SEPARATE HDB SHOP RENTALS FOR RESETTLEMENT CASES

Mrs Yu-Foo Yee Shoon asked the Minister for National Development whether he will consider having a separate system of Housing and Development Board shop rentals for resettled farmers and shopowners who, despite the discounts granted by the Board, are still finding it difficult to pay their present rentals based on the tender system, in order to alleviate their problem.

The Minister for National Development (Mr Teh Cheang Wan): Mr Speaker, Sir, at present, there is already a separate system of HDB shop rentals for resettled shopkeepers. While the rental for public applicants is based on tendered amounts, the resettlement rental is pegged at 90% of the rental paid by the lowest successful tenderer. Furthermore, under this system, resettled shopkeepers pay only 50% of the resettlement rental for the first year. Thereafter, the rental is increased by 10% each year until it reaches the full resettlement rental in the sixth year. Resettled shopkeepers thus enjoy rental concessions for a number of years. Resettled farmers are normally paid a cash grant of $26,000 as part of the resettlement compensation. If they opt for shop premises in lieu of the cash grant, they are also given similar rental concessions for a period of five years. Generally, these concessions work out to be more than the $26,000 cash grant.

The concessions enjoyed by the resettled shopkeepers are best illustrated by an example. Assuming the market rentals for shops in a neighbourhood centre range from $2,000 per month to $3,000 per month, the rentals for shops reserved for resettlement cases in the same neighbourhood would be pegged at 90% of the lowest market rental of $2,000 per month. The resettlement rental is therefore $1,800 per month. In the first year, a resettled shopkeeper would only be paying a monthly rental based on 50% of the resettlement rental, ie $900 per month. This works out to be only 36% of the mid-point of the rental range for public applicants in the neighbourhood. Although the rental for the resettled shopkeepers would be gradually increased to the full resettlement rental in the sixth year, the final rental of $1,800 per month still amounts to only 72% of the rental range for public applicants.

The rental concessions enjoyed by a resettled shopkeeper are thus very substantial. Therefore, a resettled shopkeeper with normal business acumen will be able to conduct his business successfully. However, not everyone is endowed with business acumen, be he a resettled shopkeeper or a public applicant of HDB shops. No amount of rental concessions can help the person without the necessary business acumen to succeed in his business.