By Matangi Tonga reporters

Tenants at the Small Industries Centre (SIC) who were hit with commercial rent and lease increases before Christmas, sent a petition to the Prime Minister yesterday afternoon, January 7, protesting the massive increases, which they say range from about 70% to over 200%.

“We, as well as other tenants are still under shock,” said one tenant whose rent more than doubled with a 125% increase, for their large premises, at the SIC industrial compound at Ma'ufanga, Tongatapu.

The 22 petitioners yesterday pointed out that TAMA management was well aware that businesses are still struggling from impacts of the ongoing national CoViD-19 restrictions and two major cyclones, TC Harold in 2020 and TC Gita in 2018.

The decision to increase the rents was made by the SIC board and Tonga Asset Managers and Associates Ltd. (TAMA), a public enterprise owned by the Tonga government. All tenants were given one month's notice of the impending increases.

In a letter to all tenants on 23 November 2020, the TAMA CEO, advised that from January 2021 “on average, rates will be revised upwards by around 70%”.

However, some rents were increased by over 200%, say the petitioners, who call the decision to impose such large sudden increases as “unbelievable” and “unfathomable”.

This is because the rent and lease increases follow an economic impact survey [2] of 64 businesses, conducted by TAMA late last year, which found that incomes at SIC had fallen by an average of 67% due to the pandemic.

Rationalizing the rate increase in his letter, TAMA CEO Tevita Hu'akau stated that “Our shareholder's demand for a return on its capital also needs to be taken into consideration.”

He stated that SIC was built with a loan from the Asian Development Bank. “T$1.5 million is the balance outstanding. This has also been factored into the revised rental.”

40-year-old buildings

Yesterday, the 22 petitioners complained to the Prime Minister, Rev. Dr Pohiva Tu‘i‘onetoa, that “members of the board have not set foot in buildings to inspect decays. The SIC buildings are 40 years old, leaking from the roofs, gaps on doors and windows, prone to flooding, and when damaged by Gita, tenants were not informed by security or management, leaving stock open for theft.”

The petition also pointed out that the board and management "should have conducted meetings with all tenants to discuss changes such as this abrupt rent increase".

The 22 tenants who signed the petition have made a number of proposals including postponing the rent increase, reducing the rent increase percentage, and introducing a gradual rent increase plan annually for current tenants.

In addition, tenants proposed that new SIC board members should be considered, “which should include at least two current tenants.”

Negative impacts

Meanwhile, a long term SIC tenant, Aneti Moimoi, Director of PAO Plumbing Services, told Matangi Tonga that after receiving the new rental advice, she wrote to TAMA asking them to reconsider their decision as it would have a negative impact on the business and its employees.

However, earlier this week, she received an invoice with the new increased rental rate for January 2021. She said she would return it to TAMA, as it was unacceptable.

Other tenants are also eagerly awaiting a sympathetic response from the Prime Minister.

It is common knowledge that other public enterprises factor in annual service fees increases of around 5%, generally in line with the published inflation rate in Tonga. This is vastly different from the 70-200% increases demanded by TAMA.

Government property

TAMA was established by the government in 2011 to manage SIC as well as other government properties. SIC was founded by the Tongan government in 1980 to assist business development, establish manufacturing industries and provide opportunities for trained skilled workers, in order to counter the growth of imports.

Currently, the 64 businesses operating at SIC employ 227 workers (170 Tongans and 56 foreigners).

Related article: Small Industries Centre reflects challenges for Tongan economy [2]