SALE OF SHOPS AND CHANGES TO RESETTLEMENT POLICY AFFECTING RESETTLED SHOPKEEPERS

Mr S. Dhanabalan: Mr Deputy Speaker, Sir, the Housing and Development Board's home-ownership programme has enabled the great majority of Singaporeans to own their homes. The Board now intends to extend this programme to enable its shop tenants to own their own shop premises. Presently HDB manages some 14,000 shops spread over all its estates. The HDB will sell its shops gradually over a long period of time. The sale of shops will assure security of tenure to businesses and also be a form of investment.

The proposed sale of shops will be done in a manner that will not dampen the property market. The Government is aware of the present glut in this market and will implement the scheme in stages. Numbers sold will be based on market studies to ensure that recovery in the property market is not adversely affected.

The Board will begin with the sale of 100 new shops at the end of 1987. This will be done to gauge the response of the market. Thereafter depending on the response, new shops which are scheduled for completion throughout 1988 will be put up for sale as and when they are completed. For the first three years the sale of new and vacant shops will be confined to Singapore citizens and to companies and partnerships in which the majority ownership belongs to the citizens. Depending upon market reaction the sale of existing shops to sitting tenants will take place in a later phase. For sitting tenants the restriction on citizenship will not apply.

Owners of HDB shops, which they purchase under this new scheme, will be allowed to sublet, or resell their shops freely as in the private sector. Resale is subject to the citizenship restriction for the first three years. Change of use and trade will be allowed subject to the normal environmental and development regulations. This will bring HDB's shops policy closer to market practice.

Meanwhile existing shops in HDB estates will have their monthly tenancies converted into fixed periods of one to three years, depending on the circumstances and types of shops. This is to give tenants a more assured term of tenancy within which they can make their business planning and other investment decisions.

As part of its policy to increase the residents to shops ratio in HDB estates, the HDB will be building proportionately fewer shops in its new estates. This will increase the viability of these shops. In view of this change, the present practice of allocating shops on priority to resettlement cases will cease immediately.

The position of shophouses affected by public clearance scheme will be as follows:

(1) Anyone interested in renting shops, including resettlement cases, will have to tender for them.

(2) Shopkeepers in permanent rent-controlled premises affected by resettlement will be given cash grants as provided under the existing policy.

(3) Shopkeepers in temporary premises affected by resettlement, who were previously not entitled to any cash grant, will now be given a cash grant of $26,000 per premises.

In all these cases, there will be no alternative option to request for allocation of a shop. They will have to tender with the public if they are interested.

To assist resettlement shopkeepers who want alternative premises to continue their businesses, the Government has decided to give them a preferential margin when tendering for HDB shops. The margin will be 10% for sole occupiers and 5% each for the tenants. This preferential margin is given in addition to the cash grants which I have mentioned earlier. Farmers who are not shopkeepers will not be entitled to such a preferential margin.

Mr Ng Kah Ting (Punggol): Mr Deputy Speaker, Sir, since my Question No. 15 has prompted the Hon. Minister to make a Ministerial statement, it gives me an opportunity to ask him more questions as a result, and I hope he will take them down.

(1) Can the Hon. Minister indicate where these 100 shops will be located?

(2) Will HDB provide loans to the successful tenderers for the shops? If not, who will provide the financing of such purchases? How long will the leases be then? Can lessees of HDB shops purchase their shops?

(3) As regards rental shops, will there be a review of the terms governing their tenancies upon renewal?

(4) As regards resettlement cases, what is the rationale for allowing those shops affected by clearance schemes to lose their priority of shop allocation?

(5) No doubt the Minister has just now mentioned, but is he of the view that these shopkeepers affected by clearance schemes are unable to survive in new environment and to compete with the others?

(6) Would HDB consider allocating a shop if a shopkeeper affected by such clearance scheme elects or chooses to forgo the compensation, as mentioned by him?

Mr Tang See Chim (Chua Chu Kang): Sir, I just want to ask the Minister two questions. Would priority be given to existing tenants if the shophouses are up for sale? Second question is: can CPF be used to finance the purchase?

Mr Heng Chiang Meng (Jalan Kayu): Sir, I have two questions for the Minister. As regards the new shops to be sold at the end of 1987, must they be used for owner- occupation, which means that the purchasers must use them for their own business? Or can they freely lease them to others? Secondly, will the new policy of $26,000 compensation for shopkeepers be applied to those already resettled, ie, already moved out but are presently on the waiting list for the allocation of shophouses?

Dr Augustine H.H. Tan (Whampoa): Mr Deputy Speaker, Sir, I have a couple of questions. Firstly, would the Hon. Minister consider a petition by existing tenants of HDB shophouses to purchase shops from the Housing Board? Secondly, why is he confining the sale of new shops to Singapore citizens, if he is really concerned about the property market? One would have thought that by allowing non-citizens to compete in buying the new shops, this would help to buoy up the property market.

Mr Dhanabalan: Mr Deputy Speaker, Sir, first of all, I must say that the Member for Punggol, although he is very influential, did not prompt this change in policy. It just happens to be a coincidence.

Sir, the first question he asked was, where will the shops be, ie the 100 shops that will be sold in the first instance by the end of this year? These shops are located in the various town centres in Hougang, Serangoon Town Centre, Bishan Neighbourood II Centre, and the Bukit Timah estate. They are spread over these areas. He then asked: will the HDB provide loans? The answer is no. The tenderers for these shops must make their own arrangements with banks, finance companies or others, to finance the purchase of these shops. I do not think under current circumstances they should have any difficulties because I think the financial system as a whole has more than sufficient liquidity to finance these shops.

