Parliament Q&A

Oral Reply by Senior Minister of State for the Environment and Water Resources, Dr Amy Khor, to Parliamentary Questions on Hawker Centres on 19 November 2018

     Thank you. Let me first thank Members for their questions and concerns for our hawker centres. In fact, I would like to take this opportunity to thank members of the public for the many views, discussion and suggestions that they have put forward. We appreciate such views and feedback to help us to improve to better serve our hawkers and Singaporeans.

2    I will speak on our efforts to better support our hawkers and look after their well-being.

3    As a regulator, NEA must strike a balance between serving the public well, and ensuring the well-being of hawkers, while working to achieve the social objectives of our hawker centres. Residents should have access to affordable food in a clean setting for all three meals. At the same time, hawkers must be able to make a decent living, under fair tenancy terms and conditions.

4    As with any trial, it is difficult to get the Socially-conscious Enterprise Hawker Centre (SEHC) model right from the start, especially since we have not built new hawker centres for almost 30 years. So, we set some key parameters. Let the market work; and when we get feedback, or issues are raised, we will move to address them swiftly and decisively, as we have done in the past month or so. We are not done with the stock-take of the model, and will continue to refine it to better serve Singaporeans. I will outline three areas of improvements which we have made and will continue to focus on.

5    First, we will better support stallholders to manage costs. My Ministry, together with MTI, conducted a study on the drivers of hawker centre food prices in 2014. We found that the costs of raw materials and manpower made up the bulk of the hawkers' costs at 76%, and not stall rentals which only comprised 12%. It is also shown through studies by the Institute of Policy Studies (IPS) that hawkers generally price food according to what the market can bear.

6    This is influenced by competition in the vicinity and the demographic profile of customers. Hence, rentals do not directly affect food prices. Nonetheless, for both our existing hawker centres and our new SEHCs or new centres, we have put in place measures to ensure that rentals are fair and not speculative. For existing centres, we have removed the reserve rent and disallowed subletting and assignment. For new centres, we have, in our tender evaluation favoured tenderers who offer lower total rental and operating costs, and prohibit any increases in rentals or operating costs for the duration of the tenancy, as one of our priorities is to safeguard the interests of our hawkers.

7    The median rental of stalls in SEHCs is about $2,000 per month, not $4,000 per month as some media reports have claimed. The median rentals of stalls in comparable existing hawker centres is $1,700 per month, which is comparable to those of the new centres after accounting for the larger stall size, better-designed stalls and amenities at the new centres, and in some cases, the co-location of the new centres, with residential properties as well as other amenities.

8    Stall sizes at our new centres of between 10 sqm and 21 sqm, are much larger than existing centres, which are between 5 sqm and 13 sqm. Additionally, the actual stall rentals at our new centres range from $750 to $3,700 a month. This is in line with rentals of non-subsidised stalls at our comparable existing centres, which range from $640 to $3,900 a month.

9    Our hawker centre rentals, specifically those at SEHCs, are not linked to the rentals of surrounding coffeeshops and food courts. In fact, they are nowhere near the rentals at these private F&B outlets, which can range from $4,000 to $13,000 a month, before other operating costs. We will continue to monitor and ensure that stall rentals in our new centres are reasonable to enable hawkers to make a decent living.

10    As for existing hawker centres, no stallholders are paying astronomical rentals. The recent $10,000 bid was an outlier and the bidder did not even commence operations. Besides rentals, the operating costs at the SEHCs and existing centres are comparable too. For example, Service & Conservancy Charges (S&CC) at the new centres are between $110 and $350 a month, within the range of $130 to $450 a month at our existing centres. Similarly, table-cleaning fees at the SEHCs are between $300 and $550 a month, again, within the range of $200 to $830 a month at our existing centres. Operating costs payable by hawkers at existing centres also frequently do not take into account the costs for dishwashing. At the majority of our existing centres, without centralised dishwashing (CDW), stallholders may have to hire dishwashers which could cost up to $1,500 a month, which is much higher than the average CDW charges. Moreover, these hawkers often have difficulties hiring and retaining such hawker assistants, as my Minister has said earlier, too.

11    Nonetheless, to further help SEHC stallholders manage costs, we announced last week that we will extend the Productive Hawker Centre (PHC) grants to these hawkers for two years, effective from 1 January next year.

