Source : Straits Times - 5 Mar 200
THE unenviable predicament of tenants of factories sold by JTC Corporation to Mapletree Investments, which was reported on Monday (’Mapletree rejects appeal for rent cuts’), is a reminder to the Government to rethink its plan to hive off JTC factories to the private sector.
Once such factories are taken over by the private sector, full market forces must come to bear. As it is a listed real estate investment trust that survives or perishes by rental yield, Mapletree’s sole concern is yield maximisation.
Even if the factories were sold to an unlisted private entity, rent maximisation will still be the ultimate objective, although it may not need to be as high-handed in the absence of stock market pressure. Private-sector landlords are just doing what they are supposed to do.
But if factories, as productive entities, have wider added values in the economy (what economists call ‘externalities’), then the Government must rethink its plan to leave them at the mercy of yield-maximising private landlords. It is not without economic basis that even in the supposedly ruthless United States free market, state governments regularly offer free industrial land in exchange for agreed investment commitments.
Cheng Shoong Tat
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