Small businesses hit with skyrocketing rent hike plead for help

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Small Industries’ business owners petition Prime Minister against skyrocketing rent increases

PAO Plumbing, one of the small businesses
at SIC who are affected by the rent hike.

By Ana Tausinga

 

Nuku’alofa, Tonga – In a letter to Prime Minister Tu’ionetoa on 5 January 2021, tenants of the Small Industries Centre (SIC), located in Ma’ufanga, signed a petition against skyrocketing rent hike imposed by government owned public enterprise.

The group of small business owners stated in their letter of petition to the PM the shocking and “unfathomable decision made by the Board of Directors responsible for the Property Sector; to Increase Rent for Businesses by over 200%!”

The 22 tenants of the SIC are mostly Tongans who employ anywhere from 2 to 20 employees. In addressing the hardship faced with such a huge spike in rent increase, they pointed out, “Considering the difficulty the Tongan Economy is facing at this current time along with Countries around the world, it is unbelievable that while other Governments are scrambling to support local businesses in their respective countries, in contrast to the Board Members responsible for the SIC Ma’ufanga, who find it fitting to increase the Rent within the Small Industries Center; the very location established with an aim to support local business and economic development.”

“As the Board Members ought to be well aware, businesses are struggling from the impacts of the events of 2020. TAMA has identified a 67% average drop in sales by the 64 businesses under their care, and YET they choose to implement an unbelievable Rent increase,” reads the petition letter by the tenants.

Tenants also raised the issue that board members of Tonga Asset Managers & Associates (TAMA) have not set foot in the aging SIC buildings, to see first-hand the issues of leaking roofs, gaps on doors and windows, etc.

According to the tenants, there has not been any major renovation done to the buildings since it was built 40 years ago. Tenants claim they have paid for most of the maintenance expenses.

Pacific Paints, one of the businesses that has been at SIC for the longest time – 30 years, pays $1800 rent monthly. According to one of the officials of Pacific Paints, the raise to their rent would put them over $3000 a month.

“This is an outrageous raise at a time like this. Over the years, the Board has neglected any maintenance work on the building, and we had to do most of it,” the official said.

“Drainage has not been fixed, so that when there is heavy rain, the water flows right into the building. We, ourselves had to build this embankment to stop flooding when it rains.”

Tenants were not consulted by the board before making the dramatic rent increases that appear to be out of touch with today’s current economic climate. They asked the following in their letter of petition to the Prime Minister.

• Postpone the Implementation of any Rent Increase
• Decrease the Percentage by which Rent is increased
• Introduce a Gradual Rent increase plan annually for current tenants.
• Reconsider selecting Board Members who have successful experience in private sector development and a reputable track-record in business, who can better work along with Businesses in the SIC to identify growth opportunities that can benefit all
• Select at least two current Tenants to be Members of the Board

Chairman of the Board, Sione Havea Taione

Board of Directors for Tonga Asset Managers & Associates Ltd. include Sione Havea Taione (Chair), Salesi Fotu (Deputy Chair), Katalina Tohi, ‘Uhila mo e Langi Fasi, Maika Haupeakui, Manuopangai Hingano.

Small businesses are the engine of the local economy, they provide much needed employment and services to the country, and for a small economy like Tonga, their existence is a necessity. For the Government to demand rent increase that could mean a 200% increase to some businesses during a global pandemic is irresponsible and unfathomable.

Many of the businesses in Tonga are just trying to survive. And the chief reason for setting up of the SIC in the first place is to provide the most reasonable rent for businesses.

The Prime Minister as Minister of Public Enterprises is ultimately responsible for the public enterprise portfolio, and the Board of Directors for TAMA are under his watch. Was he not involved in the decision making to increase the tenant’s rent? Will he listen to the voice of the people and work out a reasonable solution to create a win-win situation?

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