Median Hawker Stall Rentals in Last Two Years and Proposed Balloting Model Based on Cost Recovery for Such Stalls

28 Mr Melvin Yong Yik Chye asked the Minister for Sustainability and the Environment (a) what is the median rent for hawker stalls tendered out in the last two years, excluding stalls that have had their rents adjusted after their three-year tenancy period; and (b) whether the National Environment Agency has any plans to review the duration of the initial tenancy period to discourage disproportionately high rental bids.

29 Mr Melvin Yong Yik Chye asked the Minister for Sustainability and the Environment (a) when did the National Environment Agency last review the way hawker stalls are tendered out; (b) whether a ballot model at a fixed rental rate targeted at cost-recovery have been considered; and (c) if so, what are the reasons for not moving to such a model.

The Senior Minister of State for Sustainability and the Environment (Dr Koh Poh Koon) (for the Minister for Sustainability and the Environment): Mr Speaker, with your permission, may I take Question Nos 28 and 29 together, please?

Mr Speaker: Please proceed.

Dr Koh Poh Koon: Thank you, Sir. The National Environment Agency (NEA) lets out vacant hawker stalls through monthly tender exercises, which are transparent and fair. After the first tenancy term of three years, tendered stalls are adjusted towards an assessed market rent determined through independent professional valuation.

Since 2012, NEA has removed reserve rent and does not set a minimum bid price for hawker stall tenders. As such, tenderers can secure stalls at lower-than-market rent for the first tenancy term. This would not be attainable under a model where stalls are allocated at fixed rental rates.

About one in five cooked food stalls was awarded tender prices at or below $500 a month in 2023. The median successful tender price for cooked food stalls across hawker centres was about $2,000 in 2022 and $1,800 in 2023. While some stalls at popular locations have attracted higher bids, such tender prices are not the norm. NEA is reviewing relevant policies at hawker centres to ensure that the system remains effective while keeping hawker food prices affordable.

Hawkers face various cost pressures, such as raw material and manpower costs. To address manpower challenges, NEA has provided support through measures, such as the Productive Hawker Centres programme and the Hawkers' Productivity Grant to help stallholders improve productivity and reduce reliance on manpower.

We are also looking at other ways to further ease manpower challenges. Currently, only Singapore Citizens and Permanent Residents can be stallholders or work as stall assistants in hawker centres managed by NEA and NEA-appointed operators. These measures help to safeguard and preserve the local identity of our hawker centres. NEA exercises some flexibility by allowing stallholders to appoint their spouses who are Long-Term Visit Pass (LTVP) or LTVP+ holders with a Letter of Consent (LOC) or Pre-approved LOC as their stall assistants, given their familial ties to the hawkers.

To provide additional support to stallholders at hawker centres managed by NEA or NEA-appointed operators, we will further relax our policy to allow hawkers to hire LTVP or LTVP+ holders with LOCs or Pre-approved LOCs to work as their stall assistants. This policy will be effective from 1 January 2025.

This suggestion was also previously raised by Mr Edward Chia in an earlier Parliamentary Question. I hope he will be happy that NEA is now making this move. We are also studying other support measures for hawkers and will share the details when ready.

Sir, with your permission, may I say a few words in Mandarin?

(In Mandarin): [Please refer to Vernacular Speech.] Hawkers face various cost pressures such as raw material and manpower cost. Currently, only Singapore Citizens and Permanent Residents can be stallholders or work as stall assistants in hawker centres managed by NEA and NEA-appointed operators. These measures help to safeguard and preserve the local identity of our hawker culture. NEA also allows stallholders to appoint their spouses who are LTVP or LTVP+ holders with a LOC or Pre-approved LOC as their stall assistants.

To provide additional support to stallholders at hawker centres to manage manpower challenges, we will further relax our policy to allow hawkers to hire LTVP or LTVP+ holders with LOCs or Pre-approved LOCs to work as their stall assistants. This policy will be effective from 1 January 2025.

We are also studying other support measures for hawkers and will share the details when ready.

Mr Speaker: Mr Melvin Yong.

Mr Melvin Yong Yik Chye (Radin Mas): Sir, I thank the Senior Minister of State for his reply and I am glad for the new measures to better support our hawkers. I would like to focus my supplementary questions on the high rental bids.

Sir, I have spoken to veteran hawkers regarding this phenomenon of new entrants bidding high rental prices. They shared that it is common that these hawkers would, therefore, have to charge higher food prices to make up for the high costs. In some cases, other hawkers in the same hawker centre would then see this and take this as a signal that they can also increase their food prices, therefore, causing a price increase ripple within the same hawker centre.

My first question is: does the Ministry track if food prices have, indeed, increased in hawker centres where there had been an abnormally high rental bid?

My second question is: could the Ministry consider modelling its tender bid system after the Housing and Development Board's (HDB's) resale portal and alert prospective bidders if the rental bid that they have submitted exceeds the median rent in the same hawker centre, by say, about 10%? Doing so can possibly help prospective hawkers place more realistic bids, but more importantly, I hope that this can help moderate food price increases as a result of high rental bids.

Dr Koh Poh Koon: Mr Speaker, I thank the Member for his two supplementary questions. On his first question of whether NEA tracks hawker food prices in correlation to the rental they bid for, I do not have the data at hand. But I would say that in a price competitive market, in a hawker centre where there are multiple stalls offering food of different prices and different choices for consumers, it would be something that the market will have to take into account. In other words, a person who bid for a high rental price at the stall, will have to take into account what consumers can bear as well, so that he can keep his business viable.

