RETAIL TRADERS IN HDB ESTATES

Dr Lily Neo asked the Minister for Trade and Industry whether his Ministry has any data on how the retail traders are faring in the Housing and Development Board estates and if anything can be done to help these traders if they are faring poorly.

BG George Yong-Boon Yeo: Mr Speaker, Sir, retailers in HDB estates have seen modest improvement in sales after the Asian crisis. This is in line with the recovery of the overall retail trade. Sales of HDB retailers fell by 12% in 1998, but picked up by 1.2% in 1999 and 3.3% in the first 10 months of 2000, lagging behind overall growth in retail sales in Singapore.

The performance varied among retail segments and shops. While shops selling telecommunications equipment enjoyed brisk sales, provision shops, supermarkets as well as watch and jewellery retailers generally did not fare well.

Some of the problems faced by HDB retailers include keen competition, limited selection of merchandise, lack of economies of scale, and the inability to utilise modern technology and methods of business management. Many consumers prefer to shop at larger one-stop malls than patronise smaller HDB retailers. As a result, a number of small retailers have experienced a squeeze in margins.

As a short-term measure to help its shop tenants cope with the increase in business costs, HDB will extend its rental rebates for another year to 31st December 2001, at half of the levels last year. It will continue to stagger the rental increase to market levels for assignment of tenancies, subletting cases and for tenants who are renewing their tenancies for the third time. Shop lessees can also apply to convert to shorter leases to reduce the cost of servicing their mortgage loans.

For the longer term, the Singapore Productivity and Standards Board (PSB) and Retail Promotion Centre (RPC) work closely together to help HDB shops upgrade and increase their productivity through various programmes. This includes the promotion of franchising and economic groupings to help overcome size constraints. The Retail Operation Assistance Programme (ROAP) will help shops to spruce up and keep track of stocks. To-date, about 1,200 HDB retailers have signed up for this programme.

Dr Lily Neo: May I ask the Minister whether the presently available Retail Operation Assistance Programme that he mentioned is successfully taken up and whether such a programme will be further improved and more aggressively promoted?

BG George Yong-Boon Yeo: Since February last year, MTI has made PSB the lead agency to help the retail sector. Generally speaking, those who are interested to upgrade themselves or introduce modern methods of management, eg, franchising, inventory control, will get ready assistance from PSB. The problem with many of our retailers is that their children are not interested to join the parents' businesses. The proprietors and proprietresses themselves are not able to keep up with the new technology and so they languish in prolonged decline. These are difficult problems for us. There is really an over-supply of retail shop space in our HDB estates, and we must find a way to make it easier for them to exit their businesses. In this regard, MTI is working with MND to see how we can facilitate exit.

Assoc. Prof. Chin Tet Yung: Sir, may I ask the Minister whether MTI and MND could also work together to allow those retailers who are facing difficulties in their original trade to vary their businesses so that they can take on what they regard as being more lucrative trades while they are holding the lease to such HDB retail properties?

BG George Yong-Boon Yeo: Mr Speaker, Sir, over the years, we have liberalised these regulations and we shall continue to do so. We should not introduce unnecessary rigidity to industry restructuring.

Dr Lily Neo: May I ask the Minister whether he would consider setting up a committee with representatives from retailers in HDB estates to look into their difficulty so that his Ministry can render them more effective assistance?

BG George Yong-Boon Yeo: Mr Speaker, Sir, we have a comprehensive outreach programme right now through PSB which works closely with various retail associations and the Retail Promotion Centre. So it is not as if there is a lack of communication. There is a lot of communication. The problem is the inability of some of our retailers to make the necessary adjustment. As I said earlier, those who are prepared to make the adjustment will be able to tap upon a wide range of programmes.

Mr Tay Beng Chuan (Nominated Member): I am in support of what Prof. Chin said just now. I would like to know whether HDB would allow shop tenants to change their trades or bring in new partners without having to increase the shop rentals to the market level.

BG George Yong-Boon Yeo: Mr Speaker, Sir, I have mentioned earlier that where we can liberalise to allow for greater flexibility in the trades which retail shops want to go into, we should. Where rentals are subsidised, then the problem arises when you, in fact, transfer all or part of your lease to somebody else, whether you will still enjoy those subsidies or you will be brought up to market, is a question for HDB and MND to answer. Mr Tay could pose this question to the Minister for National Development. He has just indicated to me that he is very happy to answer it.