12    With the grant extension, stallholders at our new centres will enjoy 50% reduction in their CDW costs for the first year and 30% for the second year. Currently, these grants are only available to hawkers at our existing centres under the PHC format. However, after a few years of operations with the new centres, we recognise that hawkers at the new centres may also need some support in transition as they need time to build up their clientele. These productivity solutions, such as CDW and automated tray return systems (ATRS), are necessary to alleviate our tight manpower situation and help hawkers solve problems like staff shortage. The average tray return rates of our SEHCs are far higher, at about 58%, than those at our existing hawker centres which are at about 25%. But we can do better. First and foremost, patrons should form the habit of returning their trays with the crockery after eating.

13    A high tray return rate will directly benefit both patrons as well as hawkers as it will lead to a faster turnover of tables, keep the birds away and lead to a cleaner environment that helps attract patrons.

I14    t will also ease the workload of our cleaners so that the cleaning companies do not have to keep increasing the number of cleaners, which will eventually lead to higher cleaning costs for the hawkers. Even if they want to increase the number of cleaners, they consistently face manpower shortage and issues with hiring.

15    Greater public education and close partnership between operators, hawkers and patrons are key – everyone must play their part towards ensuring a clean environment in our hawker centres to benefit both patrons and hawkers. In fact, most hawkers have welcomed the productivity initiatives implemented at our new hawker centres. Toh Swee Han, a 39-year-old hawker operating the "Mang Cheng Xiang Curry Rice" stall at Our Tampines Hub (OTH) Hawker Centre, said that he was satisfied with CDW as it helped him reduce his cleaning costs significantly. He highlighted that CDW fees at OTH added up to only $700, before the productivity subsidy, while it would cost him about $3,000 to hire two assistants to cover the same workload.

16    CDW also saves stallholders from paying additional water charges, or managing an inventory of crockery and cutlery that has to be replaced due to wear and tear, or loss. Hygiene is better as they do not have to carry out dishwashing within the stall area. We hope that this will alleviate the workload of our hawkers, especially the older hawkers and make the trade more attractive to our younger hawkers by reducing menial work.

17    Following a Call-for-Collaboration (CFC) led by Enterprise Singapore (ESG), on behalf of NEA, HDB and JTC, NEA is partnering NETS to provide inter-operable e-payment solutions to our hawkers. Stallholders in SEHCs can take up the CFC e-payment solution for three years without paying transaction costs or terminal rental. This will provide an additional option to SEHC operators to encourage stallholders to opt for e-payment.

18    The above subsidies will help to reduce the operating costs of our hawkers at the new centres in their initial years. These will support them as they build up their customer base.

19    There may be some other fees from value-added services that the SEHC operators provide, such as coin changing services, but these are optional.

20    Second, NEA will rebalance the soft touch regulatory approach towards SEHC operators and exercise greater oversight to safeguard hawkers’ well-being. NEA has reviewed some of the key contractual terms between the SEHC operators and stallholders. Some of the terms were replicated from contracts the operators use in the other food establishments that they run. In practice, operators have actually exercised flexibility with these terms. NEA has taken in the feedback of hawkers and worked with the operators to make four key changes as an immediate priority.

21    Operators will be more flexible on stallholders’ operating hours. Stallholders will not be required to work more than five days a week or eight hours a day, although they could if they wished to.

22    Operators will also engage stallholders who intend to open more than eight hours a day on how they intend to do so and whether they would have sufficient manpower, for example, through engaging stall assistants or joint operators. As asked by a Member, operators can also decide if it is feasible to install food vending machines to meet meal requirements beyond operating hours, especially for small meals or snacks.

23    Operators will not require a notice period of more than two months for stallholders to terminate their tenancies, or require security deposits exceeding two months’ rental. This would address concerns of some stallholders being locked into their tenancies.

24    Operators who impose liquidated damages on stallholders for regulatory or other breaches will limit these payments to no more than $50 per day for minor ones and $100 per day for major breaches. They will also bear all legal fees related to the tenancy.

25    NEA will continue to engage both hawkers and operators to address concerns in other areas. For instance, at OTH, the community had initially asked for a 24-hour hawker centre. But as the demand from patrons has not materialised, both hawkers and the operator will recalibrate the arrangement. With the changes made to operating hours, hawkers who do not wish to continue with the 24-hour operations which they had previously signed up for, can do so now. NEA will also ask operators to communicate stall tenancy agreement terms in simple language to ensure that potential stallholders can understand them clearly before they commit to run the hawker stalls.

