HOUSING AND DEVELOPMENT BOARD SHOP PREMISES (Rentals)

Mr Tay Beng Chuan asked the Minister for National Development (1) to what extent have the rentals of Housing and Development Board (HDB) shop premises let out by recent tenders gone down as a result of decreasing demand for or oversupply of these shop premises in both existing and new estates; and (2) whether HDB will consider a general downward rental adjustment of all HDB shop premises in response to the adverse market conditions.

Mr Mah Bow Tan: Mr Speaker, Sir, rentals for HDB shops had come down over the last five years. The average tendered rentals last year were about 46% and 12% lower than the rentals in 1995 for older estates and new estates respectively. To help shop tenants tide over the difficult economic conditions and lower their business cost, HDB has given them rental rebates since December 1997. The current rebates consist of three categories: (i) across-the-board rebate; (ii) a rebate to bring down the rentals nearer to January 1999 market level; and (iii) a rebate arising from property tax reductions which is then passed on by HDB as the landlord.

Taken together, the rebates amount to 16% in 1998, 25% in 1999, 23% in 2000, and between 12%-13% this year. HDB is currently reviewing the present rental rebates and will finalise the review in about three months' time.

Mr R. Ravindran (Bukit Timah): Sir, in the light of the predicament faced by many of the shopkeepers in the HDB heartland, particularly because of this high rental and poor business due to these mega supermarkets and shopping centres in the HDB estates, would the Minister consider giving a once-and-for-all cut in rentals and also adopt other pro-business practices to ensure that business returns to these shops in the HDB heartland?

Mr Mah Bow Tan: Sir, there are two parts to the Member's question. The first is the question of bringing business back, and the second aspect is lowering business cost. In so far as the second aspect is concerned, as I explained earlier, HDB has given back to the shopkeepers rebates in rentals over the last four years. Indeed, the rental rebates are still in place and will be reviewed again in the next three months. But that would not help shopkeepers if the business is not there in the first place. This is the reason why, in the recent package of measures to assist HDB shopkeepers, which I announced in Parliament, there are elements to help the shopkeepers to bring back the business, for example, assistance measures, upgrading measures, franchise measures, measures for shopkeepers to get together to improve and upgrade the environment, and so on. I think those measures are just as important as any measures taken by HDB to reduce rentals. There are also other programmes in place, for example, greater flexibility in subleasing the shops, greater flexibility in changing the use of the shops, and so on. Last, but not least, for those who really wish to exit the trade, there are also measures put in place to facilitate their exit.

All these measures taken together will, I believe, help to a certain extent. But I would like to emphasise that the shopkeepers themselves must make the effort. They must avail themselves of these measures. They must make the effort to get together. They must make the effort to approach PSB to upgrade their shops and to take advantage of the various schemes that are available. Without the efforts taken by them, I am afraid that just talking about a rebate and a cut in rentals alone would not suffice. I hope the Member will help to spread this message.