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Rental is not the issue woh!
Thu, 26 February 2026 at 4:23 pm SGT
5 min read
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Between 2019 and 2024, rent fell from 26 per cent to 17 per cent for the F&B sector, and from 30 per cent to 26 per cent for the retail sector.
(ST PHOTO: KUA CHEE SIONG)More
SINGAPORE – Rent increases for retail spaces have risen more slowly than overall economic growth and inflation, and rent now makes up a smaller share of total business costs for small and medium-sized enterprises (SMEs) here, said Prime Minister Lawrence Wong on Feb 26.
Between 2019 and 2024, rent fell from 26 per cent to 17 per cent for the food and beverage (F&B) sector, and from 30 per cent to 26 per cent for the retail sector, PM Wong said, as he addressed MPs’ comments on the 2026 Budget statement delivered on Feb 12.
These two SME segments face greater pressure than other sectors due to structural disruptions from e-commerce, changing consumer habits and more Singaporeans travelling overseas, he added.
Advertisement
PM Wong, who is also Finance Minister, noted that the largest components of operating expenditure for businesses in the F&B and retail sectors are the cost of goods and materials, labour, and rent.
He noted that while rentals have broadly tracked economic fundamentals, market rents vary by property type and location, which is why individual tenants may face higher rent increases during renewals.
“We are mindful of these cases where government agencies are landlords like HDB and JTC, and where we have direct oversight, like in hawker centres, we have frameworks to keep rents fair and competitive, and we will continue reviewing and updating these frameworks,” he said.
“We will also continue to monitor the situation closely to ensure that rentals remain sustainable and competitive.”
Advertisement
WP MP Jamus Lim (Sengkang GRC) said business owners have expressed concerns that there is insufficient effort to restrain “unbridled market forces” and are hoping for a cap on the year-to-year increase in rentals.
In response, PM Wong said there will always be a distribution of rental increases, but overall, the situation remains stable, and the Government does not envisage imposing caps.
“We do not think rental caps will work, but, for example, if we understand better a particular situation where there has been very sharp increase in rental for that location... then we will have to study and consider what appropriate interventions might work for such circumstances,” he said.
PM Wong also noted that labour costs for businesses have increased in recent years.
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Part of this reflects structural factors such as an ageing population and tighter labour supply, as well as market forces as companies compete for workers, he said.
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But part of this is also the outcome of policy, he added, noting that the Government is raising the wages of lower-wage workers through the Progressive Wage Model.
“That is the right thing to do, to uplift incomes, strengthen dignity in work and narrow wage gaps,” said PM Wong.
He added that to support businesses through the transition, the Progressive Wage Credit Scheme was introduced and that, “in this Budget, we are enhancing the scheme and extending it for another two years”.
Advertisement
Nominated MP Mark Lee had asked for more leeway for SMEs to hire foreign workers.
PM Wong said that the Dependency Ratio Ceiling (DRC) – or the proportion of foreign workers a company can employ – cannot be relaxed, as doing so will encourage excessive reliance on foreign manpower and weaken the Singaporean core.
But the Government will consider calibrated ways to provide more flexibility, like expanding the sources from which businesses can hire work permit holders for certain occupations where genuine shortages exist.
“We will continue to strike the right balance – sufficient flexibility for businesses without undermining Singaporean workforce development,” he said.
Advertisement
“Ultimately, the sustainable path forward is productivity improvement and business transformation.”
Associate Professor Lim asked if the DRC ratio can be lowered for the F&B sector, citing feedback from businesses that it is hard to attract locals despite the sector paying good wages.
In response, PM Wong said the Government prefers not to carve out something separate for the F&B sector, as it is difficult to distinguish F&B as a service from other service industries.
“Once you make the DRC for F&B lower, you can be sure there will be many F&B workers in Singapore doing non-F&B jobs, and it’s very hard to monitor and enforce, so we rather keep services DRC as a whole where it is,” he said.
Advertisement
Several MPs, including Ms Cassandra Lee (West Coast-Jurong West GRC), Mr Lee Hong Chuang (Jurong East-Bukit Batok GRC) and Mr Henry Kwek (Kebun Baru), offered suggestions on how to better support SMEs.
Others, including Mr Liang Eng Hwa (Bukit Panjang) and Mr Victor Lye (Ang Mo Kio GRC), also spoke about the importance of internationalisation for SMEs.
PM Wong said the Government will “lean forward” to enable Singapore’s SMEs to innovate, upgrade and internationalise.
He also noted that SMEs that redesign jobs and transform their operations can offer higher wages and more meaningful opportunities to attract and retain Singaporeans.
Advertisement
Many SMEs have done so successfully, including those in the retail and F&B sectors, he added.
PM Wong cited the example of heritage jeweller Poh Heng, which was founded in 1948 as a small shop in North Bridge Road.
A few years ago, the company embarked on a “serious transformation”, strengthened its management and embraced e-commerce, said PM Wong.
It is also developing artificial intelligence tools, with support from the Government, to analyse customer data and shopping behaviour to enable more personalised product recommendations. The company currently employs 150 people and is planning to expand into Asean.
Advertisement
“These examples show that even traditional industries can reinvent themselves, and in doing so, create better opportunities for Singaporeans,” said PM Wong.