26    In our contractual review, we found that the operators indeed have shown flexibility. For example, we have not observed any operators charging stallholders rentals for the remaining of their tenancy terms, in the case of premature termination. The operators have also agreed to make changes to the terms I have just described, and to waive any legal fees for new tenancy contracts and renewals.

27    Whilst there is a need to rebalance our soft touch regulatory approach towards our SEHC operators, we recognise, as I have said, that they have shown flexibility through the contract review process, and are making changes to some of their terms and practices. They have also shown innovation and creativity in implementing measures to drive footfall to the centres. These include family carnivals and loyalty programmes, which offer discounts and other promotions to build up a pool of repeat patrons.

28    In fact, many of these operators have been bearing the cost of various initiatives to improve footfall at the centres, such as free shuttle bus services and free parking not long after the centres began operations. They are required under the terms of our tender to plough back at least 50% of any operating surplus for the social benefits of the hawker centres. This, plus our tender process which favours operators who charge lower total rental and operating costs and our prohibition on SEHC operators to increase any rental or operating costs over the tenancy period, limits the extent of any operating surplus.

29    These safeguards are part of our efforts to manage and reduce the risks of profiteering. We stand ready to act decisively should there be any mismanagement by the SEHC operators. Potential measures include imposing liquidated damages, or even termination of their contracts.
As part of our on-going stocktake, NEA will look at the selection criteria for operators, what to leave to market forces and whether any other safeguards should be prescribed.

30    Third, all SEHC operators have set up structured feedback channels for their hawkers and have had at least one meeting. They will continue to engage their hawkers regularly and address concerns together and quickly. NEA officers will be present at these meetings. I am hopeful that such structured and regular meetings will help encourage communication, resolve day-to-day issues and also reduce misunderstandings.

31    I attended one of these meetings at Ci Yuan Hawker Centre. The atmosphere was constructive and stallholders had positive experiences to share. For example, Zhang Li Jun, a 29-year-old hawker who has been operating the "Teochew Satay Bee Hoon" stall since 2015, said that with the Hawkers’ Feedback Group, operators could proactively seek hawkers’ views on various matters relating to the hawker centre and stalls, and also work together on ideas to help the centre do better.

32    I had a fruitful dialogue recently with HC3.0 committee members, hawkers and food advocates passionate about preserving our hawker culture. The participants contributed many ideas and we have agreed to set up a ground-up workgroup, comprising hawkers and other experts, to look at how to support new entrants to the hawker trade and sustain our hawker culture. We shall share details when ready.

33    Many of the new centres are doing well. When I visited Kampung Admiralty Hawker Centre recently, the place was crowded and many patrons shared with me that they were happy with the wide selection of hawker food at affordable prices. One patron even told me about the $2.60 mee siam sold by "The House 22". Similarly, I met a group of ladies who frequent the OTH Hawker Centre. They excitedly told me how happy they were with the many tasty hawker fare offered there, such as laksa by "Social Bite", and "Chicken Rice @ OTH". In fact, the father of Mr Kiang, who runs "Chicken Rice @ OTH", was among the pioneer batch of chefs who developed the famous Chatterbox chicken rice at Mandarin Hotel. So, I share with you this little secret, which means that the next time I go, it will be a longer queue.

34    But for those centres which are not doing so well, we are working with the operators and stallholders to increase footfall, improve business and serve their patrons better. What they need now is our support, not speculation and negative publicity that will keep patrons away and cause stallholders more hardship. The latest efforts to discuss and resolve issues through regular dialogue is the right way to go.

35    In summary, we will continue to make adjustments and recalibrate the SEHC model to ensure that it continues to achieve the key social outcomes of our hawker centres, which are: to provide affordable food in a clean environment, allow our hawkers to make a decent living and build communities. We will seek and listen to feedback from hawkers and patrons, and continue with our stock-take to further improve the model.

