Thursday, April 1, 2010

$10k fine for using warehouse for retail

POPULAR retailer Mustafa was fined $10,000 yesterday, after it pleaded guilty to illegally using its six-storey warehouse building in Kallang Pudding Road for retail sales.

The fine caps a saga which began last November, when the Urban Redevelopment Authority (URA) served a writ of summons on Mustafa for converting the first two levels of its warehouse into a department store and a supermarket.

These retail spaces have since been shut down.

In a statement yesterday, the URA said Mustafa had committed an offence under the Planning Act, which is punishable by a fine of up to $200,000.

A spokesman for the authority said: ‘Warehouses are approved primarily for the storage of goods and as a central distribution centre. They should not be used for… the retailing of merchandise, which is considered a commercial use.’

The URA added, however, that ’some flexibility’ would be exercised for occasional warehouse sales conducted to clear stock.

Mustafa had, with the approval of the URA in 2001, developed the Kallang Pudding warehouse on a 58,400 sq ft freehold site it owned.

Save for the occasional sale, the warehouse was closed to the public until about October last year, when the shutters went up to reveal a department store on the ground floor and a supermarket on the second.

Competitors were upset that Mustafa was getting away with operating a retail store while paying low warehouse rents.

Asked yesterday why it took more than four months and repeated adjournments for Mustafa to plead guilty, its lawyer, Mr Bala Chandran, said several representations were made because this was the retailer’s first such offence.

He added the warehouse had stopped sales soon after the authorities stepped in.

Mustafa’s managing director, Mr Mustaq Ahmad, declined comment when contacted yesterday.

The retailer has been making headlines for all the wrong reasons recently. Yesterday’s fine, for example, comes a day after the court heard an application by the Singapore Civil Defence Force for Mustafa Centre in Little India to temporarily stop business on the first floor.

The move came amid concerns about over-crowding at the shopping centre.

Warehouse operators and retail experts interviewed said Mustafa’s conviction served as a ‘clear signal’ that warehouses should not be used for retail purposes.

Ms Frances Chow, a supervisor at wine distributor Excaliber in Aljunied, said warehouse operators who have carried out similar sales in the past now know ‘where the lines are drawn’.

Added Singapore Polytechnic senior retail and marketing lecturer Sarah Lim: ‘This will help prevent cases where warehouses are used for retail – which is unfair competition because warehouse rents are much lower.’

Source: Straits Times, 1 Apr 2010

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