Monitoring Rents and Profitability to Ensure Sustainability of Small Businesses, Including Heritage and City Centre Retail Shops
Ministry of Trade and IndustrySpeakers
Summary
This question concerns the profitability, rental trends, and sustainability of F&B and retail businesses, including the preservation of heritage and city-centre retail ecosystems. Mr Saktiandi Supaat asked for observations on business closures and rents, as well as additional regulatory adjustments to foster sustainable small business growth. Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong replied that while business entities grew significantly between 2019 and 2025, profitability slightly declined as rental cost shares dropped. He highlighted Enterprise Singapore’s support for innovation through the FoodX programme and productivity-enhancing retail formats, alongside the 50% Corporate Income Tax Rebate for Years of Assessment 2024 and 2025. Eligible heartland businesses also benefit from increased patronage via Community Development Council and SG60 vouchers to help manage costs and ensure long-term viability.
Transcript
29 Mr Saktiandi Supaat asked 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.
Mr Gan Kim Yong: The formation of food and beverage (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.
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.
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.
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.
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 Community Development Council (CDC) Vouchers scheme can also benefit from increased patronage from residents using their CDC vouchers and the one-off commemorative SG60 vouchers.