36    Next year, we are nominating hawker culture for inscription on the UNESCO Representative List of the Intangible Cultural Heritage of Humanity. It is a community-based effort involving many stakeholders, including our hawkers, to sustain the hawker trade. The UNESCO nomination will be an important recognition of our hawkers, as we let the world know about our local food and multi-cultural heritage. As of 18 November, we have received 133,000 pledges online. I urge Members and all Singaporeans who have yet to pledge to do so on the Our SG Heritage website.

37    I am heartened by the passionate discussions and support for hawker food and our hawkers. To sustain the hawker trade and preserve our hawker culture, I urge everyone to patronise our hawker stalls and support them. I wonder if all Members in this House have visited our new hawker centres. If you have not, I urge you to show your support by visiting and patronising them with your families and friends.

38    Let me share that there are many interesting and tasty hawker fare at these centres – so, a few more secrets – including some of my favourites, such as delicious min jiang kueh by “Munchi” at Yishun Park Hawker Centre, chendol from the dessert stall at Ci Yuan Hawker Centre run by a young hawkerpreneur, and tze char from “Jian Fa BBQ Seafood” at OTH Hawker Centre, just to name a few. Parents should bring their children to our hawker centres to appreciate our hawker culture and heritage food. Our hawker centres should not be treated as nice-to-have dining options, but an important part of our living and evolving culture as, after all, we started building new hawker centres again because of the many appeals from the community for the hawker centres.

39    I am confident that our hawker centres will continue to thrive as community dining rooms, bringing together Singaporeans from all walks of life and strengthening our bonds as a country.

Miss Cheryl Chan Wei Ling (Fengshan): Deputy Speaker, I would like to thank the Minister and the Senior Minister of State for their very elaborate response. I think many Singaporeans and myself really enjoy all the hawker food and we are supportive of the idea, including the need to try new models for what is relevant for time. But for the fact that because the term is called "social enterprise", I think it needs to clearly demonstrate that there is this element of social benefits, whether it is for the hawkers themselves or even for the consumers. I have two clarifications that I would like to ask the Senior Minister of State or Minister.

Firstly, for the grant that is given, for example, on the productivity initiatives, are these operators actually mandated to pass through all these benefits to the hawkers or are the hawkers paying extras for the e-payment system, the tray return system, etc?
Secondly, the Senior Minister of State mentioned about need for 50% of the surplus to be translated back to social benefits. Can the Senior Minister of State elaborate more on what are these social benefits?

SMS Dr Amy Khor: For the Productive Hawker Centre Grant of 50% and 30% for first and second year respectively, these would directly benefit the hawkers, because 50% of the cost of the centralised dish washing will be deducted from the payment they have to make for the CDW. So, it would be a direct benefit to the hawkers.

Regarding the sharing of any operating surplus, it is in the terms of the tender agreement with the operator that, firstly, if they are not a social enterprise, they would have to set up a separate entity to tender for the hawker centre because we require them to submit an annual set of audited accounts to us. And if there are any operating surplus, the condition is that they have to plough at least 50% of this operating surplus back to benefit the hawker centre, the hawkers or the community. Some of the proposals that have been made by the successful tenderers are, for instance, providing meal vouchers for needy residents or the elderly within the community, or sharing some of this operating surplus with the hawkers in terms of providing discounted meal vouchers or one-for-one meal vouchers, for instance, like Yishun Timbre+ does, to give to the residents so that they can purchase and part of the meal would be funded from the operating surplus.

So, there are various programmes, or it could be the training of hawkers or helping the low-income, for instance, to set up a hawker stall there. But if there is an operating surplus, they will have to propose how they want to plough this benefit back into the community or the hawker centre, and it would be subjected to NEA's approval.

Er Dr Lee Bee Wah (Nee Soon): Sir, I would like to applaud NEA for resuming the building of hawker centres. It is a welcome move. In fact, I was one of those who lobbied very hard to have a hawker centre in Yishun. But many of us would like to see the hawker centres that are run by NEA that provide good and cheap food. I have three supplementary questions.

I know that the Minister and Senior Minister of State have explained about the social enterprise hawker centres. But a lot of residents are asking what is the definition of "social enterprise". We do not see VWOs who come in, but we see those social enterprises that are set up by big companies. So, what is their motivation?

The second question: does this translate to lower cooked food prices? Is there any study done? How do you ensure that economic meals that are available at the hawker centres are available all the time? Because residents have told me that they were very often told "卖 完 了", or sold out. If they want to buy the economic meals, the answer is, "卖 完 了". I would like to know whether there is any checking?

