We Are Family: Jamus Lim on Chinese F&B chains, rising rents and saving Singapore’s local food culture

Best of, let's talk Singapore. Real Conversations. Real Family Life. We are Family. Only on Money FM 89.3. We are Family. I've got all my sisters. We are Family. Good morning and welcome to We Are Family. Here's a question for all of you. Are our Family Hockestalls and Heartland malls losing their identity to Chinese brands? Just think about this for a moment. When you visit your neighborhood mall, what do you see? Maybe you see Yakuun, Olchanki or neighborhood E3. But statistically, you probably also saw a Chinese F&B chain, Chargy, Lucking Coffee and a growing number of Marla Hotpot food concepts. These brands are expanding quickly in Singapore. And look, while many of us are very happy to enjoy the variety, there is a growing concern about the consequences for our home grown Singapore businesses. Yes, so the question we're asking today is, are local operators finding themselves priced out of the very spaces they've occupied for years? And could our Heartland malls eventually lose some of that local character that makes them distinctly Singaporean? It's an issue that Tsing Kong MP James Lim raised in Parliament, calling for greater support for local F&B businesses and for Singapore to preserve its food culture. Now, to be clear, this isn't about saying foreign brands should not be allowed here. It's about finding the right balance between welcoming new businesses, supporting local operators, and making sure our neighborhood spaces continue to offer a good mix of food choices. So, to unpack all of this, we're very pleased to have the man who raised the issue in Parliament, joining us in the studio this morning. Please welcome James Lim MP for Tsing Kong GRC. Welcome, James, to the show. Thank you for having me, and thanks for the introduction. I couldn't have said it any better. Fantastic. Okay, James, I live in Tsing Kong, and everybody's got a story. This is mine. Rivervale Plaza is my local mall. There's a local bakery. I've used it for years. My daughter loved the chocolate waffles there. Now it's been cut in half. Half of it is still the family bakery. The other half is a licking coffee. This trend is playing out across Singapore right now. What do you make of it? Well, Neil, I think the first point I should emphasize is that, well, of course, the idea of the malafification in your words of Singapore is evocative. But really, a lot of what I was sharing in that speech was emphasizing the increasing challenges that local FMB businesses face. This is an environment, of course, that affects both foreign players as well as local players. But I think the question I wanted to get people to think about is what it means when we start to lose some of our local players, the presence of our local players, and what it means when increasingly what we have are chain stalls and chain options, rather than the possibility of going to a small mom and pop bakery or a small mom and pop restaurant, serving recipes that their grandmother or great grandmother have been doing for a long time. I think we all inherently have a deep-seated yearning for this type of food. And I think there will be a loss to the local FMB landscape if we let that go. So what prompted you to raise this issue in Parliament? Was there a particular development that you saw yourself or something that you're hearing from residents maybe and business owners that made you feel this needed some attention? Yeah, I think it's all of that. But of course, a big part of it is that it's not new. We have been observing this creeping sense that you read this in the papers too. That basically FMB businesses are facing increasing challenges. The two I emphasized in the speech was about rent and manpower, the two big areas. And because of these factors, a lot of them brands that have been around for five or ten years, beloved and still actually having a decent customer flow will force to close down. And I think that prompts people to think, what is it that is causing this loss of our local brands? It's astonishing. And there's no getting away from the stats. The numbers suggest that Chinese brands still make up a relatively small proportion of more tendencies. We must make that clear, but this is the key. Their share has doubled, doubled in just three years. James, how are you interpreting these numbers? And are we seeing a real shift in the makeup of our neighbourhood malls? Well, of course, that ultimately will depend on customer demand and up to us in some ways. But we must remember that the makeup of the malls themselves are not entirely organic, right? In the end, if you are a customer and you walk into a mall, you have to accept what is on offer. So in the sense that distribution of stalls is curated, is curated by mall operators, many of which are nationwide. And to be fair, I've spoken to some of them as well. And they say they do try to have a mix. But in the end, very often what we observe is that the economics comes to dominate. And that is the element that I'm trying to rebalance, if you will, a little bit. Not just to have the highest bidder for the stalls, and then we end up with just a certain type of stall, the one that is able to pay the most. But rather, we want to ensure that the mix is something that our customers, that our people, in my case, our residents, are willing and able to access. Jason, coming in to say, this is not a challenge unique to Singapore. Many countries