circumstances that the charge

would entail serious hardship. It would be helpful if the criteria on which these decisions would be made are spelt out more clearly.

To quote from the recent Budget cut speech made by my Parliamentary colleague Mr Gerald Giam, “Some businesses have lamented to me that their TDL far exceeds business revenue, especially during the pandemic. If businesses are unable to pay the TDL, they might have to close down, leading to losses to themselves, their landlords and their employees. The Government will also lose out on tax revenue. Can URA consider giving such businesses rebates or deferments of their TDL?”

Thank you.