The third question: what I understand is that hawkers are managed by social enterprise hawker centre company. Then, NEA staff oversees the social enterprise company. What my residents have been asking is: why can we not take away all these layers? Why can NEA itself not run the hawker centre, build up its own internal capability? This is something that many residents hope to see; they would like to see the old type of the hawker centres that offer good food at cheap price, rather than giving us a hawker centre that is very beautiful but then, most of the time, the food is more expensive than at the coffeeshops.

And lastly, I think the Minister did not answer my Question No 4, on the Incubation Stall Programme. I think there is such a programme and I would like to know how many have been under this programme and whether they continued beyond the incubation period; and if they do not continue, what are the reasons?

SMS Dr Amy Khor:The Member has raised five question in total, I think. Firstly, about the motivation of SEHCs. I think that first of all, this social enterprise hawker centre that the media has been using is a bit of a misnomer. We actually started by saying "socially-conscious operators". So what we are saying is, operators who tender for these hawker centres and run them, there must be a social mission. So, a social enterprise could be one of the operators or interested party to tender for the hawker centres, but not necessarily must be a social enterprise. What we have done is that within the tender conditions, we have ensured that there is a social mission. As I have said earlier, the Minister had also said, there are various safeguards that we have put in place in the tender conditions to ensure that we need the social objectives of the hawker centres that we started building again, in the first place. And that is to ensure that we have affordable food options of a good variety in a clean environment, ensure that our hawkers can make a decent living, and of course preserve our hawker culture and ensure the vibrancy of our hawker centres.

We have said a number of times what these are. For instance, we favour operators who offer lower rentals and total operating costs. They cannot raise these rentals and operating costs through the term of the tenancy agreement. As I have said, there is also the requirement to plough back any operating surplus for social benefits to the hawker centres, the hawkers and the community. A good example of a socially-conscious operator would be NFC, which is part of NTUC and is a cooperative. In selecting SEHCs, we also look out for how we can harness their expertise, which is actually the recommendation from the Hawker Centre Public Consultation Panel that we try and leverage the experience of these operators in F&B and in business management, in order to be able to put in place various initiatives and various ideas to ensure and enhance the vibrancy of the hawker centres.

In relation to that, the Member had a question about why not let NEA continue to run hawker centres. The Minister had elaborated in detail, some of the reasons why we need to look at new management model for our new hawker centres. The reasons are because there are inherent challenges in the hawker trade: ageing profile of our hawkers, where our existing hawkers' age profile is 60 years which means within 10 years' time, one third would retire if we do not attract new hawkers into the trade. So it is renewal; manpower constraints, as well as the evolving needs and tastes of patrons; how do you ensure that what you offer meet the needs and demands of patrons. And also, in existing hawker centres, as the Minister had elaborated, our existing hawker centres have been around for years; they are already established. Many of them have anchor hawkers who are able to pull in the crowd. But on the other hand, you would also note that many existing hawker centres, when you go, you are sometimes not sure whether the stall is open. Only 35% of our hawkers in existing hawker centres open for three meals. Most of them for one or two meals; some only work three to four days. So, does this then meet the needs of our community, especially the newer communities where there are many dual-income families and they need to access food through the day and through the week for three meals.

These are some of the challenges and therefore, we looked at how we can try out and pilot new management models in order to overcome these challenges and to meet our social objectives. Indeed, SEHCs have resulted in positive outcomes. There are, of course, teething issues, and we are committed to looking at how we can recalibrate, make adjustments and improve the model, even as we look to implementing it for our new hawker centres.

Economical meals – how come they are not available? It depends on which point in time of the day you go to the stalls. Basically, majority of the SEHC stalls do offer at least one affordable option. But let me say that we only ask that they offer at least one affordable option and we are not asking them to artificially suppress the prices of all their food options. In fact, they can sell all the other food options at different price points, and that is really the concept of a community dining room, where people from all walks of life can come together, share a table and enjoy a meal at different price points. And that will ensure that they will be able to make a decent livelihood. Whichever hawker centre does not have enough of those economical meals, we can talk about it and we can talk to the operators. I have been to many of them and they do offer affordable options, and these are good options.

