On a day where we celebrate being a racially harmonious country, we would like to take the opportunity to dive into one of the many efforts the government has made in an attempt to integrate different races together - the Ethnic Integration Policy(EIP).
Back in 1989, then Minister for National Development of Singapore S. Dhanabalan highlighted the emergence of ethnic enclaves in HDB estates. Some examples he drew on included neighbourhoods in Bedok and Tampines housing estates where Malay households made up more than 30% of the estate population, as well as Hougang where more than 90% of the households are Chinese.
EIP necessary to ensure diverse neighbourhood
The policy seeks to promote racial integration, as well as mixing and understanding of different ethnic groups in Singapore. This was especially important for us during our time as a young country with our unique history of diverse social groups coming together to form a nation, further contributing to building a strong social pillar.
In 2010, the SPR (Singapore Permanent Resident) quota was also launched alongside the revision of the EIP in an effort to encourage better integration of non-Malaysian SPRs. This excluded Malaysian SPRs as they were more culturally similar to Singaporeans.
Today, nearly a third of HDBs and 14% of HDB neighborhoods have already reached one or more EIP limits. Minister for National Development Desmond Lee also stated in Parliament on July 5th that “The Ethnic Integration Policy (EIP) remains an ‘important’ part of combating racism and building racial harmony as it ensures ‘inclusive and diverse neighbourhoods”.
The EIP limits the percentage within a HDB block or neighborhood that a certain ethnicity may occupy. This is applicable to sales and purchases for all new or resale flats as well as allocation of rental flats by HDB.
When the percentage of a certain ethnicity is maxed out for a certain block or neighborhood, no further sales can be made for that affected ethnic group. For example, if the current limit for Chinese occupiers has been reached, a Malay seller will not be able to sell off his flat to any Chinese buyer.
Similarly, if the limits for all ethnicity has been met in a particular block or neighbourhood, future sellers will only be able to make the sales to buyers of their own ethnicity.
Updates available on HDB’s site
Though the proportion or percentages for both EIP and SPR quotas are not listed, buyers and sellers can make use of the enquiry that is updated every month on HDB’s site in order to check buyers’ eligibility for a particular block.
There are also a couple of points to take note of when buying/selling under the EIP in order to ensure a smooth-sailing process. First things first, be aware that the ethnic proportions will be updated by HDB on the first day of every month, and any resale applications must be submitted to HDB in the same month for them to apply.
In a scenario where you are exercising your option to purchase this month, you may find yourself unable to complete the transaction next month when submitting your resale application due to revised proportions. Thus, ensure that you are well updated in your purchasing process.
Confusion for mixed race households
Secondly, mixed race households can find themselves confused on how the policy will apply to them. These types of households can actually choose to classify their household ethnicity under the ethnic group of any of the co-owners or occupiers, as indicated on their NRIC.
However, do take note that once an ethnicity is chosen for the household, it cannot be changed subsequently when selling the flat in the future.
Lastly, buyers/sellers with double-barreled race classifications on their NRICs should use the dominant race that is listed first to check their eligibility. For example, Malay-Indian individuals should select ‘Malay’ as their ethnic group.
The EIP creates a disparity between the supply and demand of HDB flats for a particular block or neighbourhood. Due to the restricted availability, prices of flats will also be affected.
An example will be a sample search we have conducted on a particular cluster in Toa Payoh Central. The EIP service then reflected that Chinese buyers can only buy from Chinese sellers, whereas Malay, Indian and other ethnic groups can buy from all sellers regardless of their ethnicity.
Conversely, this would mean that Chinese sellers will be able to sell to anyone, while a Malay or Indian seller is unable to. In this scenario, we can then conclude that flats listed by Chinese sellers face a higher demand compared to their counterparts, thus having a better chance of selling it at a higher price point.
Nonetheless, this does not mean that the policy puts minorities at a disadvantage. From the same example above, a Chinese buyer is as equally affected compared to a minority seller. Comparatively, they have lesser options to choose from and can be compelled by competition and end up paying a higher price.
21% Households successfully appealed for ethic quota waiver
With concerns over the restrictions, it might be good to know that between 2018-2020, there has been a 7% increase in successful applications for ethnic quota waiver from 14% to 21% - with more appeals made from minority sellers.
After providing the figures in parliament on July 5th, Mr Desmond Lee also noted that buyers would benefit from a lower resale price in cases where sellers are unable to sell to buyers of a certain ethnic group that has met the EIP limit.
With that said, he also understands that this might not be the most satisfactory outcome for sellers who previously bought their flat before the limits were reached but yet are now caught by the same limits.
Policy aids in maintaining diverse population
Given the spike in race and religion police cases in 2020, it is important to remind ourselves to embrace our neighbour's culture. Singapore has come a long way in promoting social harmony and we cannot let our hard earned efforts come to naught.
From the perspective of maintaining social cohesiveness, EIP will remain relevant until an improved alternative is made available. Today, over 80% of the resident population are living in HDBs, which means the policy still has a bearing on their way of life.
Understandably, many may want to stay near their family members or specific amenities or services. Regrettably, at the end of the day this can result in ethnic concentrations.
Difficulty in selling homes
While the policy helps ensure inclusive and diverse neighbourhoods, there are unfortunately some unfavorable situations people might find themselves in. Sellers of the minority races in a resale situation may lambast the policy when they are unable to reach a larger buyer pool, where they will not be able to command better selling prices or even find it difficult to sell their flats.
In the meantime, buyers from the majority race may express regret over a policy that restricts them from getting their matrimonial home while there are empty units reserved for other races.
The EIP came into focus again just last year when many were facing financial hardships due to the pandemic, as some homeowners found themselves unable to sell off their flats during a time when they needed to do so the most.
It was brought to the focus again when Leader of Opposition, Pritam Singh called for a review on the policy.
EIP crucial for racial harmony but hopeful for policy to be refined
Ultimately, it can be a tad extreme to call for a policy meant for a greater good to be completely removed. Instead, we can be hopeful that in the near future the policy can be streamlined and improved to allow for an additional layer of flexibility to address certain commonplace issues many have faced due to EIP.
While the government works to smoothen its edges, there are measures implemented in order to offer aid to EIP-affected sellers. For instance, on a case-by-case basis, HDB may grant an extension of time for those in difficult situations e.g. owners who have bought a new flat but are struggling to find a buyer for their existing flat.
If you have any questions regarding EIP, feel free to get in touch with us via our Contact Us page.
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