SINGAPORE - Hawkers who submit high bids for stalls from November’s tender exercise onwards will no longer see their rents immediately drop to market rates after their three-year tenancy, as is the case now.

This is to encourage them to exercise restraint and prudence when making their bids.

The new initiative was announced on Nov 4 by the National Environment Agency (NEA) under its purview. Existing hawkers will not be affected.

ST understands that about 200 market and cooked food stalls are put up for each tender exercise. Over 6,000 cooked food stalls and more than 7,000 market stalls are currently under NEA’s purview.

Currently, after hawkers pay their tendered bid price as monthly rental for the first tenancy term, which lasts three years, they will see their stall rental rates adjusted to market rates, as determined by an independent assessor.

So hawkers in popular areas where bid prices are higher than market rates can expect their rates to come down immediately after their tenancy period ends.

The median assessed market rate (AMR) for non-subsidised cooked food stalls have remained constant since 2019 at about $1,200 per month.

Under the new scheme, NEA will instead adjust hawkers’ rent downward after the first tenancy period – the rent for the second tenancy period will be 50 per cent of the difference between the tendered rent and the AMR, plus the AMR.

From the third tenancy period onwards, the rent will be the market rate.

For example: If the tendered rent for a stall is $5,000 and the AMR is $1,000, the stall owner will have to pay $5,000 for the first three years of tenancy and then $3,000 for the second tenancy term.

The rent is then adjusted to $1,000 for the third tenancy term, which starts in the seventh year.

Essentially, the tendered rent will be adjusted to the AMR over a longer period, instead of at the fourth year of tenancy. This is to deter high stall tender bids and also to encourage bidders to take into consideration longer term business costs.

If the tendered rent for a stall is lower than the AMR, NEA will moderate the rental increase towards the AMR to help stallholders to adjust gradually. Rental increases have not exceeded $300 per tenancy term, according to NEA.

The agency said that only about 4 per cent of cooked food stalls in hawker centres today are paying rent at above the AMR.

Based on successful tender bids in 2023, about 56 per cent of the tender bids were above the AMR and 44 per cent of the tender bids are below the AMR.

Separately, about 30 to 40 per cent of hawkers from pioneer batches in Singapore pay subsidised rental rates. NEA said that the current scheme and the new scheme introduced on Nov 4 do not apply to this group of hawkers because they pay a flat rate.

Mr Anthony Low Hock Kee, 57, vice-president of the Federation of Merchants’ Associations, said that the new scheme is “a good move” as it will discourage people who want to take advantage of the current scheme.

Mr Low, who is also a cooked food stall hawker at Boon Lay Place Food Village, added that the new scheme will also assure newer hawkers that they do not have to bid too high for stalls.

Mr Kang Kaiming, 67, a hawker who runs a Hokkien prawn noodles stall in Aljunied, said that there should still be a minimum and a maximum bid price to be fair to all hawkers.

“High bids affect potential new hawkers who are really keen on joining the hawker businesses but do not have enough financial resources to do so,” he said.

He added that hawkers who submit high bids have to adjust their food prices accordingly and may not be able to sustain their business in the long run if their food prices are higher than other hawkers’.

During monthly stall tender exercises, NEA provides additional stall rental information to tenderers. It is currently reviewing what would be useful for tenderers.

The information provided now to tenderers includes the list of five highest tender bids received in past exercises, the final tender results of past exercises and resources on tendering for a hawker stall such as brochures and videos.

The agency will also be providing online business cost estimation tools for tenderers to make better business cost and revenue estimates.

Senior Minister of State for Sustainability and the Environment Koh Poh Koon said that the additional information provided to tenderers has to be something that is meaningful for them to make their necessary cost calculations.

Speaking at the Singapore Hawkers’ Seminar and Awards 2024 on Nov 4, Dr Koh said: “Rental may form about 10 per cent or less of their costs... The kind of dishes they offer will have impact on the kind of material costs they have to (factor) in as well.”