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Govt to step in if unfair Reit practices arise: Ser Luck
[SINGAPORE] The government will intervene if it sees evidence of collusion or the abuse of market dominance by any landlord - including real estate investment trusts (Reits), said Minister of State for Trade and Industry Teo Ser Luck yesterday in Parliament.
Speaking during the Committee of Supply debate on the Ministry of Trade and Industry (MTI), Mr Teo also revealed that the government is looking into publishing more comprehensive shop rental data later this year, in a bid to make rental pricing more transparent.
This, he said, would help businesses make more informed decisions about the rental market.
MTI's statements yesterday came as calls for help with climbing business costs (and in particular, the affordability of business space) have grown louder both in and outside of Parliament in recent months.
Reits - some of which were formed after JTC and HDB divested space to private owners - have been blamed for shorter lease renewals and sharper spikes in rentals.
"We know that it has come up as an issue, many of you have raised it. We will monitor it," said Mr Teo.
At the same time, he noted that "Reits are not necessarily the leading players in the rental space market, because they currently only own about 13 per cent and 16 per cent of retail and industrial rental spaces respectively. Like any other landlord, they have to compete in the rental market to attract tenants and cannot charge excessive rents".
Mr Teo also said that rents for space are likely to moderate in the medium term, as the government has released a "significant amount of land".
Over the next three years, about 145,000 square metres of new shop space will be completed each year. Over the same period, an average of 500,000 square metres of multiple-user factory space will come on-stream each year.
For the former, that represents more than double the average annual demand for such space in the last three years; for the latter, it is just under double.
Entrepreneurship will also receive a boost, since by the end of this year, JTC will open two more blocks to incubate start-ups, as part of a cluster called JTC LaunchPad@one-north.
"It's our answer to Silicon Valley," said Mr Teo.
In response to Inderjit Singh's (Ang Mo Kio) concern that the government's restructuring efforts are taking place too quickly, Trade and Industry Minister Lim Hng Kiang said that the appropriate pace may differ at the macro, sectoral, and firm levels.
"I would argue that if you look at it at the macro level, we're not doing it as fast as we should ... If you look at the way the economy is still growing, and the jobs that are still generating, and the labour force (that is) still growing, one could argue that we're slightly behind the curve," said Mr Lim. He added that on the sectoral and firm levels, the ideal pace would vary among sectors and companies.
"So we prefer the middle path - consistent, steady restructuring," said Mr Lim, who said "we feel that this is the right pace".
Meanwhile, Senior Minister of State for Trade and Industry Lee Yi Shyan provided more details on the government's plans to assist companies in their internationalisation efforts.
For instance, $25 million has been set aside to enhance International Enterprise (IE) Singapore's programmes to better cater to companies at different stages of growth. This is expected to benefit 200 companies over the next two years.
To help rapidly expanding companies which tend to find securing financing challenging, the government will double the maximum loan quantum under the Internationalisation Finance Scheme from $15 million to $30 million.
In addition to an enhancement in the existing Global Company Partnership initiative, the government will also increase its support for pilot and test-bedding projects - which help companies test out the viability of their products and solutions in new markets - from 50 per cent to up to 70 per cent.