Reduce the occupancy cost

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