SALE OF HDB SHOPS BY PUBLIC TENDER (Details)

[Mr Speaker in the Chair]

Mr Ng Kah Ting asked the Minister for National Development (a) if he will ascertain from the Housing and Development Board whether the details for the sale of the 100 shops by public tender are ready; and (b) whether the Government will reconsider the plight of those shopkeepers affected by resettlement and give them a cash compensation or a choice to rent shops, indicating the number of shopkeepers affected as at 28th July, 1987.

The Minister for National Development (Mr S. Dhanabalan): Mr Speaker, Sir, the details for the sale of some 100 new shops are being finalized by the HDB. The Board will make a press announcement on this as soon as the details are ready. The shops will be sold by public tender, on 99-year leases. Besides selling these new shops on tender, HDB will let out another 600 shops over the next 12 months, by tender on fixed-term tenancies of one to three years.

Under the current resettlement policy, effective from 28th July 1987, resettlement shopkeepers are paid a cash grant. Those who wish to rent HDB shops will have to tender for them. To help the resettlement shopkeepers in their tenders, a preferential margin of 10% will be given to resettlement shopkeepers who are sole occupiers of affected premises. In the case of resettlement shopkeepers who share premises, a preferential margin of 5% is given. This policy has not changed.

There were 2,075 shopkeepers affected by clearance as at 28th July 1987 when the resettlement policy was revised.

Mr Ng Kah Ting (Punggol): Mr Speaker, Sir, may I know why the Hon. Minister cannot reconsider - I say "reconsider" - the position with a view to giving those shopkeepers affected by resettlement the option to rent the shops, as was the case in the past?

Mr Dhanabalan: Sir, the answer is very simple. We just do not have enough shops. With your permission, Sir, may I distribute this table which sets out the availability of shops at the present moment? [Copies of table distributed to hon. Members.]

Mr Speaker, Sir, as the Member for Punggol can note from this schedule that is being distributed, as I mentioned in my answer, there were 2,075 resettlement shops as at 28th July 1987. There are several categories. Some were already offered shops but they did not accept; there are 600 of them. Others had Notices to Quit served on them but no offer has been made yet, and there are still others who have been already identified and they know that they are going to be cleared but no Notices to Quit have been served. So there were 2,075 resettlement cases as at 28th July. Since we have already cleared most of the squatter areas, we expect over the next few years to have another 50 to 100 new resettlement cases as from 1988 onwards.

As against this potential demand for resettlement shops, you can see that the supply is only 546 at the present moment, with another 150 new shops which HDB will complete every year for the next few years.

Mr Speaker, Sir, even if half the resettlement cases want shops and the other half are prepared to settle for cash, there are still just not enough shops to offer all resettlement cases. Moreover, Sir, I think it is bad policy and not in the interest of the public and the residents in HDB estates to allow all shops to be taken up by resettlement cases . We want a mix of resettlement shopkeepers as well as new businesses. So we just do not have enough shops. I have looked at this matter very sympathetically. I have asked the officials to try and examine whether we can accommodate those on whom Notices to Quit have been served and who want shops, and whether we can in fact offer them shops.

Sir, the facts are these. Of the 546 shops that are now available, not all of them when tendered out will be able to survive. Quite a few of them are shops which have become vacant many times because businesses have not been able to make a go at that particular site. We really have just too many shops catering for too few people in the HDB areas. This is the reason why HDB has decided that from next year, they will build only 150 shops a year. So taking all these figures into account, it is not possible with all the goodwill in the world to try and accommodate the request of the resettlement shopkeepers.

I must also mention that the revised resettlement policy allows a cash grant for shops in temporary premises. The shops in temporary premises did not have this option of taking cash under the previous policy. So at least they have a cash grant now.

Mr Heng Chiang Meng (Jalan Kayu): Sir, may I ask the Minister, in view of what he has said, whether the policy could be modified to (a) give a higher preferential margin in the bidding, say, from the present 10% to 50%; and (b) to provide for enhanced compensation as in the case of farmers where their structures and improvements are currently compensated at higher levels than those of non-farmers. In this respect, Sir, may I also ask the Minister to have the Resettlement Committee look into other proposed modifications.

