Assoc Prof Jamus Jerome Lim: During last year’s Committee of Supply, I shared data that volunteers and I had collected, showing that the difference between coffee shop food in Sengkang versus mature estates amounts to around 50 cents, which is significant for many families. I had suggested then, that the bidding for coffee shop spaces could be altered away from the current price quality method (PQM), to a system where the winning bidder would be awarded the price of the second-highest bid.
This could potentially contain the race to the bottom or race to the top, depending on one’s point of view, behaviour of coffee shop operators; and, in turn, short circuit the pass-through of high tender prices to high rents; and, in turn, high rents to high food prices. I am pleased to see that in Sengkang, a new NEA-run hawker centre has opened up in Sengkang Grand Mall in Buangkok and another is slated to open at The Village in Anchorville.
I believe that increased competition among vendors will, at the margin, likewise help control the rapid rate of food price increases seen islandwide since the start of the pandemic. But both of these cannot be the full story. After all, if the Government truly believes that competition alone would be sufficient, it would not have ceased selling coffee shops to private operators since 1998.
It would not need to introduce a substantial weighting in the PQM that includes factors, such as whether budget meals are promised by bidders. Indeed, the Government’s own statistics belie this. It was recently revealed to this House that among half of coffee shops owned by HDB, almost all of them did not choose to increase their rentals over the past five years. In contrast, there is no such assurance for private operators. And in our conversations with stall vendors, many have shared that back-breaking rent increases have forced them to either pass-through costs to their meal prices or risk giving up their tenancy altogether.
If we are unconvinced that rental increases may be well-contained by competition alone, it may make sense to return control of our coffee shop to HDB hands with the outright purchasing of existing units if necessary. In addition to being able to exercise greater control over rental price hikes, which it has already demonstrated a willingness to do, this will undoubtedly help Singaporeans who are struggling with expensive meal prices.
But MND can do more. The current strategy is for MND to content itself with working with the budget meal requirement into the PQM matrix and to publicise where one may purchase such cheap meals. But since the framework only requires that vendors offer at least one budget meal, in reality, this translates into each coffee shop offering only a small handful of very plain vanilla options, think fishball noodles or two-vegetables one-meat cai fan or kopi and teh-o. This quickly becomes limited and boring.
One alternative is to incrementally increase the weight placed on the quality of the bid for every additional budget meal the tenderer includes in its bid, or to receive a percentage discount on their final bid price that increases as the number of budget meals offered increases.
The Senior Minister of State for National Development (Ms Sim Ann): To the point that Assoc Prof Jamus Lim has made, I wish to clarify that for HDB coffee shops let out via PQM tender, we require at least six stalls to provide one budget meal each alongside two budget drinks. And for renewals of HDB-owned coffee shops that are rented out, we require four budget meals and two budget drinks. This ensures a range of food and drink options at affordable prices. I thank Assoc Prof Jamus Lim for his support of the PQM tender framework as well as the suggestions that he has made and we will refine the framework further if necessary.
Ministry of National Development
5 March 2024
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=budget-2376
Office of the Leader of the Opposition 