By Andrew Loh & Biddy Low
Mrs Lai has been operating her small sewing business at Chinatown Complex for 9 years now. The last one year, however, has seen her rent raised by some 85 per cent. This came about after her last lease period ended and the National Environment Agency (NEA) renewed her lease for another 3 years.
With utilities and town council charges, Mrs Lai would have to fork out some S$850 a month as fixed costs for her business. This is a substantial increase from the S$340 she used to pay as rent.
Her shop, a small unit, is located at Block 335 Smith Street in Chinatown Complex..
The complex had earlier undergone an upgrading exercise and was re-opened in 2008. It boasts of 700 stalls housed on 3 levels - the wet market at the basement, sundries and retail on the ground level and cooked food on the second level.
Mrs Lai’s shop is on the ground level.
She is not the only one affected by the rental hike. Several weeks ago, we reported how Mrs Rosemary Chng was also forced to give up her business for the same reason. She too had her rent raised from S$345 to S$600 and decided that it was not viable to carry on. (Read her story here: Rental hike broke them at the knee.)
We paid a visit to the complex two weeks ago on a weekday afternoon and noticed that out of the 36 shops in that cluster where Mrs Lai’s shop was located, only 10 or so were opened for business. The rest had their shutters down. Most did not have signboards, perhaps an indication that the shops have been given up by their tenants.
In the one hour which we spent speaking to Mrs Lai, there was only one customer who approached her. She told us that she would need at least 9 customers a day to earn enough to service the costs of running her business. At times she would have more customers, but it is a struggle most of the time to break even. Her average monthly collection this past one year, since the rental hike, has been about S$800, she says. This hardly covers the costs, let alone afford her any earnings to care for her family, which includes 3 school-going teenagers.
Her predicament is compounded by the competition from the other sewing business just a few shops down from where hers is. It is difficult to maintain competitive prices, she said. She cannot raise the price for her service, otherwise no one would patronise her shop. The area also has poor human traffic and Mrs Lai relies mostly on her regulars who know where her shop is. “The place is a dead town,” She said. “How would people even know my shop is here?”
Last year, when the rental hike was announced, tenants there approached their Member of Parliament, Mrs Lily Neo, for help. Mrs Lai said Mrs Neo had paid a visit to the complex and they handed over a letter, signed by many of the tenants, to Mrs Neo. However, they have not heard from the MP since, Mrs Lai said.
In 2011, when the other shops were put up for tender by the NEA, Mrs Lai made a bid for two of them, after she learned that the minimum bid required by the NEA - S$480 – had been removed.
She submitted a S$100 bid for each of two shops which were directly opposite hers. If she succeeded in her bid, she would not only have a bigger, more prominent façade for her business (the two shops were next to each other), it would actually be cheaper as well.
Unfortunately, the NEA eventually informed her that since hers was the only bid for the shops, it was not a “competitive” tender, and thus her bid was invalid. NEA could not allow her to have the two shops.
Earlier this year, the shops were again put up for tender and a bid of S$168 was submitted by another prospective tenant. The tender closed on 6 June 2012 and the NEA released the results of the successful bids on its website:
In May, the authorities formally announced a change in policy on the minimum or reserve price set by the NEA. New hawkers wanting to set up shop no longer had to contend with this minimum price. The move, the authorities say, is “an effort to lower costs for those wanting to set up shop.”
“The lower prices are possible following the removal of the reserve rent, or the minimum rent the Government imposes when it rents out stalls through its tender scheme,” the Straits Times reported Senior Minister of State, Ministry of the Environment and Water Resources, Grace Fu as having said.
Since the change, “more than one-third of the bids for 50 hawker stalls were below their previous reserve prices,” the NEA said.
The policy change by the NEA is, however, little comfort to existing tenants who face an increase in rental when they renew their leases, as Mrs Lai and Mrs Chng have found out.
So, while new tenants enjoy lower rent, existing ones are being put out of business by the NEA raising rent after the initial lease period, and this is based on the valuation of a “private valuer” which the agency engages. As Mrs Chng told publichouse.sg previously, the method of evaluation of this “private valuer” is not transparent.
This and the policy change have resulted in substantially different rental rates between the different stalls, although they are all mostly of the same size or space area. For example, the rent for the stall opposite Mrs Lai’s is S$168, while that of Mrs Lai’s is S$645.
The New Paper reported in June that 100 shop owners at the complex had petitioned the NEA to lower the rent.
While the Ministry for Environment and Water Resources, under which the NEA operates, may want to make it cheaper for new prospective shop owners to set up their businesses with cheaper rent, it should also explain the rationale behind hiking rental fees for existing owners so substantially that these owners are having to shut down their businesses.
As for those like Mrs Lai and Mrs Chng, they either have to close down their operations – as Mrs Chng did – or struggle through the next 3 years of their new lease – which Mrs Lai will now have to do.
In the meantime, Mrs Lai is upset that her two bids, made after the NEA had removed the minimum bid requirement, were rejected last year – only to learn now that the shop has been tendered out to another tenant whose tender bid was a mere S$68 more than hers.
Read also: Rental hike broke them at the knee.
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