Mr Dhanabalan: Mr Speaker, Sir, there are no plans to give a higher preferential margin. In fact, I looked at the terms of tenders by resettlement shopkeepers, and I find that even giving them a 20% margin will not make any difference. A 50% margin, I think, is just unthinkable.

Mr Speaker, Sir, we are dealing with property on behalf of the public and there is a responsibility on the part of the Government that we get the best for the taxpayers.

Mr Tang See Chim (Chu Chu Kang): Mr Speaker, Sir, would the Minister consider allowing only those resettled shopkeepers to tender for the shops? Would the Minister give the reason why it is not in the public interest to allow only shopkeepers affected by resettlement to tender? These people are in the business, and so they should know better than fresh entrants into the retail trade.

Mr Dhanabalan: Mr Speaker, Sir, I think the second part of his question answers the first part. If they know better, they should be able to compete with fresh entrants into the business.

Mr Ng Kah Ting: Mr Speaker, Sir, whilst I am not entirely in disagreement with the Hon. Minister's answer, nevertheless could I ask him to ascertain from the HDB whether they could increase the number of shops available? The figure given here is 150 which, I think, is hardly sufficient. Also, could he not reconsider this question of letting the resettlement cases have priority because, as he put it, there are 50 to 100 cases per year from 1988 and beyond?

Mr Dhanabalan: Sir, regarding the first part of his question: whether we can increase the number of shops. I think it must be made very clear what shops are built for. They are built to cater for the needs of residents and, of course, they must be built in numbers that will make those shops viable. We cannot just build shops to cater for resettlement cases. As I mentioned in my answer to the first supplementary question, we already have shops in HDB estates which fall vacant all the time because people tender, they get the shops, and they find they cannot make a go of it, because there are too many shops in these areas. So to build more shops merely to cater for resettlement cases will not resolve the problem. In fact, it will make it worse for the resettlement cases. It is better for them to take the cash and do something else.

Mr Ng Kah Ting: Why can we not let them have an option - either take the cash or give them the alternative of renting the shops, as was the case in the past? As I understand the position, is it not a fact that it is Government's duty to make sure that resettlement is made less painful and more humane?

Mr Dhanabalan: We seem to be going round in circles. We cannot go back to the old system because we do not have shops.

Mr Tang See Chim: Why not?

Mr Dhanabalan: Sir, I think the figures speak for themselves.

Sir, we want to try and reduce as much as possible all the trauma of being dislocated, of being removed from businesses that they have been engaged in for a long long time. But we cannot also hold up development. We need these areas. And if we had not moved in the way that we did, Singapore would not be what it is today. It is because we want to try and reduce the hardship that we changed the policy and now allow a cash option which was not there before. In fact, many of these cases under the previous scheme would just have not got any shops, neither would they have got any cash. In order to alleviate their hardship, we offer this cash option. We have to work within the constraints of the numbers that we have and we just cannot squeeze more shops out of the numbers that we have to offer to all resettlement cases.

Mr Ng Kah Ting: Sir, can I ask the Minister whether he will try to understand the position of the affected shopkeeper by giving his impression as to how much or how long the $26,000 cash compensation will go to overcome or to resolve the shopkeeper's temporary predicament or maybe for the rest of this life? In other words, I am trying to suggest that the $26,000 cash compensation is just a mere paltry sum. It is depriving a shopkeeper of his livelihood thereafter.

Mr Dhanabalan: It is not a paltry sum as compared to the zero that they got previously. We have to try and work out --

Mr Ng Kah Ting: In the past, he had the alternative to rent a shop.

Mr Dhanabalan: Not necessarily the case.

Mr Ng Kah Ting: Yes, it was.

