Assistance for Stallholders at Coffee Shops Faced with Increasing Rentals and Business Overheads

6 Ms Yeo Wan Ling asked the Minister for National Development with regard to keeping food prices affordable in the heartlands, whether the Ministry will consider taking further measures to assist stallholders of coffee shops who are facing increasing rentals and other business overheads.

The Senior Minister of State for National Development (Ms Sim Ann) (for the Minister for National Development): Sir, there are currently 776 coffee shops in Housing and Development Board (HDB) estates in Singapore, of which, 374 are owned by HDB and rented out to operators and 402 are sold and hence privately-owned.

HDB is committed to ensuring that the rents payable by operators of HDB rental coffee shops remain stable.

Over the last five years, HDB did not increase the rent for 97% of HDB rental coffee shops at renewal. The increase in the median rent of HDB rental coffee shops was limited to 1.6% during this period. This is part of HDB's effort to help operators and stallholders in a rising cost environment. Further, to help all HDB rental coffee shop operators transition to providing budget meals by 2026, HDB offers a rental discount of 5% for a period of one year, subject to verification that the new budget meals and drinks have been implemented. For sold eating houses, HDB does not regulate the stall rentals that owners charge as these transactions are private commercial agreements between the coffee shop owners and the stall operators.

Coffee shop operators and stallholders may tap on schemes, such as the Heartlands Go Digital Scheme, which supports enterprises in adopting digital solutions and improving their productivity. Business owners can visit the GoBusiness portal at gobusiness.gov.sg, for more information on the Government schemes available.

Mr Speaker: Ms Yeo.

Ms Yeo Wan Ling (Pasir Ris-Punggol): Thank you, Mr Speaker. There have been reports of escalating rental prices, some as high as 20% to 30% in coffee shops, leading to stall holders giving up their businesses due to sustainability issues. In keeping rentals affordable for essential heartlands food services, what are the considerations that the Ministry has in deciding which coffee shops are sold and which are rented from the HDB? Would the Ministry also consider putting in place programmes with third-party owners or master operators of coffee shops to regulate rentals and business costs to keep food prices reasonable?

Ms Sim Ann: In response to Ms Yeo Wan Ling's supplementary question, HDB began selling HDB coffee shops in 1988, but ceased doing so from 1998 onwards. So, from 1998 onwards, we have not been selling coffee shops in HDB estates. So, these are owned by HDB. Further, after a pilot in 2017, from 2018 onwards, we have been tendering out new HDB coffee shops using the Price Quality Method.

This would put weightage, not just on the rental bid; but, also on the coffee shop operators' ability to fulfill quality criteria. We also take the availability of affordable meals into consideration. And in the recent couple of years, we have also been implementing the Budget Meal initiative, which I believe Members of the House are quite familiar with. This is how we look at maintaining the availability of affordable food.

As a landlord, HDB plays its part by keeping rent stable. I have also explained that just now, in the main reply. At the same time, we also are mindful that the coffee shops need to be operated by people in the trade. We are also mindful that HDB is not, itself, directly in the business of cooked food provision. So, we do need to allow room for the coffee shop operators as well as stallholders, to abide by market principles and operate. But we do our part to keep rents stable and also to encourage the provision of affordable meals via the Budget Meal initiative.

As for the practices that Ms Yeo Wan Ling has mentioned, I would appreciate it if she could provide us with more details. We will look at the situation. I think Ms Yeo would appreciate that our approach towards sold privately owned coffee shops would have to be different than the ones that HDB owns and then rents out – because the relationship with the operators in the two instances are quite different.

Nonetheless, I also believe that in Ms Yeo Wan Ling's ward, I think, all the coffee shops in the HDB estates in her ward are owned by HDB. So, we will continue to play our role as a responsible landlord; and, if there are specific practices that she is aware of and, which she has concerns about, please raise it to us and we will study it carefully to see if intervention is warranted – particularly, if these coffee shops are owned by HDB.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim (Sengkang): Let me start first by commending HDB for its proactive approach in trying to control rent increases. Because, I think, just like the Member Ms Yeo, in my constituency of Sengkang, we have challenges with private operators where, because they have increased their rent, have also resulted in a pass-through to higher food prices for residents.

But, I wonder, since the Senior Minister of State has shared, that since the 1990s, they no longer have this sale of coffee shop spaces to private operators, whether there are any plans afoot, or even intent, to potentially re-acquire some of these, so that the entire umbrella of coffee shops would be fully-owned by HDB? After all, the Senior Minister of State said that, I think, it was 90% if I recall correctly or more than 90%, are already directly managed and owned by HDB.

Ms Sim Ann: Although Government is not in the business of directly providing cooked food or stipulating cooked food prices, ultimately, the best safeguard against runaway cooked-food prices is by ensuring wide availability. And this, we do through ensuring that, in towns and across the island, that there is a good spread of food and beverages (F&B) premises. This covers not just coffee shops in HDB estates, but other kinds of F&B outlets and also hawker centres.

And in terms of how Government generally deals with the private sector, I think it is also important that we are clear about where the market is free to operate and where the Government comes in with interventions. In terms of the strategy that Assoc Prof Lim has described, I think that is something that Government would consider very carefully and it is not a step that we would take lightly.