Business Times article ‘contained serious errors’, says MND

The Ministry of National Development (MND) spoke out strongly yesterday against a Business Times (BT) article earlier this week on developers’ profit margins for the Housing and Development Board’s Design, Build and Sell Scheme (DBSS) projects.

In a press statement last night, MND director (Housing) Han Kok Juan said the article published on Thursday “was highly irresponsible as it contained serious errors”.

Said Mr Han: “We are disappointed that The Business Times had not thought it fit to verify the facts. The general public rely on and expect responsible and accurate reporting from the mainstream media.”

He added: “It is unacceptable that BT had not exercised due diligence and professional journalism, which resulted in an erroneous and highly misleading report. These errors could have been easily prevented if BT had been responsible in checking the facts, most of which were published materials.”

Mr Han pointed out that for example, the article quoted a land price of S$82,222,000 and a maximum GFA of 721,188 square feet for the DBSS project, Centrale 8.

“Both figures were wrong. The correct figures were, respectively, S$178,128,000 and 682,385 square feet. This was a huge difference of almost S$100 million, resulting in a gross over-estimation of the developer’s profit and gross profit margin. Based on these figures alone, the profit margin would have been 26 per cent, instead of 76 per cent,” said Mr Han.

He added that the article had “failed to take into account key cost components such as financing, marketing and administrative costs”. Said Mr Han: “These are significant costs and, when included, would have further lowered the profit margin for all the DBSS projects listed in the article.”

MND’s statement came hours after two developers – Hoi Hup Group and Sunway Group – expressed similar concerns over the article.

In a joint statement, Hoi Hup Sunway – the consortium behind DBSS projects City View@Boon Keng and The Peak@Toa Payoh – said: “Such essential costs for DBSS projects form a very significant chunk of total costs as compared with that for private mass market condominium projects and therefore exert a large negative impact on profitability.”

Hoi Hup Sunway reiterated that developers “are also exposed to a whole host of business risks over a fairly long period of about four years”.

On Thursday, Mainboard-listed Sim Lian Group – the developer for Centrale 8 – filed an announcement with the Singapore Exchange to clarify the “incorrect” figures published in the BT article.

Source : Today – 2 Jul 2011

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