Mr Dhanabalan: In the past, in the case of those shops which were in temporary premises, they did not have cash option but they had the option of tendering for a shop, and they paid 50% of the tender price of shops in particular areas. In other words, they paid 50% of the market rate, and it graduated up 10% per year over a period of five years. But not all were successful in getting shops. That also must be made clear. More than half or about half the shops in temporary premises did not even bother to tender for shops, because they knew they could not survive, even paying 50% of the market rate. Many of them survived because they were paying very low rentals in shops or premises which were rent-controlled. And that is how they kept going. They could not have survived under a fair economic price situation even at 50% of the market rate. Now they get $26,000. Previously they would not even have got that.

Mr Chiam See Tong (Potong Pasir): Mr Speaker, Sir, there is a real problem in resettlement cases, even the existing shopkeepers in HDB estates. In view of this, would the Minister be willing to set up a committee to study their plight with a view to pegging a reasonable rent for these shopkeepers?

Mr Dhanabalan: Mr Speaker, Sir, there was a committee in fact which made a number of recommendations. Many of the recommendations of the committee have been accepted and implemented. To be fair to the committee, the committee recommended a cash option of $26,000 or a shop. In other words, in addition to the previous policy of just offering only a shop, the committee recommended a cash option. But when the Ministry studied the figures, it was just not possible to implement the recommendation and that is why we had to change the policy. I do not want to repeat what I have already said previously.

So we have had a committee. The committee has looked at this whole subject thoroughly. It has made a number of recommendations. Most of the recommendations have been accepted.

As to whether we can have a committee to settle what should be a fair rent, I think that is not possible. Fair rent is what the market is prepared to pay and the best way to decide that is by tender.

Mr Heng Chiang Meng: Sir, may I once again ask the Minister why he cannot consider an enhanced compensation for the structures and their improvements by shopkeepers? Under today's policy, farmers do get enhanced compensation for their structures compared to non- farmers whose structures are compensated at residential rates. I believe that today the shopkeepers' structures are also compensated at the residential rates. So the proposed enhanced compensation is for the loss of livelihood which appears to be the case considering the effects of the new policy.

Mr Dhanabalan: Mr Speaker, Sir, the compensation was fixed on the basis of an average advantage that a shopkeeper had by way of his paying 50% of the market rate. And this was calculated over a number of years and the figure arrived at was $26,000. As to whether we should give him more compensation, of course, Mr Speaker, Sir, it is easy to give away money. But somebody has got to pay for it at the end of the day. We think the figure that we have fixed is fair. I do not really see much reason for us to reopen this issue. If Members can make out a very clear case, I will look at it. But I have already looked at the figures and they seem fair. But if Members want to bring up new facts, I am open to look at their new facts.

Mr Chiam See Tong: Sir, it is obvious that the Government has not solved this problem because there is still much dissatisfaction. I would like to ask the Minister whether he would be willing to reopen the case because the problem is still there. And if he does reopen the case, I hope he can give the Opposition a chance also to join in and look into the matter.

Mr Dhanabalan: Sir, I think we should not be discussing about this subject as though it is something new. We have been resettling people for many many years, for more than 20 years. From time to time, we have revised resettlement policies to keep up with changes in circumstances and in situations. In fact, I would say that we are almost at the tail-end of our resettlement programme, because most of the squatter areas have been cleared. So it is not as if it is a new problem that we are confronted with and we need to come up with new policies. The revised policy was just a change to an old policy in order to cope with the new situation - the new situation being one where we just do not have enough shops to go round.

Mr Chiam See Tong: We must solve the problem.

Mr Tang See Chim: Sir, the Minister admitted that some shops have been tendered and retendered. Does he not realize that this is really caused by his admitting new entrants into the tender system? These people had no idea of the economics of the retail trade and just tendered high rentals which they could not afford to carry on later.

Mr Dhanabalan: Mr Speaker, Sir, I disagree with that completely. The reason why these shops have failed and had to be tendered and retendered is that there are just too many shops and they cannot make a success of their business.