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RISING COFFEE SHOP RENTALS SHOULD BE TAKEN SERIOUSLY

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RISING COFFEE SHOP RENTALS SHOULD BE TAKEN SERIOUSLY

Post by Darkmen on Mon Aug 26, 2013 4:08 pm

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The Housing and Development Board does not intervene in the rents of individual stalls at eating houses because these are business decisions to be negotiated between operators and stallholders. (“Coffee shop for sale, vendors hope for S$12m”; Aug 22)

This implies that facilitating market forces and the freedom of contract is a dominant consideration in the HDB’s regulation of its commercial properties. To that, I proffer several observations.

First, this is likely to entrench existing hierarchies between operators, stallholders and consumers. Stallholders may have less bargaining power than operators because of the difficulties in relocating, having established a customer base in the neighbourhood.

Many consumers may have even less bargaining power if they find it difficult to resist price increases passed on from operators due to a lack of comparable alternatives.

To not intervene except in instances of “excessive price increases” and “speculation” is to suggest that this hierarchy is largely acceptable. This largely ignores stallholders and consumers as stakeholders in how and at what price hawker food should be provided.

A regulatory response is warranted, considering the importance of affordable hawker food to ordinary people’s lives and our shared heritage. According to legal scholar Gunther Teubner, the law may be used to structure bargaining relations so as to equalise bargaining power.

Law that subjects contracting parties to mechanisms of “public responsibility” could ensure that various externalities, not just economic costs and benefits, are taken into account.

In the present context, this could mean requiring parties to satisfy the HDB that prices would remain affordable for both stallholders and consumers before the transaction may take place.

The HDB could also incorporate price sustainability as one of the criteria in the bidding for new coffee shops and when tenancy terms expire for existing ones.

In May, the Acting Minister for Culture, Community and Youth spoke about steps taken to prevent erosion of local food cultures. The Prime Minister has also emphasised the need for Singapore to develop shared values beyond free market individualism and for a fairer society.

On the issue of hawker food prices, one dear to many Singaporean hearts, these objectives do converge. Rising rentals may be only one of many factors contributing to increases in hawker food prices, but should nevertheless be taken seriously by regulators.

Hong Cheng

Related Articles: HDB SHOULD INTERVENE IN SALES OF COFFEE SHOPS, FOOD PRICES
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