On Friday, the Singapore government issued a “Forward Singapore” report that lays out a new vision for Singapore. The key message is that Singaporeans should now chase meaning, rather than materialistic well-being, and that “success” needs to be redefined across all areas of life.

The “Forward Singapore” exercise was first launched in June 2022. In this exercise, Deputy Prime Minister Lawrence Wong Shyun Tsai engaged other fourth-generation political leaders to seek “the glue that holds society together, the shared understanding of our roles and responsibilities towards each other, and our shared values and aspirations as a people”. Apart from finding that young people often express a desire for meaning and purpose in what they do, the exercise also found that Singaporeans agree it is critical to have a strong and vibrant economy, as well as to uphold values of fairness, inclusiveness, stewardship, and “a shared sense of solidarity and mutual responsibility, where everyone gives back to society and helps those in need”.

Singapore offers key lessons for Hong Kong. It’s noteworthy that Singapore’s fertility rate has started to rise in recent years. Like Hong Kong, its fertility rate had fallen sharply in the past. The rate was 4.53 in 1965; it hit bottom in 2018 at 1.209. Since 2018, the fertility rate has picked up every year. It now stands at 1.244.

It should be noted that Singapore has always stressed the spirit of self-reliance. Its Central Provident Fund (CPF) is a mandatory savings plan that requires significant contributions both from employers and employees. The former has to pay to the CPF a contribution equal to 17 percent of the salary up to the age of 55, while the latter has to pay 20 percent of the salary as employee contributions. The contributions are reduced after the age of 55 but stay positive through 70 years old. Those in the age bracket of 65 to 70 have to pay 7 percent, while their employers have to pay 8.5 percent.

The contributions are divided into different subaccounts that can be used to buy health insurance (called Medishield) or as down payment for a home purchase. Singapore of course is also well known for a homeownership plan run by Housing and Development Board (HDB). All Singapore citizens are eligible to purchase these flats without a means test. If they want better flats, they can buy them from private developers. HDB homes are quite decent and even include executive-grade flats. Low-income Singaporeans who cannot afford to buy HDB flats can rent one-room or two-room flats at affordable rent. But they must meet the eligibility requirements to qualify, and they must prove that they remain qualified before they can renew their leases three months before the current lease expires.

Singapore’s “self-reliance spirit” is one reason why its economy has been doing much better than Hong Kong’s over the past two decades. With a strong economy, the great majority of Singaporeans have little worry about basic necessities. This makes way for a change in values.

Singapore’s middle class can all buy affordable housing. Given that Hong Kong’s residential land area is much smaller than Singapore’s and that Hong Kong has a much larger population, Hong Kong can follow Singapore’s model only if the flats are much smaller.

Hong Kong Chief Executive John Lee Ka-chiu is correct in saying that the Hong Kong Special Administrative Region government should not interfere with housing prices, which should be determined in the free market. However, the Special Stamp Duty (SSD) is hampering the free market, so that the true prices cannot prevail. Sagging transactions are hurting the economy. Investors are now buying overseas properties, leading to a capital flight that hurts the economy.

The chief executive, in his Policy Address last week, announced that the government has identified sufficient land to develop about 410,000 public housing units. If our public housing resources are more fairly priced and efficiently utilized, there is no reason why we cannot offer a Hong Kong version of the HDB program that promises all Hong Kong families consisting of Hong Kong residents the ability to buy a public housing flat without a means test. Self-selection will ensure that those who can afford better housing seek such in the private market.

One important reason why the demand for Home Ownership Scheme (HOS) homes is so high is that they are priced so low that successful buyers are almost guaranteed to enjoy a significant capital gain. For example, a flat in Tai Wai with an area of 447 square feet (41.5 square meters) was sold for HK$5.6 million ($716,050) earlier this year in the secondary market at a profit of HK$2.68 million. The flat was bought in 2015 from the Housing Authority. Another HOS flat in Ma On Shan was sold at a profit of HK$1.588 million this year, also in the secondary market, without paying the land premium. The owner bought it at HK$3.1 million in 2020. There are reports that a number of HOS buyers never moved into the flats they bought from the Housing Authority and resold them at huge gains after waiting three years in order to avoid the SSD.

With rent-seeking rampant, demand for private flats falls, and it pays to “lie flat” to remain qualified for the HOS and for Public Rental Housing (PRH). This reduces the vibrancy of the economy. Rent-seeking is hurting our middle-class families. My proposal is to follow a simple system, with basic HOS housing available for purchase to all Hong Kong residents at an affordable but not excessively low price (such as eight times the median annual income for economically active households). PRH should be provided to those who cannot afford these prices.

The author is director of the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University.

The views do not necessarily reflect those of China Daily.