The next question: how long will the leases be? They will be for 99 years. He then asked whether HDB flat owners can purchase shops. The answer is yes. They can purchase, just as they are allowed at present to purchase commercial properties.

The next question was in relation to those who are renting shops, whose monthly tenancies will now be changed to fixed term tenancies for one, two or three years, as I mentioned. And the Member asked what would be the terms upon renewal. The practice will be the same as in the private sector. When a fixed term expires, renewal will be negotiated on current market terms. If the current market rentals have gone up, of course, the rentals will go up. If the current market rentals have gone down, then rentals will go down. So upon the expiry of the fixed term, renewal will be upon prevailing terms at the time of renewal.

The next question was: what is the reason or the rationale for not allowing resettlement cases to have alternative shops? I have already explained this. HDB is building less shops in the new housing estates because in the old housing estates where there are too many shops, this makes not all of them viable. In some areas as and when shops are vacated, HDB is not letting out vacated shops but converting them into other uses so that the ratio of shops to residents or dwellings will improve and the shops will become more viable. With less shops, there will not be enough shops to offer to resettlement cases. And if resettlement cases are given alternative shops, then almost all the new shops in the new Housing Board areas will be taken up by resettlement cases. This would mean a very poor mix of shops and limited variety of services for the residents in these new areas because most resettlement cases are sundry shops. You cannot have a Housing Board neighbourhood comprising only sundry shops. We need a variety of services. So in view of the smaller number of shops available, this policy of not offering alternative shops was decided. I must say that many of these new policies pertaining to resettlement are the result of recommendations made by a Committee that was established by the Ministry. Many Members of Parliament who have many resettlement cases in their constituencies were members of this Committee, including the Member for Punggol and many others. They made a number of recommendations on resettlement terms and many of the recommendations were accepted. So this process of reviewing the resettlement terms has been going on for some time.

Have we come to the conclusion that resettlement shopkeepers or resettlement cases can survive by competing with others? Well, they have to survive by competing. And I think that under the present circumstances which I have explained, it is just not possible to give them resettlement priority. As to whether the HDB will consider allocating a shop if a resettlement shopkeeper chooses to forgo his compensation, obviously the answer is no, because that is the old policy. No alternative shops will be offered. He has to take the cash compensation. And if the shopkeeper wants to tender, then he can take advantage of the 10% and 5% preferential margins that I mentioned in my statement just now. I think that covers all the questions raised by the Member for Punggol.

The other question is whether priority be given to existing tenants. I am not very clear about this question. I think it was the Member for Chua Chu Kang who asked this question.

Mr Tang See Chim: If a tenant's shop is up for sale, would you give him priority? Or has he got to move out first before he tenders with the others?

Mr Dhanabalan: We have not decided on the details of how sitting tenants' shops will be sold. As I said, this will be in a later phase of the exercise. Obviously, some special consideration will have to be given to sitting tenants. Because when I said that we want to sell the shops to sitting tenants, it must mean that sitting tenants will have an advantage. So at the time when we come to selling shops to sitting tenants, the rules and procedures will be drawn up in such a way that they will have some advantage.

On the question whether CPF funds can be used, I think, if I am not mistaken, CPF can be used to buy commercial properties as an investment. So if they fall within the existing CPF rules, certainly they can use CPF. But you might want to ask my colleague, the Minister for Labour, for more clarification.

There are two other questions. First, can the present purchasers lease their shops? Was that the question?

Mr Heng Chiang Meng: Mr Deputy Speaker, Sir, perhaps I may refresh the Minister's memory. What I asked was whether there are any conditions attached to the purchasers of the new shops, such as whether they are allowed to lease out the shops or whether the shops must be owner-occupied.

Mr Dhanabalan: The details will be spelt out when the HDB makes its detailed policy statement. If I remember correctly, if somebody wants to buy a shop merely as an investment, he can do so but there is a limit. I think you cannot buy more than one or two units. There is a limit to the number of units that you can buy. But if a company wants to buy 20 units to open a supermarket, because that company is operating the business, it can make a bid for 20 units. If somebody wants to merely buy a unit as an investment and not operate a business in the unit, there will be a limit on the number of units that he can buy. These details will be announced later.

On the question whether the $26,000 will also be granted to those on the waiting list, I am afraid this is a matter of detail which I cannot answer the Member now. But if the Member can address a question to me in writing, I certainly will give him a reply.

Whether the HDB will entertain a petition from existing shop tenants who want to buy shops, certainly we will entertain petitions. And if they are very keen to buy the shops, maybe we will accelerate the programme of selling to sitting tenants. But on this, as I said, we will determine the phasing based on market demand.

I think I have covered all the questions.

Dr Augustine Tan: Why are we confining to Singapore citizens?

Mr Dhanabalan: Why are we confining only to Singapore citizens? I have already mentioned that we do not want to upset the market too much. At the same time, the present policy on the HDB shops is to try and give them to citizens first. As I said, after the three years, there will be no restriction. They can sell it to non-citizens. Should it be extended in the initial phases, we will have to study what the market reaction is to the initial sale before we make any changes.

Mr Ng Kah Ting: Mr Deputy Speaker, Sir, one last question. Does it mean that this statement takes immediate effect vis-a-vis the resettlement cases?

Mr Dhanabalan: Yes. As I said, it would take immediate effect.

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