I think we have to allow the market to weed out those who are not competitive and unable to offer food at affordable prices where consumers will see this as good value for money, and allow some churn in the market so that at some point, the best operator with the best offering, in terms of taste and quality of the food with the price that consumers can bear, will be the one that eventually can succeed.

Having said that, I must emphasise that high stall rental bids that the Member may be talking about are actually the outliers and not the norm. As in my reply earlier, the median cost of rental across our hawker centres has remained quite stable over the last few years.

What we can do, in response to his second suggestion of putting some form of alert to help bidders to be more considered in their prices when it comes to bidding for a rental stall, is to put out a bit more granular information on the NEA website, so that a potential bidder would be more cognisant of the kind of price points that he is competing against, fellow stall owners in the same hawker centre. And to ensure his longer-term viability, he would then have to be a bit more moderate about what kind of price he wants to bid for a stall. I think this is something that NEA would take back and see how much more granular information we can put out.

Like I said, these are very rare circumstances where a small number or percentage of stallholders put in that kind of bid prices. I would say most hawkers do try to make sure that they bid at a price that is sustainable for their own businesses. And I think this is something that we will see how to enhance further.

Mr Speaker: Mr Liang Eng Hwa.

Mr Liang Eng Hwa (Bukit Panjang): Sir, while I agree with the Senior Minister of State that these very high rental bids are the exceptions, they do have the effect of creating some upside on the rentals – something that we should take note of. These disproportionally high rental rates do go against the intent of why we set up hawker centres, which is to provide hawker food at affordable prices.

So, I would like to ask the Senior Minister of State whether NEA, besides looking at the rental bids, could also do some due diligence on the bidders on whether they have the ability and the financial capacity to sustain at this kind of high rentals for their business, and because to take up a stall when another stallholder might have been able to do it better — so, very much like how, in public tenders, we look at price and quality, whether these stallholders have the means and capability to be able to sustain at such a high rental rate.

Dr Koh Poh Koon: Sir, I thank the Member for his supplementary question and the concern he has. Indeed, I think it is always good to help the stall owners make a more considered bid when it comes to bidding for a stall. But I would be cautious about putting in requirements that would make it much more difficult for a potential tenderer to put in a bid.

When we say "doing due diligence", I think it could mean that we are going to impose a lot more onerous demands on the stall bidder to show a lot more information before we select the bid. And that itself could disadvantage hawkers who may not be able to put in, say, a certain proposal or show their financial standing.

We do have to let the market, in some ways, select out those who can survive in a competitive marketplace. Bear in mind that in a typical hawker centre, it is not everyone who will be in the outlier pricing, and as I have said, these are a small number of stalls in the grand scheme of things. So, by and large, the kind of hawker offerings in a particular hawker centre will help to moderate prices of other stalls who may find that it is difficult for them to survive if they were to actually price themselves out the market.

When we talk about "due diligence", I think it is putting out more information, so that they can also be clear about what they are bidding for. One thing which I said earlier is about putting more information on the NEA website, so that when the bidder comes in, he is aware of what his fellow stallholders are actually paying as market rent.

We will take some of these considerations that the Member has raised and see how best we can, maybe, make adjustments even to the bidding process, so that these excessive high bids will be something that is lesser than what it is today. But, in fact, this is a very small number of bids that go into this kind of stratospheric range.

Mr Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai (Non-Constituency Member): Mr Speaker, I have two questions for the Senior Minister of State. The first question is: when he said one in five hawker stalls have rental below $500, does that statistic include non-cooked food stalls?

Secondly, since the Government is liberalising the manpower policy with regards to the hawker stalls to include the LTVP holders, has the Government also considered liberalising it to allow Work Permit holders to work in hawker stalls? Because, currently, as far as we know, there is a scheme called the mini-restaurant licence scheme, whereby some hawkers at the coffee shops and food courts are allowed to employ Work Permit holders.

Dr Koh Poh Koon: Sir, to the Member's first question, the answer is that the rates we quoted apply only to cooked food stalls.

And for the second question on whether we were going to liberalise it to, in general, Work Permit holders, the answer is, not at this moment. Because we still want to preserve the hawker culture, which is largely run by local Singaporeans, of course, with a small supplement from some LTVP+ LOC holders. The numbers today are very small to begin with. And while we want to help solve their manpower challenges in the immediate term, the more sustainable way forward is to continue to help them to adopt more resilient and more productive methods, which is why we enhanced the Productive Hawker Centre Grant to do things at a centralised level, to make the hawker centre more productive through things like centralised dishwashing, for example.

We will also continue to enhance the Hawkers Productivity Grant, where the hawkers themselves can take on more productive methods of preparing their food. For example, with the grant, they can purchase food preparation processing equipment to do the meat mincing, vegetable chopping and also reduce their reliance on manpower to do these repetitive tasks.

So, I think with these kinds of measures, we want hawkers to adopt a more productive approach to their business to be more sustainable, while for those who may still need some manpower, this is where the LTVP+ LOC liberalisation will help them to access some of these LTVP+ holders who are already here in Singapore on a permanent basis as part of a family nexus in Singapore, to be able to contribute economically as well.