Singapore - No more $2.50 chicken rice soon

Paying $2.50 chicken rice may be a thing of the past soon.

The Sunday Times has raised the possibility of that happening by the end of the decade because hawker stall rents are set to soar by more than 10 times in the coming years due to expiring subsidies.

Stall holders in 15 food centres told The Sunday Times that hey will either raise their prices or quit the business when the rent hike comes.

When this happens, food prices at their neighbouring stalls and at coffee shops and foodcourts, are likely to shoot up too as they sometimes peg their prices to those of nearby hawker competitors, said The Sunday Times.

At the Zion Road hawker centre, a plate of chicken rice costs $2.50. But the coffee shop next door charges $3.20 for it.

At the Food Junction foodcourt in the Great World City mall across the road, you have to pay $4.30.

The Sunday Times also found that in Clementi, Hougang and River Valley, where all the three types of food establishments were located close to one another, the same dishes are priced within $1.50 of each other, with the hawker fare the cheapest.

Currently, potential hawker stall holders have to rent stalls from the National Environment Agency (NEA) or sublet them from other hawkers.

The NEA sets minimum rents determined by valuers for its vacant stalls and auctions them off every month.

Bidders must be Singapore citizens or permanent residents, and the highest bidder gets the stall for three years, after which he gets priority to renew his lease, which comes at a new market rate.

If the minimum bid is not met, the stall is kept for the next auction.

The NEA also rents out stalls on one- to three-year leases on a walk-in basis, but these are usually unwanted stalls in unpopular places.

The monthly rent ranges from $85 to $3,600 for market stalls, which sell sundry goods, although most rents are between $300 and $800.

The rent for cooked food stalls ranges from $300 to $4,900, but  most are about $1,000 or more.

Stalls in central locations such as Newton and Serangoon easily command rental of more than $2,500.

Hawkers are allowed to sublet these stalls, even to foreigners, which may cause prices to jump higher in popular areas.

At the People’s Park Food Centre in Chinatown, for example, hawkers can pay more than $5,000 a month to sublet a stall.

But only half of the 15,000 stalls in Singapore have these market-determined rents.

The other half are now heavily subsidised or are owned by the hawkers themselves, said The Sunday Times.

About 40 per cent of hawkers pay only between $56 and $320 for their stalls, possibly less than a tenth of the market rates.

This is mostly because they are first-generation hawkers, who used to operate stalls in the streets in the 1970s.

The first-generation hawkers can transfer their low rents only once to their family members.

After the second generation dies, or if the hawkers retire, the Government will take back the stalls and raise the rent according to market rates.

Ms Grace Fu, Senior Minister of State for the Environment and Water Resources, told reporters at a meeting about hawker centres earlier this month that the subsidies are unlikely to be extended.

Doing so would create hawker dynasties, making it harder for outsiders to gain a foothold in the industry, she said.

This means many of the subsidies could expire within the decade.

The 20-year leases sold to hawkers will also expire between 2014 and 2017, after which those stalls will also be rented out at market rates.

At the Kovan Hougang Food Centre at Hougang Street 21, the end of the subsidies could mean a rent increase of more than 20 times.

One subsidised stall’s monthly rent at the centre is $190, compared with $3,000 at the Government’s non-subsidised rate and more than $5,000 if it is sublet.

Hawkers told The Sunday Times that it was only natural that food prices will increase with the rental fees.

SoShiok.com

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