Investigation into Possible Subletting of JTC Premises to 26,000 Business Entities Without JTC's Approval

Mr Speaker, Sir, I thank the hon Member of Parliament Mr Louis Chua for his question. The Auditor-General’s Office (AGO) had, in its 2020 Report, identified 26,000 instances of potential unauthorised subletting because 26,000 business entities had indicated JTC premises as their registered addresses even though they were not JTC’s lessees, tenants or authorised sublessees.

JTC is investigating the entities highlighted by AGO. So far, JTC has found that 1,900 of them are deregistered entities and 700 of them are on divested properties where JTC’s subletting policies do not apply. There are another 12,400 related entities of JTC lessees and tenants. For these 12,400 related entities, even if there was subletting of space, there would not have been any potential loss of revenue as the subletting fees would not have applied. Together, if we add them all up, these 15,000 entities account for around 60% of all the entities that AGO has highlighted.

For the remaining 40% of the entities – there are about 11,000 of them – JTC has now prioritised investigations for them. Based on preliminary investigations, JTC has found that a significant number of them are using JTC premises as their registered address even though they are not physically operating out of the premises. Again, since they are not operating out of these premises, these cases do not involve any unauthorised subletting of space.

To date, JTC has confirmed around 400 cases of unauthorised subletting. JTC will continue and will complete its investigations by the first half of 2021.

JTC is strengthening its processes as well as its inspection regime and it will make use of data analytics to better detect and reduce future incidences of unauthorised subletting. It will take enforcement action against lessees or tenants for confirmed cases of unauthorised subletting. Depending on the severity and circumstances of the breach, enforcement actions will range from financial measures to recover the sublet fees owing to JTC, to legal action to repossess the site from recalcitrant occupants.

I thank the Second Minister for his response. I have two follow-up questions, the first of which is in relation to the 400 cases thus far identified. In terms of these cases, what would the penalties be and what would have been the loss in the sublet fees that JTC would have collected. The second supplementary question is in terms of the sharpening of the analysis to improve the inspection regime, specifically with the use of data analytics which the Second Minister has affirmed. What has really changed between now and then? Since the implementation of this change, has there been more cases of unauthorised subletting that have been discovered and how would the Ministry assure the efficacy and efficiency of such a new regime?

Mr Speaker, Sir, as I have alluded to earlier, the 400 cases were detected as a result of fairly stringent actions undertaken by JTC. As to the extent of the sublet fees and the unauthorised part, it is still a subject of further investigations. We will take all active steps and measures to recover these fees that are owing and, in cases where clear-cut illicit subletting has been proven, we will not hesitate to take legal action to enforce it.

On the part about using data analytics, indeed, in terms of the understanding of the ability to register a business address using a premise, this is one of the policies which we need to tighten and realign. Having said that, in terms of the 11,000 that we are now actively looking into, many of the measures that we are taking actually draw a fine balance between taking a proactive step towards encouraging new businesses to start up and to set up and, of course, we need to draw a fine balance between enforcing to make sure that these businesses do not think that every single one that is setting up we treat them as if they are out to game the system itself.

So, to that end, the measures that we have taken are in terms of looking through the register of addresses, going into frequent and more intense inspection; in 2019, we had conducted about 1,900 inspections. But, of course, these are on a regular time basis to inspect the premises whether there is illegal subletting. Now, over and above what we had done in 2019, on top of the regular inspections, we are also going into random spot checks as well. So, the intensity of the checks, audits and inspections has also increased significantly.

At this particular point in time, I am not at liberty to share what is the frequency of these checks and inspections. But suffice to say that this is at a much more focused pace and, obviously, we are going to put a lot more effort and work into tightening it.