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Following is a question by the Dr Hon Kwok Ka-ki and a written reply by the Secretary for Food and Health, Dr Ko Wing-man, in the Legislative Council today (December 19):
Question:
In October 2010, the Food and Environmental Hygiene Department (FEHD) launched a pilot scheme to let market stalls on short-term tenancies (STTs) for its public markets (the pilot scheme). Under the pilot scheme, market stalls which had been vacant for more than eight months were let through open auctions and their upset prices were fixed at 60% of the open market rents. The tenancies of the stalls leased out during the first round of open auctions covered three years, and stalls which had not been leased out were leased out in the form of STTs during the second round of open auctions. The STTs, which covered three months commencing on November 1, 2010, were renewable for another three months. The tenants might extend the tenancies later by paying the open market rents of the stalls as assessed by the Rating and Valuation Department or the STT rents, whichever were higher. The tenancy agreements for the third term covered 30 months. However, FEHD has not offered rent concessions to long-term market stall tenants who are required to pay rents higher than those payable by short-term tenants, resulting in two sets of rental standards applicable to the same market. In this connection, will the Government inform this Council:
(a) of the vacancy rates of various FEHD markets in Tsuen Wan, Tuen Mun, Yuen Long and Kwai Tsing districts from 2008 to the first half of this year set out in Annex;
(b) of the respective numbers of stalls leased out by three-year tenancies, STTs and tenancy extension through the pilot scheme in the past two years; and
(c) of the existing number of tenants who have rented stalls for more than three years but not through the pilot scheme; whether the authorities will implement any concessionary measures for such tenants; if they will, of the details; if not, the reasons for that?
Reply:
President,
At present, the Food and Environmental Hygiene Department (FEHD) is responsible for managing 77 public markets which mainly provide fresh food and other dry and wet goods, as well as 25 free-standing cooked food markets (CFMs), providing a total of some 14 450 stalls. FEHD is committed to enhancing the operating environment and competitiveness of its markets and CFMs through the implementation of various measures. These measures include carrying out enhancement projects to upgrade their facilities, keeping the markets clean to provide customers with a pleasant environment, and holding promotional activities from time to time to attract patronage. Currently, the overall occupancy rate of public markets and CFMs managed by FEHD is approximately 89.1%, representing an increase of 12.2 percentage points from 76.9% in 2008. Excluding the number of vacant stalls that have been withheld from letting out due to impending consolidation or improvement works in certain markets and CFMs, the actual occupancy rate is 96%.
My reply to the various parts of the question is as follows:
(a) The vacancy rates of various FEHD markets and CFMs in Tsuen Wan, Tuen Mun, Yuen Long and Kwai Tsing districts from 2008 to the first half of this year are set out in Annex.
(b) In February 2009, FEHD introduced the arrangement whereby long-standing vacant stalls were put up for auction at concessionary upset prices (the "concessionary upset prices" arrangement) in the interest of achieving better utilisation of these vacant stalls. Under the arrangement, FEHD reduced the upset auction prices for stalls vacant for more than six months and eight months to 80% and 60% of the Open Market Rental (OMR) respectively and let out the stalls through a three-year tenancy, with a view to enhancing their attractiveness. Since the implementation of the arrangement, a total of about 2 220 stalls have been let out at concessionary rent.
For stalls that could not be successfully let out despite the "concessionary upset prices" arrangement, most of them were situated at locations with relatively poor patronage which render them less attractive to prospective bidders. In view of this, FEHD had since October 2010 launched a pilot scheme to let out public market stalls through short term tenancy (the "STT pilot scheme") thus giving persons interested in starting up their business ventures in public markets the choice of trying out their business for three months without being bound by a three-year tenancy. Under the scheme, for stalls which had been left vacant for more than eight months and were not leased out in the first round of auctions at 60% of the OMR through a three-year tenancy, they would be auctioned in the second round through a STT for three months. The STT, upon expiry of the three-month period, is renewable for another three months. The tenant may then choose to extend the tenancy for another 30 months by paying the updated OMR as assessed by the Rating and Valuation Department or the STT rent, whichever is the higher. In the past two years, a total of 30 stalls have been let out under the "STT pilot scheme", with 15 tenancies being renewed for three months and nine subsequently renewed for further 30 months.
(c) Currently, a total of about 12 870 stalls in FEHD markets and CFMs have been let out. Among them, about 1 320 are let out under the "concessionary upset prices" arrangement and 12 under the "STT pilot scheme".
As mentioned above, the "concessionary upset prices" arrangement and the "STT pilot scheme" are applicable only in the case of long-standing vacant stalls. Hence, the concessionary rental rates are applicable to the tenants of these stalls only. In fact, the rentals of public market stalls were reduced across-the-board by 30% in 1998 and had been frozen at that reduced level since then. The tenants of many stalls are paying rents below the OMR. The Government has earlier announced its decision to further extend the rental freeze period for public market stalls under the management of FEHD up to December 31, 2013. There is currently no plan to introduce other rental concessions for market stalls.
Ends/Wednesday, December 19, 2012
Issued at HKT 16:20
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