HDB SHOP RETAILERS

4.00 pm

Dr Lily Neo: Mr Speaker, Sir, I would like to declare that I am running a clinic from an HDB tenanted shop.

Sir, the retail sector in Singapore, like many other small and medium enterprises (SMEs), is undergoing a dramatic change. High operating costs, fierce competition and dwindling business in the industry are threatening the survival of some 12,000 HDB shop retailers. Their growing woes and difficulties must be heard and heeded by our Government. I wish to voice their call for help and beseech the Government to extend a sympathetic hand with rescue measures for their survival.

Sir, rapid economic growth, more working women and higher education levels have changed the lifestyle of Singaporeans and brought about big changes in consumer attitude and shopping preferences. Many also prefer to cross over and shop in Malaysia where goods are often cheaper. Such new trends put a toll on the local retail trade.

Today, our shoppers are more sophisticated and discerning; placing more emphasis on better quality of goods, wider choice of goods and prices, more attractive presentation and more pleasant shopping ambience. There is a marked preference for mega shopping centres with exciting atmosphere and ambience. Many HDB shop retailers face stiff competition from the big chain retailers that can sell goods at much lower prices operating through economies of scale. As in the case of many SMEs, challenges faced by the retailers include weak entrepreneurial culture, insufficient management professionalism and know-how, shortage of professional technical manpower, insufficient use of technology, outmoded, unproductive methods of operation, limited ability to tap economies of scale and small domestic market. Thus, these SMEs are losing out to supermarket chains and big shopping malls which offer one-stop shopping and appeal to the young with their up-market image. Sir, as this trend continues, these retailers will find their clientele shrink year by year.

Local SMEs employ 51% of our workforce. They make up about 92% of all business establishments here and form an important part of the Singapore economy. At least, 90% of retail businesses in Singapore are SMEs and many of them are in the HDB estates. Sir, many SMEs have not recovered from the last economic crisis and most of them are not feeling the benefits of the high economic growth reported by our Government. In fact, they are facing more difficulties as they have to pay increasing charges such as rental, property tax, service and conservancy charges, utilities bills and transport costs. Wages for workers have also been increasing. SMEs with shallower pockets and thinner profit margins find it hard to cope with the restoration of employers' Central Provident Fund contributions. In general, SMEs have cited the high costs of doing business here as a serious problem and are extremely concerned.

Many retailers, especially those who have obtained their shops by tender, lament the high rental and high prices of HDB shops. In the older estates, retailers are faced with the declining population with lower disposable income as younger people move out, leaving the older folks behind. Business had been deteriorating for many and the retailers do not have enough business to make ends meet. Shop retailers have to operate long hours, often late into the night to attract customers. Sir, many retailers fear that this situation will worsen with a lower projected GDP growth for this year.

All told, these retailers declare that times are bad and they need help. No doubt, they have to bite the bullet just like everyone else in a free market enterprise. But they do have to abide by the HDB rules and regulations and these rules and regulations may be too restrictive and perhaps inappropriate for these times. I would like to suggest that our Government, together will all relevant authorities, make a concerted effort to help them. Perhaps, we should look into the following areas for a start.

Much can be done to help the small retailers become more competitive and more in sync with consumer attitudes and shopping preferences of shoppers today. New skills and management ideas can be taught and the Government can be of assistance in this respect by providing:

Training on aesthetics and presentation and on marketing and personalisation of services. Instead of allowing products to be haphazardly laid out, retailers can be shown how to improve layout and appearance of their shops to attract customers. Instead of traditional practices, retailers can be taught how to provide personalised service as a niche area by offering a familiar, friendly experience to the neighbourhood customers. Their training courses should be tailored to suit them. For instance, more courses should be conducted in Chinese to cater to the Chinese-educated.

A conduit for bulk purchasing so that the retailers may save on costs. The small retail shops may be encouraged to band together so that they may improve their stores and enhance shopping experience. A good example of how this banding together can work can be seen at Chong Pang City in Yishun.

Computer training to introduce these retailers to the concept of e-commerce and trading through e-commerce.

It would be useful if we can allow more flexibility of the SME Financial Scheme and allow shopkeepers to have repayment of loans with instalments over a longer period when times are bad. In terms of the restoration of employers' Central Provident Fund contributions, this group feels that the GDP statistics collated do not reflect accurately their performances. They propose that the authorities collate and release statistics on a regular basis, in order to set them apart from the large enterprises.

SME 21 is a 10-year strategic plan launched last year to create vibrant and resilient SMEs in the new economy. Sir, as many of our SMEs are not doing well, I do urge the Government to speed up implementation of SME 21 with more resources and with a sense of urgency to assist the SMEs.

High property cost and rental have been cited as a major factor for the many problems SMEs face. Many say that rental cost has become a tremendous burden to them due to their poor business. Retailers who rent HDB shops have asked for a reduction in rental and some have suggested a minimum reduction of 20%. Those who paid property tax have also asked for a further extension of the 25% property tax rebate. It has been suggested that, just as hawkers are compensated for giving up their stalls, those who wish to retire or are affected by redevelopment should also be compensated for giving up their leases.

