ST Explains: What is the Ethnic Integration Policy and how does it work?

The Ethnic Integration Policy kicked in on March 1, 1989, to prevent ethnic enclaves from forming in HDB estates. ST PHOTO: KELVIN CHNG

SINGAPORE – Singapore’s Ethnic Integration Policy (EIP) was in the spotlight on Aug 1, after a correction order was issued to a property agent for making false and misleading statements about the policy, which sets quotas for flats owned by each racial group in a neighbourhood.

The ERA property agent, Mr Shaik Amar, had suggested in an eight-minute video put up on social media that the EIP is unfair, as flat owners from minority races would likely have to provide steep discounts to sell their flats when EIP limits are reached.

The Ministry of National Development (MND) said, among other things, that it was misleading to focus on the point of resale without setting out that flats such as his were obtained within the EIP framework in the first place.

The Straits Times looks at the rationale for the 35-year-old policy, and how the EIP has evolved over the years.

What is the purpose of the EIP?

The EIP, which took effect on March 1, 1989, prevents ethnic enclaves from forming in HDB estates by setting a limit on the number of households of each race within each neighbourhood and block.

It was introduced at a time when communal clustering was growing, as the HDB resale market became more active in the 1980s.

While the Government had been able to achieve a fairly balanced racial mix across new towns and estates through resettlement and its public housing programme in the 1960s and 1970s, there were “disturbing” trends towards separate communal enclaves, said then Minister for National Development S. Dhanabalan.

For instance, Malays formed more than half of applicants for resale flats in Tampines and Bedok between 1987 and 1988, while Chinese households exceeded 90 per cent in some neighbourhoods in Hougang, he said in a speech in January 1989.

Left unchecked, in another 10 to 20 years, such trends would put Singapore back to where it was before independence, and undermine efforts to foster social and racial integration, he added.

How does the EIP work?

The EIP works by setting racial quotas on flat ownership within each block and neighbourhood based on the ethnic make-up of Singapore.

The last time ethnic limits were publicly updated was in 2010. At the neighbourhood level, the quotas were 84 per cent for Chinese, 22 per cent for Malays, and 12 per cent for Indians and other ethnic minority groups.

At the block level, the limits were 87 per cent for Chinese, 25 per cent for Malays, and 15 per cent for Indians and others.

The 2010 revision, made in response to Singapore’s changing demographics, raised the limits for Indians and others by 2 percentage points for both neighbourhoods and blocks. 

Currently, EIP quotas – which are updated on the first of each month – are no longer listed on HDB’s website.

Instead, prospective buyers and sellers have to use an e-service to check if they are affected by the quota for the block.

The quotas apply to the allocation of new flats and rental flats, as well as resale flat transactions. 

When a limit is reached, no further allocation of flats to the ethnic group will be allowed.

For resale transactions, this means a sale can go through only if the seller and the buyer belong to the same ethnic group.

This ensures that the sale would not further increase the proportion of the ethnic group that is already at the limit in the neighbourhood or block.

Minister for National Development Desmond Lee told Parliament in July 2021 that the EIP “causes pain” to both the majority Chinese community, as well as minorities.

For instance, he cited cases where prospective Chinese home buyers in popular locations such as Bishan and Ang Mo Kio balloted successfully, but were told at the point of flat selection that the Chinese EIP limit had been hit and the flat would go to a buyer from a minority race.

How has the policy affected minority households, and is there any redress?

There can be differences in resale prices for EIP-constrained flats given what a potential Chinese buyer might be willing to pay, compared with a potential buyer from the minority communities.

MND said on Aug 1, 2024, that the Government accepts and has publicly acknowledged this, though it is false that all minority households suffer significant financial detriment when they sell their flats.

Price aside, some EIP-constrained flat owners have also found it harder to sell, given the smaller pool of eligible buyers.

Over the years, HDB has put in place measures to give such flat owners more time to sell their flats if they have purchased another one, and waived EIP limits in exceptional circumstances.

In March 2022, HDB announced the EIP buyback assistance scheme, which provides flat owners with the fallback option of selling their flats to HDB at a fair price, based on prevailing market conditions.

Households will need to have owned their flats for at least 10 years, and the flats should have been marketed at reasonable prices for at least six months to be eligible.

In a parliamentary reply in March 2023, Mr Lee said that 411 EIP-related appeals were made by flat owners in 2022 and, of these, about a third were acceded to by HDB.

These 128 appeals made up about 1.5 per cent of all HDB flat resale applications that year.

He added that in 2022, HDB had bought back flats from four owners who could not sell their homes due to ethnic quota limits.

Is the EIP still relevant?

The policy remains relevant, as nearly one in three HDB blocks, and 11 per cent of HDB neighbourhoods, are at their EIP limits today, said MND on Aug 1.

This goes to show that without the EIP, ethnic concentrations will increase, as has happened in many places around the world, it added.

“Without diversity in our HDB estates where the majority of Singaporeans live, opportunities for multicultural interactions will be reduced, and this will ultimately change the tone and complexion of our society,” said the ministry.

“This is one of the ways in which the EIP benefits all Singaporeans, including the minority communities.”

At a forum in July, Law and Home Affairs Minister K. Shanmugam also highlighted the continued relevance of the EIP in a speech about the Government’s policy interventions to promote social cohesion.

Left strictly to market forces, places like Ang Mo Kio and Bishan, where flats are more expensive, would be 90 per cent or 95 per cent Chinese, while Malays and Indians would congregate in other areas, he said.

“Essentially, if people choose where to live – and there should be a large degree of freedom – then the natural consequence will be segregation along ethnic lines,” he said.

“And of course, that means that the schools in those areas will become segregated over time, and your focus (on) integration will be affected.”

This article was originally published on The Straits Times. Its inclusion on this website is solely for education purposes.