Regarding the question on incubation stalls, we have launched an Incubation Stall Programme last year, just about over a year ago. When we started, we identified 13 stalls that we pre-fitted and we offered these to aspiring new hawkers who are not sure if they are interested to join the trade; they are passionate but they are not sure if they can make it. So, we offered these stalls to them, subject to certain conditions, of course. They can rent these pre-fitted stalls for six months at 50% of the assessed market rent, and that is to allow them to try out. It is pre-fitted, so we reduce the initial capital cost.

So far, we have received some 40 applications. We have increased the number of incubation stalls to 15. Ten stalls have been taken up and we have a list of applicants now which we are processing to lease out the remaining incubation stalls. This actually complements the Entrepreneurship Programme and the Place and Train Programmes offered by the SEHC operators because many of the operators also offer training and entrepreneurship programmes for new hawkers. In fact, they have actually been relatively successful. Ci Yuan, for instance, trained 16 aspiring hawkers and 10 are still in Ci Yuan Hawker Centre, and they have converted to permanent hawkers and are doing well. One of them just got married.

Mr Deputy Speaker: Mr Liang Eng Hwa.

Mr Liang Eng Hwa: Thank you, Sir. While I can appreciate the marriage of the social enterprise model and indeed we should continue to let the model evolve, I want the ask the Minister or Senior Minister of State, whether the social enterprise model is the only way to go for new hawker centres. Is NEA open to other models as well, such as for example, MCST type, where the hawkers can come together to self-manage, or for NEA to still run the new hawker centres at least for a while and then transiting to the non-NEA-run model.

SMS Dr Amy Khor: I think we are open to any model as long as it is able to achieve the social objectives that we have set up for our new hawker centres which is about providing affordable food options, moderating food prices, ensuring that the hawkers make a decent living and building communities.

So, clearly, we are open, but I think we also need to note that whatever model that we may adopt, there will always be challenges even as there may be benefits, and therefore, whatever model we adopt, we need to give it time to settle down. Our SEHC model is a good example. We implemented it only about three years ago. Infact the last one, Pasir Ris Hawker Centre, was just opened this year. So, it is really in its infancy; it is still evolving. We had set it with the intention that we will continue to monitor, evaluate, refine and improve the model.

But having said that, the SEHCs, at the present moment, have actually resulted in many positive outcomes for both patrons as well as hawkers and we do not want to undo those achievements. Therefore, we will see how we can better calibrate and make adjustments to the model. But as I have said, I think we are open to any model because the idea really is to benefit patrons, to benefit Singaporeans, to benefit hawkers.

Mr Deputy Speaker: We are one hour into this topic. I am going to ask Assoc Prof Walter Theseira, then Gan Thiam Poh and Melvin Yong.

Assoc Prof Walter Theseira (Nominated Member): Mr Deputy Speaker, thank you, and I thank the Minister and Senior Minister of State for their patience in addressing our questions. My question is: if hawkers are self-employed, then how can they be compelled by social enterprises or by the Government to work certain hours, or to meet other conditions of work. The problem seems to be that we are expecting the hawkers to bear some of the burdens of being an employee, but without the benefits of a guaranteed and stable income, for example.

SMS Dr Amy Khor: First of all, let me say that we have actually worked with our operators. So now, one of the key changes we have made to the contracts is that they need not open more than five days. They are only required to open only five days, eight hours a day. The hawkers are small businesses, entrepreneurs. They enter into an agreement with the operators to operate a hawker stall subject to, of course, various conditions that they are agreeable to, and these are some of the conditions.

The reason why you have to implement some minimum operating hours as well as minimum number of days, really, is because we want to make sure that the hawker centres are able to provide three meals – breakfast, lunch, and dinner, throughout the day, and throughout the week – in order to ensure the vibrancy of the hawker centres. The hawker centres are built to serve the community and one of the needs of the community, as I have said, especially in newer housing estates, is to have access to these food options for the three key meals. If you do not agree to such operating hours, then it would come back to the same thing that in some existing hawker centres, when you go there, they are closed or they are opened for only half a day and it does not serve the needs of the community. So, we are not compelling them. They actually enter into the agreement voluntarily and knowingly.

Mr Deputy Speaker: Mr Gan Thiam Poh.

Mr Gan Thiam Poh (Ang Mo Kio): Senior Minister of State, I think my question has yet to get an answer, that is, cost structure between the subsidised and non-subsidised stalls, one by NEA and by another model. I would like to know, generally, what are the operating costs – what are the similar ones and what are not the subsidised ones.

