INCREASE IN RENTS FOR HOUSING AND DEVELOPMENT BOARD SHOPHOUSES

6.30 p.m.

Mr J.B. Jeyaretnam (Anson): Mr Speaker, Sir, I have claimed this right to speak on the Motion for the adjournment on the matter of the latest increase in the rents for shophouses let out by the HDB. If I may crave your attention on behalf of these shopkeepers for a while, Mr Speaker.

I do not think anything else has created so much anger and frustration among a section of the community as the announcement of the increase announced in the press on the 4th May, 1983. I have been around my own constituency, particularly in the blocks where the tenants of the shops occupied their shops in 1957. It is now nearly 16 years since they have been in occupation. Their rents have gone up, or will go up, from somewhere in the region of $170 to $180, and in some cases from a region of $250 to $320, these rents which they are now paying will go up to $800, $850, $950. They are, understandably as I said, indignant on two grounds; that the increase should be effected at this time when the Government has been speaking of a recession and which is widely accepted; and secondly, that there has been no prior consultation with or reference to them before any attempt was made to increase the rents. I can understand these grievances and how they feel, Mr Speaker, Sir, having seen and read in the papers the protest that arose as a result of this announcement and particularly the report that several Members of this House were disturbed by the HDB's unilateral increase in the rents without any consultation with the shopkeepers.

I announced in the press in June this year that I would gladly welcome any motion, any substantive motion, by any Member of this House, and that I would be very happy to second it if it were necessary and to speak in support of it. Alternatively, I asked whether any Member of this House would second a motion if I tabled one for debate in this House. Nothing came of this invitation from me. And then, Mr Speaker, Sir, as you may be aware, I gave notice pursuant to Standing Order 32 (1) of my intention to propose a motion at this sitting of the House, a substantive motion for debate:

'That this House regrets the proposed increase with effect from the 1st September, 1983 by the Housing and Development Board in the rents for shophouses let by the Board and calls upon the Board to suspend the implementation of the increases until a Committee of this House has examined the proposed increases and reported thereon to this House and the House has by resolution accepted the increases.'

After giving the notice, I took the trouble to speak to two Members of this House to ask whether they would second my motion because I needed a seconder. I regret to say that I found no takers of my invitation to the two Members that I spoke to. And may I say to those Members who have been protesting about this outside this House that it is a matter of regret to me that no one has been found to second my motion. I do not know how the 43 Members who are reported to have marched to the Minister for National Development's office will be able to face their own constituents if they are asked, "Why didn't you second the motion from the Opposition Member?" Well, that is their problem and I hope they will find an answer to explain their reluctance to second my motion. I suppose if any of them had done so, he might have found himself out of his seat in Parliament and I suppose that must have been or may have been the consideration.

Having said that, Mr Speaker, may I move on to this matter on which I have asked to speak. When we were talking about the Medisave Debate, the first speaker congratulated the two Ministers of Health on the good public relations job they had done. It is a pity that the Ministry of National Development does not take a leaf out of the book of the Ministry of Health when it comes to implementing its decisions. There was a brief announcement of the reason when the increases were announced in the press on the 4th May, 1983. All it purported to say was that the increase was to remove an anomaly in its shop rents policy. So the question that arises is, what was the shop rents policy before the increases were announced?

One must not forget, Mr Speaker, Sir, that these shops, particularly those which were built 15, 20 years ago, were let at the market rents then prevailing and the tenants have been paying the let rent for the last 15, 17 years. What was the policy of the Board then? Why has it found it necessary now to revise its policy? One must not forget again, Mr Speaker, a number of things about this, and that is, these shops in the HDB estates are performing a service to the residents in the estates. They are not all situated in busy shopping centres. Some of them are in isolated areas but they nevertheless serve a useful purpose by rendering a service to the residents in the estates. In my constituency, for example, even in Jalan Bukit Merah, these three blocks, the old blocks, do not front Jalan Bukit Merah. They are inside the estate and they do not attract anybody very much from outside the estate itself. Then one other thing that we must bear in mind is that quite a lot of them were resettled from the shops where they had been previously carrying on business. They might have owned them, I do not know, or they might have been tenants. And they gave up these shops in return for the HDB allocation of a shophouse. Now they are told suddenly, "Either you pay these increases of three or four times or you get out." Some have asked, "Will the HDB return the shops that they took from us?" It may seem a bit naive but that is how some of them feel.

