12 June 2012
Editor
Forum Page
Straits Times
The Government has announced that the tenure on industrial sites will be reduced from 60 years
to 30 years to make them more "affordable" to industrial users.
I urge our Government leaders to get away from the "asset values" mindset and to think about
operating cost. The cost of doing business is determined by the occupancy or rental cost
of the premises and not the cost of owning the property.
The proper way to reduce the occupancy cost is to increase the supply of industrial property
or reduce property tax, development charge and other levies. Changing the tenure of the lease does
not, by itself, impact the occupancy cost.
As the largest landowner in Singapore, the Government can reduce the occupancy
cost more effectively by releasing more land. This has to be done through a deliberate policy of the
Government, as the officials responsible for the use of state land have to operate under the target
of achieving the highest possible return on their assets.
Tan Kin Lian
3 comments:
Well said Mr Tan. Our govt, despite their million dollar salaries, has absolutely no clue, and cannot distinguish between operating costs and capital costs ! They need ordinary people like us to teach them how to bring down business costs so they do not have to close down ! Pathetic !
reducing tenant duration only lowers the number that denotes rental cost in the short run.
it WILL HOWEVER provoke more bidding which will drive up that number in the long run.
It is just a trick.
Killer rent is making businesses hard since it is a fixed cost. Now they desperate to mitigate it by halving the tenure. Soon it might spread to commercial sites as well.
I read that a Brompton foldable bike is cheaper in HK even after flying over to buy + low cost accomodation + low cost eating. With such a deal might as well go over for short holiday. Why bother pay the killer rent component of the bicycle in S'pore?
With businesses paying killer rent, not much is left for R&D & other upgrades needed to gain long-term advantage against foreign companies.
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