Easing food prices with more hawker centres

Ten more hawker centres will be built over the next 12 years in a bid to moderate food prices here, Second Minister for the Environment and Water Resources Grace Fu said in Parliament yesterday.

These will be built in new estates or in existing ones that are relatively under-served, such as Bidadari, Sengkang, Choa Chu Kang, Bukit Panjang and Bukit Batok, Ms Fu said during the debate on her ministry's budget.

This is on top of the commitment by the Ministry of the Environment and Water Resources (MEWR) in 2011 to build 10 hawker centres over 10 years. The first two of those centres will open in Bukit Panjang and Hougang this year.

"Altogether, the 20 new centres will inject an additional supply of more than 800 cooked-food stalls and we believe this will help to further moderate rentals," Ms Fu said.

Market competition can help keep food prices in check, because food prices tend to fall as the number of stalls selling the same type of food increases.

Although the price of food may differ from one hawker centre to another, a statistical analysis has found that if there is one other stall selling a similar type of food in the same centre, prices are on average 8.4 per cent lower.

The rise in the number of hawker stalls is one measure the ministry is taking to ensure food prices do not increase too much over time.

In response to concerns from Yeo Guat Kwang (Ang Mo Kio GRC) over a 2013 report by the Consumers Association of Singapore that showed rising stall rents at hawker centres were linked to more expensive food, Ms Fu said there is "little substantive evidence...that rentals are the main drivers of hawker food prices".

She pointed out that rentals typically comprise only about 12 per cent of a hawker's total costs - a small fraction compared with raw materials like ingredients, which make up more than 50 per cent of costs.

Manpower accounts for another 17 per cent of costs, while utilities take up 9 per cent.

Ms Fu also noted yesterday that the average stall rents for the six hawker centres in Toa Payoh were around $650 per month, with more than half of the stalls, primarily subsidised ones, paying $320 or less.

Overall, more than 85 per cent of hawkers pay less than $1,500 in monthly rent, Ms Fu said.

audreyt@sph.com.sg

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