are facing similar threats and challenges. Today's consumers are increasingly adventurous and eager to try new cuisines, brands, and dining experience. Take the foreign brand Heidi Lau, for example, despite being a well-known international brand. It has also experienced business challenges and outlet closures in various markets. So I think it's important to talk about this, because there's nothing inherently wrong with consumers wanting to try something new. These brands are attracting customers and offering very competitive prices. So where do you draw the line? You talked about having a mix, right? At what point does healthy competition become a concern, particularly if local businesses are struggling to compete? And I think that's where, Audrey, I think that's where it's important to recognize that what I'm advocating for is not a shutdown of these alternatives. Because, as Jason suggested, in the end, we do have an increasingly globalized palette, increasingly international taste. And we want to have the opportunity to have access to these things. But remember, as I mentioned earlier, our ability to access these are not entirely within our control. It's impart curated by the model operators, and that shapes our ability to access a given brand or two. And at the same time, we will so much remember that when we think about local brands, we celebrate it rightly. We say that it's part of our intangible cultural heritage. We got it inscribed in UNESCO. So we don't want to give this up without thinking about implications of allowing just highest bidder economics come into the picture. At some point, we have to think about what's being not being priced by the market and by model operators. What are you hearing on the ground, whether it's residents or local businesses, are they approached you with concerns about rents or the changing tenant mix, as you mentioned? What are you hearing on the ground? It only is twofold, on the part of consumers. One thing we hear, especially for certain types of customers, I think, of course, of our Muslim brothers and sisters. And their ability to access certain types of food is literally limited by religion. And so what I've heard from households is that, well, they appreciate when there is always a halal option. But the halal option very often is, for instance, Indian Muslim. Again, they're happy to have it. We all enjoy Prata, but sometimes they also want to ensure that they have access to foods that they grew up with. The nasi padang store, the nasi trample store. So that is what we're hearing from on the part of households. On the part of businesses is what preoccupied most of my speech is a twofold thing. One is the costs, rising costs of manpower and the difficulty in filling their manpower needs in spite of offering pretty attractive salaries. And they have difficulties attracting Singaporeans into these jobs. And on the flip side, they also struggle with rent. And in particular, the speed in which landlords appear to be altering their rental rate increases. Sometimes we hear stories of rental rate increases of 30% or 50% in a year. And this is really difficult for small businesses to be able to adapt quickly. While we're hearing some first-hand feedback from listeners, including Alan, who says, first-hand feedback, operating costs are just no longer tenable. High rents are discouraging local hawkers and local brands. High levies and difficulty to hire willing Singaporeans to help aging owners. This is not just F&B, but again, like Neil said, can all Singaporeans make it a point to spend a portion of their spend on local businesses? They need our help and support. If not, local well-known brands we grew up with will disappear. Too many stories of retired operators. So I want to ask you, James, because you talked about this earlier. Do we have enough evidence to to say that local businesses are actually being priced out by foreign chains, rather than simply just struggling with the high cost of doing business nowadays. - So obviously when the focus of my speech was on F&B, and because that's where it's most evident in terms of thinking about the ability, as the listener shared, to attract Singaporeans to want to enter into that area. I think if you look at the data, generally, if you look at retail stalls, for example, there is still a possibility, and in fact the government did cite this, that the majority, not just a majority, but a significant majority of businesses are still Singaporean-owned. The challenge there is what they're offering, in a sense, and where is most evident that we want to have a local flavor is in F&B, because that's something that gets right into our hearts and our stomachs. - Let's talk about it from an economic standpoint. I've read many reports that suggest that these brands are effectively using Singapore as a short window for the region. They set up here, they pay the high rents, whatever they may be, and they effectively are willing to accept their outlets as loss leaders initially, initially, because their real target is the bigger, Southeast Asian markets. What's your type? Is there any evidence of this? - So I hate to be a two-handed economist, but I will be. So first, it's worth conceding that, indeed, many of these businesses, especially from China, are well-honed with competition. So they are, indeed, very competitive, when they have large markets back in China, and so when they expand to other parts of the world, they carry them a certain sense of managing