Rental declined as a share of total business costs from 2019 to 2024: PM Wong
Timothy GohThu, 26 February 2026 at 4:23 pm SGT
5 min read
Add Yahoo as a preferred source to see more of our stories on Google.
Between 2019 and 2024, rent fell from 26 per cent to 17 per cent for the F&B sector, and from 30 per cent to 26 per cent for the retail sector.
(ST PHOTO: KUA CHEE SIONG)More
SINGAPORE – Rent increases for retail spaces have risen more slowly than overall economic growth and inflation, and rent now makes up a smaller share of total business costs for small and medium-sized enterprises (SMEs) here, said Prime Minister Lawrence Wong on Feb 26.
Between 2019 and 2024, rent fell from 26 per cent to 17 per cent for the food and beverage (F&B) sector, and from 30 per cent to 26 per cent for the retail sector, PM Wong said, as he addressed MPs’ comments on the 2026 Budget statement delivered on Feb 12.
These two SME segments face greater pressure than other sectors due to structural disruptions from e-commerce, changing consumer habits and more Singaporeans travelling overseas, he added.
Advertisement
PM Wong, who is also Finance Minister, noted that the largest components of operating expenditure for businesses in the F&B and retail sectors are the cost of goods and materials, labour, and rent.
He noted that while rentals have broadly tracked economic fundamentals, market rents vary by property type and location, which is why individual tenants may face higher rent increases during renewals.
“We are mindful of these cases where government agencies are landlords like HDB and JTC, and where we have direct oversight, like in hawker centres, we have frameworks to keep rents fair and competitive, and we will continue reviewing and updating these frameworks,” he said.
“We will also continue to monitor the situation closely to ensure that rentals remain sustainable and competitive.”
Advertisement
WP MP Jamus Lim (Sengkang GRC) said business owners have expressed concerns that there is insufficient effort to restrain “unbridled market forces” and are hoping for a cap on the year-to-year increase in rentals.
In response, PM Wong said there will always be a distribution of rental increases, but overall, the situation remains stable, and the Government does not envisage imposing caps.
“We do not think rental caps will work, but, for example, if we understand better a particular situation where there has been very sharp increase in rental for that location... then we will have to study and consider what appropriate interventions might work for such circumstances,” he said.
PM Wong also noted that labour costs for businesses have increased in recent years.
Advertisement
Part of this reflects structural factors such as an ageing population and tighter labour supply, as well as market forces as companies compete for workers, he said.
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But part of this is also the outcome of policy, he added, noting that the Government is raising the wages of lower-wage workers through the Progressive Wage Model.
“That is the right thing to do, to uplift incomes, strengthen dignity in work and narrow wage gaps,” said PM Wong.
He added that to support businesses through the transition, the Progressive Wage Credit Scheme was introduced and that, “in this Budget, we are enhancing the scheme and extending it for another two years”.
Advertisement
Nominated MP Mark Lee had asked for more leeway for SMEs to hire foreign workers.
PM Wong said that the Dependency Ratio Ceiling (DRC) – or the proportion of foreign workers a company can employ – cannot be relaxed, as doing so will encourage excessive reliance on foreign manpower and weaken the Singaporean core.
But the Government will consider calibrated ways to provide more flexibility, like expanding the sources from which businesses can hire work permit holders for certain occupations where genuine shortages exist.
“We will continue to strike the right balance – sufficient flexibility for businesses without undermining Singaporean workforce development,” he said.
Advertisement
“Ultimately, the sustainable path forward is productivity improvement and business transformation.”
Associate Professor Lim asked if the DRC ratio can be lowered for the F&B sector, citing feedback from businesses that it is hard to attract locals despite the sector paying good wages.
In response, PM Wong said the Government prefers not to carve out something separate for the F&B sector, as it is difficult to distinguish F&B as a service from other service industries.
“Once you make the DRC for F&B lower, you can be sure there will be many F&B workers in Singapore doing non-F&B jobs, and it’s very hard to monitor and enforce, so we rather keep services DRC as a whole where it is,” he said.
Advertisement
Several MPs, including Ms Cassandra Lee (West Coast-Jurong West GRC), Mr Lee Hong Chuang (Jurong East-Bukit Batok GRC) and Mr Henry Kwek (Kebun Baru), offered suggestions on how to better support SMEs.
Others, including Mr Liang Eng Hwa (Bukit Panjang) and Mr Victor Lye (Ang Mo Kio GRC), also spoke about the importance of internationalisation for SMEs.
PM Wong said the Government will “lean forward” to enable Singapore’s SMEs to innovate, upgrade and internationalise.
He also noted that SMEs that redesign jobs and transform their operations can offer higher wages and more meaningful opportunities to attract and retain Singaporeans.
Advertisement
Many SMEs have done so successfully, including those in the retail and F&B sectors, he added.
PM Wong cited the example of heritage jeweller Poh Heng, which was founded in 1948 as a small shop in North Bridge Road.
A few years ago, the company embarked on a “serious transformation”, strengthened its management and embraced e-commerce, said PM Wong.
It is also developing artificial intelligence tools, with support from the Government, to analyse customer data and shopping behaviour to enable more personalised product recommendations. The company currently employs 150 people and is planning to expand into Asean.
Advertisement
“These examples show that even traditional industries can reinvent themselves, and in doing so, create better opportunities for Singaporeans,” said PM Wong.