In the Sale of Tenanted Shops (SOTS) Scheme, launched in 1992 and discontinued in 1998, some 8,000 of the 10,000 eligible shops were offered for sale to the sitting tenants. Many shopowners were encouraged to buy their units from HDB and they now face large amounts in monthly repayments. This is especially so for the shopowners who have bought their shops in 1995 and 1996; some of them have as much as $8,000 per month in repayment of their loans. The businessmen who bought the 99-year leasehold properties have very heavy burdens in lieu of high monthly repayments. They are in a dilemma because the market is extremely weak and they cannot afford to sell their properties when market prices are so low. It is very sad indeed to hear that some of them are barely able to cling on to such a bad predicament and can see no foreseeable respite. Sir, some of them mortgage their own homes to stay afloat and it is only a matter of time before they lose their homes as well. These people are hoping that their businesses will improve. Alas, I fear that they are hoping against hope under present circumstances. In the past, when the property market was buoyant, they could take solace and comfort on the assurance of having valuable assets in their properties. Those who have purchased their shops from HDB now face a double whammy of poor business and poor property prices.

What can be done here? I would like to echo their requests. Most people agree that HDB must have some sort of planning and control to ensure that no overwhelming duplication of similar businesses occurs in one area. Granted that such an occurrence is detrimental for one and all, they would like HDB to allow more flexibility in the conduct of their businesses as in:

Allowing splitting of the shops into smaller shops to co-exist with other types of businesses.

Granting "change of use" of their shops and allowing them to be converted into offices or wholesale shops either temporarily or permanently.

Resettling some retailers to other places that have better need of their kind of trade.

Relocating shops in poor locations and poor market conditions to better business areas.

Having the option of selling their shops back to HDB.

Sir, may I urge HDB to review the planning of HDB shops spaces. In view of the present trend towards mega shopping malls and supermarkets, there is a need to reduce and restructure the HDB shops, not only in terms of new supply but also in consideration of existing ones. Perhaps, HDB can improve on the defining terms concerning the variety of trade mix. Poor distribution of trades and services seems to be a common problem in the town centres and neighbourhood centres. A survey of the retail outlets in the town centres of Bedok, Clementi and Toa Payoh showed that the predominant trades are personal items (shoes, bags, accessories), clothing and miscellaneous retailing. For the neighbourhood centres, the survey conducted in the Bedok neighbourhood showed that the predominant trades are provision shops and personal services such as barber shops and hairdressing salons. There is insufficient variety of trades and the choice of goods and services is limited in most HDB town centres and neighbourhood centres.

HDB shops can be regrouped to form "commercial streets" of distinctive features to be in a better position to compete with giant shops. Representatives for retailers like the Merchants' Association and the Singapore Retailers' Association can work with the Government to bring this about.

Town councils can help by improving the physical infrastructure in the business neighbourhood. Town councils must help by injecting life into the business neighbourhood to attract the shopping crowd. There should be more effective use of festivals, eg, Mid-Autumn Festival to attract residents into the shopping areas. Shopkeepers should be encouraged to join the Business Liaison Committee of the Town Councils to address their concerns. Liberal approval for pasar malams at HDB estates should be weighed against the impact on the neighbourhood retail businesses.

The Ministry of Trade and Industry announced the Retail Sector Development Plan (RSDP) in March 1992. This is a comprehensive plan to give the small retailers a chance to survive in this competitive environment. This plan, Sir, should be extended and carried on in a faster and more organised fashion. It should be undertaken in partnership with all concerned. The sheer size of the sector and the complexity of the task require close and ongoing consultation and collaboration between the public and private sectors, and between the planners and the people.

Sir, the solution to the problems of the SMEs, especially the HDB retailers, is in restructuring that will collectively improve them and keep them relevant to the present trends and lifestyles of consumers. This needs the efforts of SMEs, private associations or organisations and Government to work hand in hand. The majority of our SMEs are not doing well in spite of a double digit growth last year. Their prospects are not rosy and they require the concerted efforts of all concerned to help them keep pace with the rest of the economy. Their transformation needs time and a lot of effort for fruition.

Sir, I beseech our Government to prioritise this matter and, in the interim, lessen their pain with immediate rescue measures.

Mr Mah Bow Tan: Mr Speaker, Sir, Dr Lily Neo has articulated very clearly and very comprehensively the concerns of HDB shopkeepers. She has analysed the problems they face and offered several suggestions to help them overcome these problems. Over the last few months, we have also heard similar feedback from many Members of Parliament, from grassroots leaders as well as from participants of feedback sessions.

Sir, I would like to take this opportunity to assure the House that the Government recognises the role and the contribution of our HDB shopkeepers. We share the concern that they are not doing well and we will look into various measures to help them. We will have to be guided by certain principles, and one of the principles must be that we must enhance the viability of the HDB retail sector on a long-term sustainable basis, and not just go for short-term quick fixes. We will also be mindful that HDB shopkeepers, like other businesses, must be encouraged to adhere to the fundamentals of business; in other words, serving the needs of their customers, offering value-for-money goods and services, taking risks and being rewarded based on the decisions they make and the risks that they take. In the final analysis, while Government can help to improve their operating environment, it cannot guarantee their viability, survival or profitability.

