Written reply to PQ on monitoring rents and profitability to ensure sustainability of small businesses, including heritage and city centre retail shops

Question:

Mr Saktiandi Supaat: To ask the Deputy Prime Minister and Minister for Trade and Industry (a) what are the Government’s latest observations on (i) profitability and rents in the F&B industry and (ii) business closures, profitability and rents in the retail industry; and (b) whether the Government is considering any additional support or regulatory adjustments to foster sustainable small business growth and preserve vibrancy and heritage in neighbourhood and city-centre retail ecosystems.

Written Answer by Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong 

1.           The formation of F&B and retail entities have outpaced cessations in most years between 2019 and 2025. This resulted in a net increase of 24% and 18% in the number of F&B and retail entities respectively over this period.

2.           The growth in the number of these entities have exceeded Singapore’s population growth, leading to a higher density of F&B and retail entities per capita. This may have contributed to increased competition, which partially explains the declines in the sectors’ profitability – measured as total profits divided by total revenue – from 1.3% in 2019 to 1.1% in 2023. Similarly, profitability for the retail sector edged down from 4.7% to 4.5% over the same period.

3.           Rental costs declined as a share of total business costs between 2019 and 2023 to approximately 20% and 26% for firms in the F&B and retail sectors respectively, from around 25% and 31% in 2019. This suggests that rising cost pressures in recent years were driven more by non-rental components such as labour and inputs.

4.           To remain viable, F&B and retail businesses must continually innovate their offerings and improve productivity. Enterprise Singapore has targeted schemes to support these businesses. For example, the FoodX programme enables F&B businesses to outsource food preparation to central kitchens, allowing them to streamline operations and reduce manpower-intensive processes. Enterprise Singapore also supports retailers to offer unique experiential concepts to strengthen value propositions, and to adopt productivity-enhancing formats such as self-checkout systems and unmanned stores.

5.           To help our businesses manage costs, the Government introduced the 50% Corporate Income Tax Rebate for Years of Assessment 2024 and 2025, capped at $40,000, with a minimum benefit of $2,000 for companies with at least one local employee. Eligible hawkers and heartland F&B and retail businesses that participate in the CDC Vouchers Scheme can also benefit from increased patronage from residents using their CDC vouchers and the one-off commemorative SG60 voucher.