Friday, April 27, 2018

Dilemma of low rental for hawker stalls

During the first 20 years of the PAP government, they provide low rentals for hawker stalls. The stall holders were able to sell their food at low prices and to make a living. It helped to create meaningful employment and lower the cost of living.

Singapore was known to be a place where you could get good and inexpensive food. It was a competitive advantage for Singapore, compared to other countries.

There was a problem. Some stall holders were able to get the stalls at low rentals and they sublet the stalls to the actual operators and kept the profit. The actual operator had to sell the food at a higher price.

Subletting was not allowed under the terms of the rent agreement. The HDB had a difficult time to investigate the illegal subletting and to take back the stalls.

In some cases, the tenant on record claimed that they were employing the people who were running the stall. Sometimes, they said that they were old, and not able to operate the stall successfully.

It was probably this practice of illegal subletting that made the government at that time decide to increase the rentals to the market rate. They did not want the tenant on record to be a middleman and benefit from the cheap rental.

This was a policy mistake. The government should have just allowed the tenant on record to sublet the stall, provided that they make an application and give a valid reason.

Each tenant is allowed to rent only one stall. It is usually given to people who are in financial need, e.g. the elderly poor or families who are not able to get a steady source of income from work.

Many of these tenants will operate the stall on their own. A small percentage will sublet the stall. Let the tenant on record keep the small margin as a source of income that they need.

There is a fear that the practice of subletting, if allowed on a large scale, will lead to high food prices. This is not likely to happen. Subletting is allowed only on application. The number of approvals can be controlled.

The competition in the food center will ensure that the prices remain at a low level. If a stall holder wants to charge a high price, most customers would patronize the other stalls.

When the government decides to open new food centers, they could have adopted the old practice and rent out the stalls to needy operators at low rentals. This would help to moderate prices and provide employment and a source of income to the operators.

Maybe, there is still a chance for the government to take this approach.

What do you think?

Tan Kin Lian

1 comment:

Yaser Hussain said...

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