SMS Dr Amy Khor: First, let me explain that for both our existing hawker centres and our new centres, the construction costs of the hawker centres, as well as the cost of upgrading and maintaining the hawker centres are not recovered through the rentals. So, there is already an implicit Government subsidy for both. 

The cost structure for both existing centres non-subsidised stalls and new centres, really, is quite similar. Earlier on in my reply, I already gave a comparison in terms of rentals, that basically they are quite comparable and in line, taking into account the differences in age, stall size and so on of the hawker centres. In terms of operating costs, it is also quite similar, and I have also given you a comparison. There will be costs in terms of service and conservancy charges, table cleaning– these are the key ones. For dishwashing, what you see for instance, when you compare, some people will say, "How come it is much lower in the existing hawker centres?" That is because of the cost element of dishwashing is often not taken into account in the existing hawker centres since most of the existing centres do not have CDWs. But if you were to take that in, you have to employ somebody for say, $1,500, just to wash dishes, or if the existing hawker centre has a CDW system, then the essential costs are actually quite similar.

Mr Deputy Speaker: Mr Melvin Yong.

Mr Melvin Yong Yik Chye (Tanjong Pagar): Thank you, Mr Deputy Speaker. I would like to ask the Senior Minister of State on hawker stalls rentals. I believe that the Senior Minister of State said that the higher end of the hawker stall rental range is around $13,000. At about $3.00 or $3.50 a plate, the hawker will need to sell at least 3,000 plates just to cover the rent. If our hawker stalls are to serve the objective of keeping our food prices affordable, will the Ministry consider implementing a cap on the rental to better manage food prices. Even at half that rental, at $5,000, you will still need sell at least 1,500 to 2,000 plates a month just to cover the rental.

SMS Dr Amy Khor: Let me correct the Member. I did not say that the top-end rental at our hawker centres is $13,000. The range of $4,000 to $13,000 is, based on our survey, the rentals for coffeeshops and food courts, not hawker centres. That is very important. What I said was that the rental of our hawker centres, new hawker centres, is nowhere near to where the rentals are for food courts and coffeeshops which range, based on our survey, from $4,000 to $13,000 net of operating cost. The rentals for our new hawker centres, median rental, is about $2,000 net of operating cost.
As I have said earlier, what we are asking is that, to achieve our social objectives of offering affordable food prices as well as moderating food prices in the vicinity, at least one food option which is affordable, and most of these new centres have put that at about $3.00 or $2.80. Just one food option. We are not asking them to sell everything at budget prices. Therefore, they have a range of options. In fact, if you go to the hawker centres, there is a soup stall that I saw Kampung Admiralty, the prices ranged from $2.80 to $14.00 because it is premium; maybe there are scallops and all that.

Mr Deputy Speaker: Er Dr Lee, would you ask the next question? Next question, please? Question No 10.

Er Dr Lee Bee Wah (Nee Soon): Can I ask one more supplementary question, please?

Mr Deputy Speaker: Okay, I will allow one last supplementary question.

Er Dr Lee Bee Wah: Thank you, Sir. The Senior Minister of State mentioned that 50% of the surplus from the social enterprise must be ploughed back to the hawker centres or hawkers. I would like to find out what will happen to the remaining 50%? Does it go back to the company?

SMS Dr Amy Khor: Actually, to Member Melvin's question about rental cap which I have forgotten to comment on, our existing hawker centres, the non-subsidised stalls, are actually let out by tender. So, there is already a range of rental indications, and in fact we have removed the reserve rent. Therefore, even for our new hawker centres, when we evaluate the tenders, there are two things that we do. First, we get the professional valuers to assess what a reasonable market rent will be, and they actually make reference to the tendered rents of the existing hawker centres, and we also use that as a guide. So, I think that we will continue to monitor rentals to ensure that they are fair and reasonable to our hawkers so that they can make a decent livelihood.

With regard to the 50% surplus, at least 50% must go back to social benefits, the other 50%, of course, they can keep. But so far, for our new hawker centres, those that have already submitted their audited accounts, none of them had accumulated any operating surplus. It has only been one to three years. It just goes to show that just as new hawker centres need time to build up, to establish themselves, so do the operators.

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