Then there is the difference in the amenities between the old shophouses and the new shophouses because the announcement was that the rents would be brought up to the rents for shophouses let in January 1980. But there are obvious differences, only too apparent. One is a new building with new amenities, new facilities, improvements. The other is old. Why should the tenant of the old shophouse pay the same rent as the new one with new facilities, new improvements? In any case, Mr Speaker, Sir, what is the policy of the HDB as regards rentals charged to shopkeepers? Is it simply based on the price mechanism allowing the market price to control the rents? Or has the HDB any definite policy? Is it, for example, recoupment of capital outlay with a satisfactory return on the investment and perhaps coupled with building up a reserve for replacement cost? It is a pity that the HDB, and for this the Minister for National Development must take some responsibility, did not explain the rationale and the reason for these increases. Merely to say that there is an anomaly begs the question because there are obvious differences. There will be anomalies.

I have asked for this matter to be raised in this House for one other reason, Mr Speaker, Sir, and that is, (I have said this before when I raised, again on the Adjournment, the increase in the prices of flats sold by the HDB) that a statutory board, like the HDB, for whose operations public funds are provided, not wholly but partly, such a statutory board should come to this House before it makes any increases in charges like rents or prices of HDB apartments. There is a tendency for Ministries and statutory boards to neglect the purpose and function of Parliament and that is, may I say, Mr Speaker, Sir, a great loss if Parliament is not to be given its proper role and function in our society. There is the question of the purchase of the four planes from America. We would never have heard of this in this House officially if I had not raised a question today at Question Time. So I say to the Minister again, as I said to him when I raised the question of the increases in the prices of HDB flats, "Will you please respect Parliament?" I think we deserve in this House a statement from the Ministry or from the statutory board before it implements or announces a decision which will affect our population, our citizens, or a substantial proportion of them. As I said, I tabled a Motion but I had to withdraw it for lack of any support. And now, we are not able to have a debate on this increase. I would therefore ask the Minister to consider of his own volition whether he would suspend the implementation of the increases until a Committee of this House has examined the proposed increases and reported thereon to this House and the House has, by resolution, accepted the increases.

I see from the report that he met Government Members of Parliament and explained it to them. I do not know what he explained to them but it would appear that he explained the increases and the rationale. But it is not just the Government MPs who ought to be explained the increases. This House has to be told and the public has to be told. And what better place than Parliament for the increases to be announced and debated upon. So I would ask the Minister to consider this request. May I say, Mr Speaker, Sir, I do not think the shopkeepers will grudge any increase. They can see the reason for some increase and I certainly can see it. I am not saying that there should be no increase at all. But you got to make out a case for the increase. It is not to be carried out just because you think, "Well, somebody else is getting so much more. Why don't we get a bit more for our rents?" You cannot try and equate HDB shops in housing estates with shops in busy shopping centres and other areas. They deserve special consideration.

So I am not saying that there should not be any increase and I am sure the shopkeepers are not saying that either. But all they are asking is that there should be proper consideration given to their views, their representations, their problems. A number of them in my constituency - perhaps that is an exaggeration - about two, I think, said that they would have to probably close their businesses. And I see the Member for Khe Bong tabled a Question at Question Time to ask whether the Minister for the Environment would consider granting hawker licences to tenants who are compelled to give up their businesses. So it is causing quite a lot of distress and hardship to these tenants. What are they supposed to do? If they cannot get hawker licences, what are we going to do with them? Are they going to become a burden on the community? Are you going to tell them to troop up to the Ministry of Social Affairs and apply for public assistance? Is it not better that something is done to accommodate them so that they can continue to carry out a service to the residents and to the community and be useful members of the society and the community?

So with those words, may I sit down and ask the Minister whether he would be good enough to defer this until further consideration has been given by a Committee of this House and this House has accepted the report of the Committee, and then implement the increases. 6.50 p.m.

The Minister for National Development (Mr Teh Cheang Wan): Mr Speaker, Sir, the Government's policy, i.e. the HDB's function, is to provide decent homes for the people. Therefore, the prices, rentals, service and conservancy charges for HDB flats are kept low. Public housing is therefore heavily subsidized. This is the Government's policy. It is not the HDB's responsibility to subsidize businesses located in HDB estates. This again is the Government's policy.

Businesses are run on a commercial basis and therefore the tenants of both HDB commercial and industrial premises are expected to pay market rentals. They cannot expect to pay subsidized rentals. The rentals of HDB shops are determined by public tender and HDB tenancies are designed to enable both the tenants and the HDB to terminate the tenancy agreements by giving one month's notice. In other words, the tenancy is a fair tenancy. Either party can terminate. A successful tenderer who subsequently finds that he cannot remain viable or that his rental is far above the market rate can give up his tenancy. In other words, the shopkeepers are not tied down by HDB tenancies which insist, "You must rent HDB shops even if you have made a mistake in bidding for the shops at extremely high rentals."

Mr Jeyaretnam: Where else can they get a shop?

Mr Teh Cheang Wan: He can get a shop at a lot of places. He can get a shop at an HDB estate. He can get a shop in a private development. In fact, if the tenant finds that he has over-tendered the premises, he can re-tender for the same premises in competition with other tenderers. And if his tender is realistic, he may be able to retain his shop at a lower rental.