their supply chains and logistics that make them extremely tough competitors. But we should also keep in mind that it's not just purely economics in the sense that, as you mentioned, they may want to have a marquee name, like Singapore, in the places that they have access to. In fact, you see this proudly displayed in many brands, where they'll list all the cities that they are, they have a presence in very often. In fact, when I was growing up, it was typically London, New York, and Paris. And now you see, increasingly, Singapore being listed alongside, and I'm very proud of that as a Singaporean, to have our name in the marquee lights. But at the same time, we don't want to be a lost leader just for a chain to be able to enter, put that as one of the markets that they serve, but crowd out the ability of our local businesses to compete just because they happen to have deeper pockets where they can cross subsidize with the other parts of their business. - Okay, James, this is economics 101, supply and demand. When I go to Rivervale Plaza, which I do every single day, I see my Senkung neighbors queuing up to go into luck in coffee. Nobody's forcing them, nobody's holding a gun to their head. It's good, I don't drink coffee, but for what I hear, it's good, decent coffee, it's affordable, that's key for most people today, it's the same with Chargy. Just as I pass McDonald's, it is also packed, which is right next door to luck in coffee. One is from China, one is from the US, in the end, why don't the success of any business be dictated by consumer choice? - Yeah, and Neil to be clear, I think in the long run, our local businesses have to be competitive. So a big part of my suggestions, for instance, when we think about managing the cost of rent. My argument isn't that rent should be capped at some kind of ceiling and artificial ceiling mind use just so that our local businesses can be present. Rather, our local businesses do have to up their game and manage that competition, but it's about the speed with which they have to face their competition. And that's why my suggestion was managing the rate of increase of rent. I just think about yourself, right? If suddenly you were given flat, for instance, and you are paying a mortgage and interest rates double on you, that's tough for anyone to adapt to. So the idea that I'm suggesting is just managing your speed with which this transition occurs to give time for our local businesses to find their feet. And in fact, I hear this exactly from the business owners too. They recognize that they have to be competitive and offer compelling product. But what they don't have is the same kind of deep pockets to ride out situations, right? So if you're going to increase their rent by 50%, they simply sometimes just cannot keep the doors open, and that's when they're forced to close. - So Christine, our listener is writing in to say, for me, the concern is less about where new commerce come from and more about whether independent local businesses can survive alongside the well-funded chains. Singapore's food culture has always absorbed outside influences. We lose something when those influences replace local character rather than add to it. But I do want to step back a bit from the foreign competition issue. How much of this is really a wider structural problem, and meaning, you know, what local F&B businesses still be struggling even without the arrival of these bigger foreign chains, simply because operating costs here are very high. - They are, and that's why a big part of it is how we manage those costs. Rent, as we have already discussed, I think a part of it that comes from a policy about how we price our land, and how the pricing of the land ultimately gets reflected into rental rates. And that has increased enormously. As anyone who is in the market to buy a house will tell you. So that is an element that I believe has affected the ability of our businesses to cope, adapt, and compete. The other area is, of course, manpower. And of course, they feed into each other, right? Because if you're facing higher costs yourselves, then you will agitate for higher wages, and eventually we get this feedback loop. So we have to tackle some of the problems I believe at the core, if we're going to be extremely high cost, what does that mean for the ability of our homegrown companies to be able to stand on their own two feet? - I have a more philosophical question for you on a Thursday morning. What constitutes local cuisine in the first place? Because here's a very good point from Benson. Bear with me, because it will make sense at the end. Benson says, you know what else concerns me? More and more of my favorite local dishes, the ones I grew up eating, like fishball noodles, law me, carrot cake, chicken rice, are now being prepared by foreigners. Before anybody panics don't get me wrong, I have absolutely nothing against foreigners cooking our food. What concerns me is how the taste is changing. Once I had hocky and prawn me that tasted more like a noodle dish that I had in China. It wasn't bad, that's not the issue, but it wasn't the hocky and me I grew up with. So how do we define local food? And that is a very philosophical question. Is high in an East chicken rice or masala dosa, any more local or foreign than Marla Hotpot? None of them originated in Singapore. So if we start saying we need to protect local cuisines and local stalls against foreign brands, where's the line? - So Benson actually touches on