I had lunch a few occasions in the canteen of the SIA Training Center and the Defense Science Organization. The prices were half of those charged in the privatized canteens. I was told that the stall holders had to pay a rental, but it was a modest rent and not the highest that the market could bear. Due to competition from a few stall holders, the prices had to be kept low, to cover the cost of rental, the ingredients and the labor. The stall holders could make a living, and the prices were kept low.
This was the business model adopted in the market and food courts that were leased out by the HDB and the Ministry of Environment two decades ago. It was a good model. It did not follow the maxim of tendering to get the highest market price, i.e. to maximize the returns. The controlled rentals still reflect the cost of cost of building these facilities. It was a good model to keep prices affordable over the long term, and to keep the cost of living low.
To prevent abuse by the stall-holders, the landlords forbid the sub-letting of the stalls. Exceptions can be made for older stall holders who wish to pass the business to their children. This can be managed, and is not a serious challenge.
Unfortunately, the Government decided to privatize and sell the stalls to the private sector. This has produced results that turned out for the worse. It is time to change and go back to the old model.
The recent move by the Government to build new markets and food courts that are operated by social enterprises is a step in the right direction. I wish the Government well in this experiment and hope that they have the wisdom and experience to deal with the challenges.
This was the business model adopted in the market and food courts that were leased out by the HDB and the Ministry of Environment two decades ago. It was a good model. It did not follow the maxim of tendering to get the highest market price, i.e. to maximize the returns. The controlled rentals still reflect the cost of cost of building these facilities. It was a good model to keep prices affordable over the long term, and to keep the cost of living low.
To prevent abuse by the stall-holders, the landlords forbid the sub-letting of the stalls. Exceptions can be made for older stall holders who wish to pass the business to their children. This can be managed, and is not a serious challenge.
Unfortunately, the Government decided to privatize and sell the stalls to the private sector. This has produced results that turned out for the worse. It is time to change and go back to the old model.
The recent move by the Government to build new markets and food courts that are operated by social enterprises is a step in the right direction. I wish the Government well in this experiment and hope that they have the wisdom and experience to deal with the challenges.
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