TENDERS FOR INDUSTRIAL LAND

Mr Chia Shi Teck asked the Minister for Trade and Industry if future tenders for industrial land can be in smaller plots and on a 99-year lease to enable smaller manufacturing companies to invest in their own premises.

Mr Dhanabalan: Mr Speaker, Sir, the recent tenders of industrial land were intended to increase private sector participation in industrial land development. They were not intended to provide land for individual manufacturers for their own use.

Currently, only 14% of industrial space in Singapore is held by the private sector. The Government's intention is to increase this proportion by tendering out up to one-third of the annual release of industrial land. Such tenders will also provide a more accurate indication of industrial land prices.

The land parcels tendered out in the recent exercise were similar in size to those sold by Land Office to JTC. This was intended to provide a benchmark for the prices of land sold by the state to JTC.

In the recent exercise, six hectares in Kaki Bukit and two adjacent lots of 10.2 hectares each in Tuas were tendered out. The results of the tender are being evaluated. As part of the evaluation, we will consider whether the land parcels offered for sale in the tender were too large. Smaller parcels may be popular with developers since the risk element in holding the land is smaller. However, parcels of land tendered out should be large enough to allow for optimal land use and permit developers to enjoy economies of scale in infrastructural provisions such as drainage and utilities.

If manufacturers want smaller industrial facilities for their own use, they can either buy or rent standard factories from JTC, as I mentioned in my previous answer. JTC provides a wide range of standard factories ranging from 910 square metres to 4,000 square metres for sale. Manufacturers can buy, in addition to these standard factories, land on 60-year leases from JTC to put up their own buildings.

As far as the length of lease is concerned, the Government does not intend to sell industrial land freehold or on leases beyond 60 years. Leases of 60 years are long and, in fact, long enough for developers and industrialists to make adequate returns from their investments. Unlike housing use, for example, the nature of industries changes very considerably over 60 years. We have found the need to upgrade and rejuvenate our older industrial estates which are not even 30 years yet. Thus, we expect that 60 years is a reasonably long cycle before the land lease should revert to the state for redevelopment to meet the needs of future industries.