It should be more sensitive to tough economic times
BUSINESSES big and small are being ravaged by the global economic downturn, with firms here down on their knees pleading for all the help that they can get, from cash to measures that will help them reduce their costs.
The Government has recognised their plight and has promised help. Prime Minister Lee Hsien Loong said the Government would help workers acquire new skills and make sure businesses continue to operate by cutting costs and ensuring that they have access to credit.
The Government wants to keep the economy competitive and make sure that Singaporeans remain employable, he said.
“Because if you are not working, and if your company is not competitive, then there is no way you can come back up and stand on your feet again,” he was quoted as saying.
And in recently explaining to an audience in Chile why the Singapore Government had cut the remuneration of ministers and top civil servants by 18 to19 per cent, he noted: “It is the right thing to do, economically as well as politically, to send the signal that at a time like this, everybody has to tighten his belt.”
However, this message doesn’t appear to have trickled down to the Housing and Development Board (HDB), which has raised the rents of its commercial properties while almost everyone else has brought theirs down.
Mr Nelson Koh of Horizon Books, a company in which my brother is a shareholder, complained that when he received the tenancy renewal notice last month from the HDB, there was a 13-per-cent increase in the rental rates from the current $1,410 a month to $1,590 a month.
When he went to the HDB office to seek clarification and ask for a reduction, he was told to wait for further notice as there were a number of other tenants making similar pleas.
In fact, in November, businesswoman Mdm Tay Boon Yong wrote to the papers to complain about a 20-per-cent hike in the rent for her HDB prototype factory in Defu Industrial Estate, which is slated for redevelopment in a few years’ time.
“What is this talk about keeping business costs down? Does the HDB not align its policies with Government initiatives? We are already bleeding from the slowdown. Increasing rent at this inopportune time is adding salt to the wound,” she asked.
“We are trying hard not only to stay in business, but also retain our workers. Can the Government please knock some sense into the HDB?” she added.
The HDB’s reply to her plight borders on callous.
“Our industrial tenants pay a fixed rent during their tenancy period, which could range from one to three years. Before the tenancy expires, they are offered the option of renewing their tenancies at the prevailing market rent.”
Now who doesn’t pay a fixed rent during their tenancy period?
The HDB then went to point out that “since 2006, the rent of similar industrial premises has increased by about 22.5 per cent. Since September last year, HDB has offered to stagger rent increases to assist industrial tenants like Mdm Tay who face significant rent increases at tenancy renewal, by spreading their rent increases over the renewal term of three years.”
For sure, rents may have risen by the amount that the HDB claims, but aren’t we facing a serious downturn now - perhaps the most serious since the depression of 1929?
Then came a “magnanimous” offer to Mdm Tay from the HDB.
“To help Madam Tay confirm the prevailing market rent of her unit, she can opt for an independent assessment from a private valuer. Alternatively, HDB is prepared to put the unit up for tender so her company can re-bid for it,” it said.
This appears to be a take-it-or-leave it attitude.
Wasn’t the HDB established to provide cheap lodging and premises to not only the population at large but also to Singapore’s small- and medium-sized enterprises (SME), which employ the bulk of our workers?
Or is its main priority now to churn out huge profits? Perhaps the tagline of it new vision and mission statement, “Soaring to Greater Heights”, should read “Soaring to Greater Profits”.
It’s not as if the HDB is losing money on its commercial and industrial properties. For the financial year ended March 2008, the HDB reported a “higher surplus” of $632 million as compared with $381 million in the previous year. It attributed the increase to higher rents, the reversal of impairment losses of commercial and industrial properties and land, as well as higher compensation received for the return of some land parcels to the Government during the year.
While the Government has recently made available$2.3 billion in loan and credit facilities to companies, especially to SMEs, by offering to take80 per cent of the risk of financial institutions in their loan grants, its gesture will come to nought if Government-linked entities like the HDB raise costs to businesses in the current climate.
Prime Minister Lee has said the Government would be introducing “strong measures” to deal with the current recession. One such measure could be to prevent the HDB and like bodies from causing business costs to soar.
Source : Today - 12 Jan 2009