something that many Singaporeans feel intuitively. Now, as he expressed, the idea isn't about whether it is delicious or not, but a sense of how we believe it's supposed to taste. And that's why one of the points that I made in my speech was that we recognize the need as we expand our ability to absorb foreign manpower, especially in our hocker stalls. We want to also have those that are working in those stalls reflect that sense of deep knowledge and understanding of how that food is meant to taste like. And a big part of that is that Malaysians, indeed, have cuisine that is very similar. They have distinct differences, obviously, if you have Penang, Chakwe Tiao is the best. - It is, well, the point of contention. - I've said it, but it is distinct from that of Singapore in Chakwe Tiao. But by and large, lots of Malaysian food is very similar in taste to that of local food. And in contrast, you could have a Chinese chef or an Indian chef, and they could learn the techniques of cooking a local dish, but it won't taste the same. In Sinkang, the area that I represent, we had a chain. Actually, it wasn't a chain, it was a local business. It has several storefronts. And they were hiring Chinese chefs to cook halal-style Chinese food. And it just didn't work. In the end, that stall has since turned over. And I believe it is in no small part because the replication is not quite there. The ingredients are the same, but it doesn't quite taste the way that we will like it to taste. - But I've had Sito, Macan Sutra guy on this show, and he sees the other side's look, guys. Singaporeans are classic complainers. You don't want to work in the hawker centers. You don't want to follow your grandparents into the job. You leave us with no choice but to employ foreigners, and then you complain when it doesn't taste like grandmother's dish. Can we really have it both ways? - I think it's all about balance. And this is I think a recurring theme in our conversation so far. It's not that Singaporeans don't want to enter, in fact, you hear many stories of Singaporeans who go from professional jobs into hawker life. But you have to ensure that the hawker life is at least something that they can cope with, they're remunerative to a certain degree, and not something where at the end of the day, they're giving up a $6,000 or $7,000 office, condition job to sweat away something that they love to be clear they want to do it but just because of the operational costs in terms of hiring assistance to their stalls as well as rent it ends up that would they have a salary of a thousand or two thousand dollars that's just not sustainable in the long run yeah so we're getting so many comments about the rent and of course I think we've hit a nerve with our listeners so I need to rattle through some of them Cornelius good morning Cornelius says the rental market needs more regulation both in residential and commercial real estate it cannot be that landlords ask for rent increases of 30 50 or more percent PM ton also coming in to say most of the time the owners of the property stalls can increase the rent when the owner notices that the FNB outlet is very good and a new writer in her Terrence has just written in to say I think the discussion misses the elephant in the room it is more about landlord 's ability to dramatically raise rents above the inflation rate we are in danger of being a renter economy and that is an undesirable outcome so we need to address all of these questions I know we talked a lot about rent already but what do you have to say to these listeners well and we hear it from the other side too business owners that say that well when it's time for the rental renewal the landlord comes and says well you know I'm going to raise it by 30% 40% and they say well I can't cope with that rate of increase I can't pass it on to my customers and they're told well is either take it leave it because I have other businesses waiting in the wings I think that's the element right that you have these deep pockets by foreign players very often but basically some local but they're chains and so they have the ability to ride out that thing just so that they can establish a presence in the local market that that's the challenge right so that's part of it and we shouldn't forget that the country's biggest landlord actually is the government or government linked companies so we don't want to completely absolve ourselves from that area as well to be fair during the time of COVID there were significant rent increases and the government actually stuck in and they said that for commercial enterprises that were run directly by either MND or by NEA they managed the rate of increase of rent in these operations so the question is why is it now that we are not applying that same standard so just to be clear I'm not saying that we should cap the level of the rent that eventually gets to but rather I think that is absolutely important that we have a smooth transition path just managing the rate of increase but looking at it from the other side the landlord we're you know we're often painting the landlord as the pantomime bogie man in all of this but the landlords are often Singaporeans they're Singaporean citizens there's not a Singaporean listening to this radio show right now if someone said to them the job you're doing for me or the product I want I'm going to give you 30 to 50% more nobody's going to turn that down nobody if a Singaporean and it is often a Singaporean is offered a 