Written by Devuni Goonewardene
18 Oct, 2018 | 4:30 pm
Colombo (News 1st) –
The Employees Provident Fund has been mired in controversy with revelations been made about it’s bad investments.
We could take a few pointers from Singapore who managed to use their employees provident fund, to build one of world’s largest public housing schemes.
The Housing Development Board (HDB) of Singapore has designed over 1 million apartments throughout Singapore. Today more than 80% of Singapore’s population lives in public housing built by the HDB, which started off from only 9% in 1960. The home ownership rate has also increased rapidly because of Singapore’s rising economy.
For the HDB to work the government required certain types of taxes from the people of Singapore. The people are required to save part of their salaries in a state managed Fund called the Central Provident Fund. This fund can be used for two things: helping Singaporeans with retirement and providing incentives for Singaporeans to become homeowners.
The Singaporean Government then uses the money in the fund to pay for construction of apartment complexes. The HDB social service is not designed specifically for the poor. The HDB builds many different types of apartments and sells them for various prices. For example, the HDB builds high density public housing for the poor and builds complex apartment condominiums that have gyms and swimming pools. This is the only government organized housing projects designed for everyone.
Why the HDB was such a financial success in Singapore may have been because by building houses for everybody, not just the underprivileged, an economic incentive is created by the government to get the lower classes working.
The public housing the government creates is not free, even for the poor, but is on average 30% lower than the private housing market in Singapore. Providing a comfortable government built apartment for people to live can motivate the lower class to work harder, and live a better life. Also, Singapore has done more than just public housing to incentivize the underprivileged to work.
Singapore’s housing projects have helped stimulate its economy, but that doesn’t necessarily mean that the government service is justified. With the government controlling almost the entire housing market this threatens the private housing market, also providing little incentive for innovation.
The HDB takes away the freedom for the Singaporean people to conduct business in the housing industry. This is due to the economy and political decisions in Singapore. It has the right balance of capitalism and socialism, to encourage the private sector and the government sector to keep the economy balanced.
However, ultimately its up to the Singaporean people to decide if public housing is a social service they want. Which they have decided for and enjoy the public housing.
Likewise, it should be up to the public of Sri Lanka to decide where the funds of their hard work should be used in.
What should also be noted is that people should have the right to easily access information on how EPF funds are invested and what returns they have received.
A system of this nature will eventually lead to greater transparency and faith in Government institutions while eliminating scandals that the EPF has been embroiled in.
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