Before I comment on the various suggestions made by Dr Lily Neo, allow me to recollect the role played by many shopkeepers in our nation building. Members will recall that in our early years of independence, many old shophouses were resettled in HDB estates to make way for roads, flats, factories, schools and so on. Government helped by subsidising their rentals and the shopkeepers in turn helped to keep the cost of living affordable for HDB residents by passing on the benefits of these subsidised rentals to their customers. In this process, they helped to hold down inflation at a time when many Singaporeans were trying very hard to make ends meet.

Today, there are still about 2,000 first-generation shopkeepers; in other words, those who were relocated in the early years, but still plying their trades in the HDB estates. Many of them are now elderly and we should not forget the contributions they have made and overlook them, even as the rest of the country enjoys the fruits of economic growth.

Dr Lily Neo, in her diagnosis of the ills facing the shopkeepers, pointed out that changing lifestyles - in other words, more working women, more sophisticated shopkeepers, more competition, easy travel, globalisation, etc - all these have affected the traditional retailers. This is true. But I believe that HDB neighbourhood shops will continue to play an important role in servicing the needs of HDB heartlanders. There will always be residents who, for one reason or another, whether it is convenience, familiarity or simply good value for money, still prefer to patronise these shops, rather than big shopping malls or mega marts.

I can still recall the friendly neighbourhood shopkeeper that I used to go to as a child in Kim Keat Avenue. I can still remember the name and the owner of that shop. It was called Ban Heng. It is no longer there. But many years later, when I went back to the shop after my studies overseas, the shopkeeper still remembered me and remembered the things that I used to buy from her shop. And I was very impressed and very touched. I think that is the kind of friendly, familiar, personalised service that Dr Lily Neo talked about, that is still able to retain the loyalty of customers, even in today's world of mega marts and shopping malls.

Also, I think many of us in our visits to hawker centres, neigbourhood shopping centres and so on will have come across many residents or ex-residents who have moved out of the estate but who still come back to the neighbourhood shopping centre, or to the neighbourhood eating shops or coffee houses, just to come back and eat at their favourite stall. So these shops and eating houses are part and parcel of our social landscape. They contribute in some small but significant way and manner towards our collective memory of what it means to be Singaporeans. And I believe we should do what we can to retain them.

Let me now comment on some of the Member's suggestions. An underlying principle of the Government's assistance programme for HDB retailers is to encourage them to upgrade, so that they can keep pace with the fast-changing environment. In other words, we will help those who help themselves.

Dr Lily Neo has made several good suggestions in the same vein. For example, provide training to enable HDB shop retailers to improve their marketing, presentation and merchandising skills. That is a very good idea. And we should work towards encouraging more of these shopkeepers, not to assume that they know what is happening already, but to try and keep up to date with the various trends and with the changing lifestyles.

She also suggested that we should provide a means for them to avail themselves of things like bulk purchasing; in other words, to enjoy economies of scale. Again, this is a good suggestion and we will certainly consider this suggestion.

The Member also suggested that HDB shops band together to form what are called "commercial streets" with distinctive features. I understand that there are certain areas in the HDB estates which have already undergone this transformation, places like Marine Parade Town Centre, Chong Pang City, Tampines N2 Shopping Street, Toa Payoh Town Centre. Shopkeepers in these areas have got together with the town councils and they have made improvements to the pedestrian malls, shopping areas and, as a result, their business has improved and their customers have not only been retained but they have been able to attract new customers. This is an idea that I would also endorse and we should find some way to encourage more of these developments.

Turning to the Member's concern on rental cost and prices of HDB shops, I would like to point out that the 16,000 HDB shop lessees and tenants today are still enjoying rental and property tax rebates which we introduced in 1998. The property tax rebates have been extended to June of this year at a reduced rate of 25%. Likewise, the HDB has kept its rental rebates till the end of this year at half the original quantum. The Government will review these rebates before their expiry, whether it is in June or December.

On the Member's request to give HDB shop retailers more flexibility in the conduct of their business, HDB tells me that it currently grants approval on a case-by-case basis. I will ask the HDB to consider being more flexible in granting approval for change of trade, except in cases that can cause disturbance to residents. One example would be conversion to an eating shop. HDB will also consider the Member's suggestion to facilitate exit of rental tenants who wish to retire or who are affected by redevelopment.

Sir, before I conclude, I would like to add that the Retail 21 Committee, which is chaired by the Singapore Productivity and Standards Board, and which comprises members from the HDB and other public and private agencies, will be releasing its 10-year strategic plan for the overall retail sector very soon. HDB is also looking into specific ways to help HDB shopkeepers enhance their competitiveness. Sir, it is in our collective interest to ensure that the HDB retail sector remains viable and sustainable, so that it can continue to provide good service to HDB residents.

Question put, and agreed to.

Resolved,

That Parliament do now adjourn.

Adjourned accordingly at Twenty-Nine Minutes past Four o'clock pm to 23rd February, 2001.