There Has Been 60% in Rental Default for Dormitory Operators

Local dormitories that house foreign workers have always been under scrutiny, whether it’s due to the cramped living environment or lackluster quality of meals.

But it wasn’t until the COVID-19 pandemic that the matter, for lack of a better phrase…

Got blown out of proportions.

To take a leaf out of a primary school student’s book, it was like a bolt out of the blue.

People living in dormitories left, right, up and centre were contracting the virus, and Singapore’s proud record of minimal active cases was soon thrown out of the window and left for the birds to feed on.

Everything was in chaos, and the local dormitories that house these foreign workers were at the centre of it.

And so it’s little wonder that there would be concerns, when it was announced that the government will be covering increased operating costs incurred by dormitories in light of current circumstances.

Additionally, there was also the speculation that dormitories were raking in the dough prior to the pandemic.

Is it really plausible, they argue, for the dormitories to receive financial support right now, when there are so many other sectors in dire need of attention?

Well, the issue’s dissected and presented in the following segment. Though take note; it might not be as straightforward as one would perceive.

Concerns Pertaining To The Government’s Decision

Recently, Netizens have been addressing their concerns to local news publication The Straits Times, in regards to the Government’s decision to foot the increased operating costs incurred by dormitory operators with taxpayers’ money.

One, in particular, implored for the dormitory operators’ profit and loss accounts to be audited first before any further action is taken.

His primary concern revolves around the concept of value: do the living conditions and meal qualities of local dormitories warrant the rates foreign workers were paying, and is the government truly justified in subsiding those costs, albeit increased rates?

“Charging $300 to $400 monthly to house each foreign worker in these dorms plus another $120 a month for three meals a day does not sound excessive,” wrote Dr Yik Keng Yeong. “But only an impartial investigation into how cramped or squalid the living conditions are, as well as into the quality and quantity of the meals, can tell how much value there is in those payments.”

Also, another provided the net profits of three companies affiliated with dormitories and other businesses during the 2019 financial year: Singapore Exchange-listed companies Centurion Corp, Wee Hur Holdings and Lian Beng Group.

According to the Netizen, the three companies earned net profits of $103.8 million, $34.9 million and $32.9 million from their dormitory and other businesses, respectively.

“At a time when many deserving demands are competing for tight public finances, those who have profited for years from business models that have now come home to roost must not expect taxpayers to clean up after them,” said Mr Cheng Shoong Tat.

There Has Been 60% in Rental Default for Dormitory Operators

While the Netizens’ concerns were definitively plausible, it seems that, for lack of a more appropriate phrase, there might be more than meets the eye.

And in this particular instance, the more is addressed by Johnathan Cheah Chi Kong, the President of the Dormitory Association of Singapore.

In a forum segment with The Straits Times, Mr Cheah addresses the Netizens’ concerns, and explained that the situation’s considerably worse than the naked eye could perceive.

According to him, the transition from the routine operations of foreign worker dormitories into isolation areas overnight has taken a heavy toll on “every infrastructure, resource and system the dormitories have in place.”

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Dormitory operation teams have allegedly been working long hours to incorporate the necessary requirements on-site, and it’s a tiring situation compounded by the fact that few people are willing to work at dormitories.

Staff members who are over 60 years old are also recruited sparingly, with concerns pertaining to their health.

This has led to dormitory operators having to hire a “large pool of additional manpower” just to keep operations going 24/7.

The pool includes security guards and personnel, who are responsible for the distribution of government-catered meals, toiletries and sundries, and cleaners who clear the large volume of waste from meal boxes frequently.

Overtime payments to existing staff have also proved “staggering”. Operating expenses have gone up by 30% since virus-containing efforts commenced.

But where expenses have gone up, revenue has not.

Mr Cheah states that there’s a current rental default rate of more than 60%, which renders average dormitories incapable of sustaining the aforementioned expenditure. And though some dormitory operators have indeed performed well in the past few years, he points out that the industry, in general, has actually been facing both “sluggish occupancy and rates” for the past four years.

To end off, Mr Cheah expresses the dormitory operators’ collective gratitude towards the government for the assistance provided, and recognises the condition in turn, that they do not raise rent during this time.

He then leaves a few parting words, presumably to concerned netizens who might still be skeptical of the situation.

“But some added requirements brought on by the pandemic are here to stay, and the increased costs of operations will remain long after the circuit breaker is lifted,” he wrote.

Which would mean that even after the pandemic is over, some additional measures will still be in place. These would mean additional financial burden on the dormitories’ part in the long run.

All of a sudden, the Government’s support does not sound so ludicrous anymore. Despite certain dormitories’ success in recent years, one can only wonder how long the pandemic would last, and how long dormitories would have to sustain such financial expenditure. Even the Government’s assistance can only do so much, as it does for any other sector suffering from the brunt of the pandemic.

Though one thing’s for sure; the living conditions of dormitories will never quite be the same. The pandemic has blown the state of dormitory housing foreign workers wide open to the entire nation…

And if there’s a silver lining in the cloud, it’s that at the very least, foreign workers will get more value for the rent they’re paying in the future.