JURONG TOWN CORPORATION

JURONG TOWN CORPORATION:

(Divestment of industrial property portfolio): 15.

Mr Seah Kian Peng asked the Minister for Trade and Industry what is the impact of Jurong Town Corporation's decision to divest a substantial portion of its industrial property portfolio on the business operating environment and whether this will curtail the development and growth of local businesses, especially the SMEs.

The Minister for Trade and Industry (Mr Lim Hng Kiang): Mr Speaker, Sir, JTC plans to divest all its flatted, ramp-up and stack-up factories, three multi-tenanted business park buildings, and one warehouse. The estimated net floor area of the JTC properties to be divested is 1.7 million square metres. This is less than 20 per cent market share of the high-rise factory space in Singapore. The rentals for JTC’s high-rise factories and business park buildings are already largely determined by the market. JTC will divest its properties in a manner that will promote competition in the property market. Instead of divesting its entire industrial portfolio to one owner, JTC plans to do so through a combination of real estate investment trust (REIT) as well as trade sale. This will introduce more players into the industrial property market, which should make for an even more competitive environment. There is also potential for higher quality and new types of industrial space products to be supplied to the market. SME industrialists looking for high-rise or business park space can thus enjoy more choices and options.

I would like to assure the Member that JTC’s divestment will contribute to a more vibrant industrial space market that will benefit SMEs rather than curtail their development and growth.

Column: 1391

Mr Seah Kian Peng: Sir, a lot of SMEs are very concerned with this news because I think they regard JTC as a more reasonable ---

Mr Speaker: Mr Seah, you have two minutes left. No speeches, please.

Mr Seah Kian Peng: --- as a benign landlord. So they see this as something which is going to increase their operating costs. It may be competitive, but I think it will lead to higher operating costs. How do we address that?

Mr Lim Hng Kiang: I would like to thank the Member for his compliment that JTC is a benign landlord, but I am not sure whether that is a backhanded compliment. In any case, the whole rationale for divestment is to create a more competitive market. And with a more competitive market, I think rentals will go up if demand is greater than supply, and rentals will come down when demand is less than supply.

3.00 pm

Mr Speaker: **** Order. End of Question time.

[Pursuant to Standing Order No. 22(3), Written Answers to Question Nos. 17, 20-21, 23-24, 26-27, 29-34, 38-39, 42 and 44 on the Order Paper are reproduced in the Appendix*. Question Nos. 16, 18-19, 22, 25, 28, 35-37, 40-41 and 43 have been postponed to the sitting of Parliament on 27th February 2007.]

• Cols. 1451-1474.