RENTAL AND SUBLETTING OF HAWKER STALLS

RENTAL AND SUBLETTING OF HAWKER STALLS: 2.

Mdm Cynthia Phua asked the Minister for the Environment and Water Resources in view of the rise in food prices at hawker centres (a) what are the Ministry's plans to moderate the rental rates of hawker stalls; and (b) whether the Ministry would stop the practice of allowing hawker stall lessees to sublet their stalls so as to mitigate the rising cost of cooked food at heartland hawker centres.

The Minister for the Environment and Water Resources (Assoc. Prof. Dr Yaacob: Column: 2178

Ibrahim): Mr Speaker, Sir, rental is one of several factors that affect cooked food prices. Other factors include costs of utilities, labour, raw materials and market competition.

About half of the 6,258 cooked food stalls in our hawker centres are subsidised. The subsidised rent ranges between $160 and $320 while the market rent ranges from $275 to $2,900. My Ministry currently has no plans to further moderate rental rates, as market rents are re-assessed at the point of every tenancy renewal. The rates may rise or fall, depending on the prevailing market conditions.

Currently, only stallholders paying tendered and market rents are allowed to sublet their stalls. The subletting of these stalls encourages longer operating hours for the stall and, in doing so, increases consumer choice and the vibrancy of the hawker centre as a whole. It should not increase the cost of cooked food in the hawker centres.

Mdm Cynthia Phua: Mr Speaker, Sir, I would like some clarification from the Minister. Currently, there are three types of rentals in the cooked food centres in Singapore: (i) subsidised rental, (ii) market rental, and (iii) subletting rental that the National Environment Agency (NEA) would not know about as this last rate is agreed upon between those that had already tendered market stalls and their sublet tenants. In Kovan, for example, the market was recently upgraded. The subletting rental is $5,500 per stall. This is compared to the subsidised rental by NEA of $350. Sir, the discrepancy is very large. In such a case, the food prices will definitely be increased. Can the Minister explain why the Ministry is not monitoring the subletting rates as well as the market rental?

My second question relates to subsidised rental in the markets. As the

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Minister said earlier, 50% of the hawker stalls enjoy subsidised rental. The reason for this subsidy is that they were the original tenants. Can I ask the Minister: over the next five to 10 years, the number of such subsidised stalls will be reduced, as the current hawker stallholders will be older and may give up their stalls. In view of this trend, we can expect the subsidised rental to revert to the market rental. How severe will this be? How will it affect the food prices?

Assoc. Prof. Dr Yaacob Ibrahim: Sir, on the second question, the hon. Member is right. As and when the subsidised rental owners are prepared to give up their stalls, these will then be given out to the market. At which point, really depends on when they exit the trade, whether this is within five or 10 years, as mentioned by the hon. Member, is not clear. We really do not have the numbers but the hon. Member is right. Once the stall is given up, it is either tendered out or rented out at market rent. This is not something that is new. As I mentioned in my reply, we have been doing so progressively. This is why only half of the 6,000-odd hawker centres are all subsidised. Will it have an impact on the food prices? As I mentioned in my reply, food prices are affected by many different factors. Currently, electricity prices have gone up and, obviously, the market will adjust. I do not think it is possible for us to pre-determine ahead of time. Our role is really to ensure that there is a proper mix, that our hawker centres continue to be vibrant.

On the Member’s first question as to whether or not we monitor, the answer is we do. As I mentioned in my reply, subletting is a private arrangement. It is what the market can bear. If the person who decides to rent the sublet stall at $5,500, he or she must have made his

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own computations based upon what is available in the vicinity. We will not be able to intervene at this point in time. As and when the renewal for the tenancy is up, then we can basically moderate. But at the end of the day, I think it is best for us to leave to the hawker stallholders to decide on the best arrangement given the dynamics of the set of factors around the hawker centres.

Mr Speaker: One last short question.

Mdm Cynthia Phua: Yes, Mr Speaker. Does the Minister not agree that the difference in rental will definitely be passed on to the consumers in the food prices? Sorry, Mr Speaker. Second question: since the Ministry monitors the rental rates, can the Minister give us an indication of the rate of increase for the last three years?

Assoc. Prof. Dr Yaacob Ibrahim: I can, again, answer the second question first. Just to give the Member some data: for the tenancy details for the second half of last year, about 230-odd stalls came up for renewal. Out of that, 51% of the stalls whose tenancies were renewed had their rentals reduced while 19% remained the same. So, by and large, rentals have not really changed for the last round of tenancy renewals for the second half of last year.

To the Member’s first question as to whether food prices will go up because of the rental – again, this is something in which you have to consider the multitude of factors affecting it. Factors affecting food prices are not only to rentals but also cost of utilities, and other things which will have an impact, for example, in terms of the type of food the particular hawker would want to sell. So, I leave it to the market to decide. And if supposing the price is too high for the patrons, they might go to another stall. So, they have to make their own calculations.

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