The transfer of industrial land and properties under the Housing Board (HDB) to JTC Corporation will not translate into higher rents for most tenants and lessees, said Minister for Trade and Industry (Trade) Lim Hng Kiang.
HDB and JTC rents are set based on similar principles and are in line with market rates, he told Parliament during yesterday's debate on the Jurong Town Corporation (Amendment) Bill.
About 10,700 industrial units and 540 industrial land leases will be consolidated under JTC in the first quarter of 2018, to better support the growth of small and medium-sized enterprises (SMEs).
The move aims to make life easier for tenants and lessees, who will have to deal with only one agency.
HDB industrial sites include shops, standard factories and terrace workshops. Most of its industrial tenants and lessees are micro-SMEs, with average annual sales of less than $1 million.
MPs, including Mr Louis Ng (Nee Soon GRC) and Non-Constituency MP Leon Perera, said firms are concerned about the effect on rents and tenancy renewal terms.
Industrial rents with HDB will continue for their current tenancies, Mr Lim reiterated yesterday.
In addition, market rents have moderated in recent years and are likely to fall further. This means most existing HDB customers are unlikely to see rents rise when they renew tenancies in 2018, he added.
However, some companies could face higher rents when they renew in 2018 because of the low contracted rents in their current term.
For example, some HDB clients who moved from their existing HDB premises to HDB's Kaki Bukit Autohub were allowed to pay lower rents to help with the transition.
When they renew tenancies in 2018, they will pay market rents for the Autohub, which are higher.
To cushion the impact of rent increases, JTC offers tenants a staggered rent scheme, which will continue after the consolidation.
Besides rents, the other tenancy policies of HDB and JTC are also generally aligned, Mr Lim added.
In responding to Mr Ng - who asked if JTC plans to divest more industrial property to the private sector - Mr Lim noted: "We have no such plans. If we had, we would not be taking over HDB's industrial properties."
Responding to Mr Perera, who noted that JTC holds a smaller share of industrial space than it did in the past with a larger share now held by the private sector, the minister said: "We now leave the provision of standard, common-user industrial space to the market, because JTC cannot add additional value for such properties.
"Instead, JTC's involvement is through the land sales programme. We release sufficient land to keep rents and prices affordable."