I will give the Member an example. In 1975, in Marine Parade, Metro originally tendered at the rental of $39,300 per month for its supermarket in Marine Parade. Finding that this tender is too high, it subsequently gave up the premises and successfully re-tendered for it at $23,600 in 1978. In other words, the tenant who made a mistake can correct it by giving up his shop and tendering again. He is not tied down by the HDB that he has to continue to pay high rental for his shop. The Marine Parade Metro is still there. The hon. Member for Anson can go and have a look and find out whether the facts are correct or not.

The HDB has a right under the tenancy agreement to increase rentals to the market rate. Until recently, HDB has not exercised this right, The HDB had considered increasing its shop rentals in 1974. The proposal was deferred because of the 1973 oil crisis and subsequently the world-wide recession.

Mr Jeyaretnam: What about now?

Mr Teh Cheang Wan: I will come to that. In the past, the disparity in rentals between the older and newer tenancies was not very glaring. In the last three years, however, the development cost of the shops and rentals shot up drastically. HDB has decided to adjust the rentals but only to the 1980 level and not to the 1983 level. The rentals proposed by the HDB at present are at the 1980 level. If the Member goes back to Anson to inquire from his shopkeepers, he will find that the shop rent at $800, as he has mentioned earlier, in fact, is still low. If the shopkeeper gives up his tenancy and we go for public tender, I am quite sure the shop will fetch more than $1,000, maybe $1,500. He can find out from his shopkeepers. It will prove that what I say is correct.

The reason for the HDB fixing the rental at the 1980 level for the older shops is that HDB would like to soften the impact of the increase of the rental on these shopkeepers. Also, it is not the HDB's policy to lead the market in setting shop rentals. HDB's shop rental is still cheaper than that of the shops in Orchard Road. The hon. Member has mentioned that the HDB shops are not in the prime location. That is correct. Therefore, HDB shop rental is not as high as the shops in Orchard Road.

The Member for Anson's proposal to form a Committee of this House to examine the rental increases, I think, is totally unsound. When the increases were first announced in May 1983, 43 PAP Members of Parliament held a meeting with myself, my Minister of State, my Senior Parliamentary Secretary, and the staff of my Ministry, and the HDB. They were not invited by us. In fact, they came to see me. They got together and came to see me. [Laughter] I will come to you later. The Members did not object to the principle of rental increases because they understood. And even the Member for Anson did not object, if I heard him correctly.

Some hon. Members: Hear, hear!

Mr Teh Cheang Wan: They made various constructive suggestions to minimize the possible hardship that increases would cause to some shopkeepers. After a thorough discussion and careful consideration, my Ministry adopted many of the MPs' suggestions with the approval of the Cabinet. The concessions worked out by the staff of my Ministry together with the MPs' suggestions were accepted by Cabinet. And those concessions have been very extensive and generous and, I am glad to say, have been accepted by all concerned.

I would like to emphasize that during this period I have not received a single suggestion from the hon. Member for Anson on how to resolve this problem. I have not received nor has my Senior Parliamentary Secretary received any suggestion from him either in writing or verbally. Am I right in saying that? So he has made no suggestions.

Mr Jeyaretnam: I have written.

Mr Teh Cheang Wan: The Member just now said that there is widespread unhappiness among shopkeepers and so on and so forth. I will give him the facts. By the 20th August, 99.1% of all the affected tenants have accepted the increase in rentals and signed the supplementary agreement - 99.1%. How many more per cent can you ask?

Mr Jeyaretnam: What choice do they have?

Mr Teh Cheang Wan: Some people have the choice. The remaining 0.9% comprising 66 tenants have decided to give up their tenancies. They have a choice. These 66 opted to give up their tenancies. It cannot even be said that all the 66 tenants who are giving up their premises are doing so purely because of the increase in rental. Because over the last five years, an average of 380 tenancies were terminated every year for various reasons. So, in fact, after the increase in rental, only 66 people are giving up their tenancies. And this year may prove to be the lowest number of HDB shop tenants to give up their tenancies. It may sound strange but it turned out to be so which, of course, I do not expect the hon. Member to understand.

The President of the Singapore Chinese Chamber of Commerce and Industry has on the 25th June 1983 written to me to express his gratitude towards the HDB for substantial concessions on the proposed rental increases, and the Chamber has commended the HDB for taking a flexible stand by considering the tenants' appeal compassionately. Eight traders' associations in HDB estates - they represent almost all the shops - have also on 11th July 1983 written to thank me. 7.00 p.m.

Mr Speaker: Order. The time allowed for the debate has expired. I adjourn the House pursuant to the Standing Order.

Adjourned accordingly at Seven o'clock p.m.