30% increase in anything they're going to take it how can you possibly blame the landlord if you do have a franchise from wherever they're from saying I will pay you 30 to 50% more for this lease who is going to say no so a few points about it and you know first is that I agree that very often the beneficiary would be on the other end of the transaction the Singaporean what we want to keep in mind though is that Singaporean we don't want him or her to develop a mindset that what I'm going to do is to hang around and just collect rent and because as Audrey alluded to this creates a rent here mindset we're not productive when we're collecting rent right so we want our Singaporean businesses including landlords to think about how they are actually being productive if what they're doing is just enjoying the fact that you have high bidders enter into the market then I think that fosters a mindset that they're not chasing productivity or improvements in efficiency but rather just accepting high bids so that's the first point second point is many other countries have rolled out laws of this nature again not absolute rental caps but across many countries in Europe and states in the United States you have laws that do protect existing tenants not by completely removing the market pressures but by saying every year you need to have a managed rate of increase and if you want to terminate the lease you need to give a justifiable reason other than just well my outside option is someone bidding at 40% higher than what you are giving me so you're suggesting that a possible subsidy or rental cap for local tenants is that correct no no no no absolute rental cap just a rate of increase so for instance that this speed in which you can increase the rent would be limited to say 7% or 8% rather than the existing free for all where you have a situation when someone can double your rent and you are just left with making a decision as a business owner on whether to accept it or not how would you legislate what constitutes a local brand so for local branches I want to be eligible for this so-called staggered rent how would they qualify we come back to what constitutes local food are you a local business and so on how would you judge it no no so just to be clear that the rental rate increased applies to all what apply to all businesses yeah so this would be a proposal that were seek to balance between the ability of the landlord to extract rent and the ability of businesses to be able to compete in the marketplace the idea of having a presence of local brands that's a separate argument about having a certain quota and Neil just to be clear we also talked about how mall owners do make a good faith effort to try to curate their tenant mix to include local brands but I'm saying that this has to be a much more a concerted and deliberate effort perhaps with the intervention of the government saying we want a certain number of halal food options we want a certain number of local food options as tenants in each more Patrick says in the 1960s Chinese food stalls at road sides when you at that time now it's just another wave food from China is occupying more empty spaces in the mall and so on it's hard to get the balance out but we just need a few more years to get used to it and look that is a very valid point James food evolves it evolves it's evolved for decades if not centuries in the UK obviously where I'm from chicken tikka masala is now a national dish in the UK which would have been unthinkable when I was a kid but it's as common now as fish and chips and anything else in Singapore chicken rice we know is from the province of Hainan Roti Prata came from South Asia isn't this just another example of food evolution in Singapore and I don't want to deny that I actually don't think it's a bad thing as you mentioned Neil it's something that Singaporeans have as a trading nation as a globalized city we have always embraced influences from abroad in fact if you look at we use the term malaiification but if you look at the malai trend there are even local owners and local brands that are entering into the space offering a type of malai that is just a tad less salty just a tad less oily and that is a little bit more catered to local taste so to be clear there's nothing wrong with foreign brand just like how we've increasingly seen and when you look at the west for instance you see local adaptations of pasta and pizza that cater to that local style and the hope of course is that some of these entrepreneurs will eventually establish themselves as a chain brand in Singapore and then expand into the region so we want to encourage this kind of influence this kind of competitive influence but we need to give them a foothold we need to give our local guys a foothold and that is the the thrust of what I'm arguing yeah well Derek has written in to say James mentioned many good points the key thing is how to level the playing field for small and upcoming players to support homegrown brands to grow and compete all while keeping our local identity but Christine has written in to say I don't agree with the rent controls Singapore thrives on free market principles and if we start doing this where do we draw the line do we ask private home owners to do the same when rents are unaffordable so we know that you brought up some measures you know talking about limiting annual rent increases exploring alternative ways of allocating commercial spaces tell us more about the other proposals that you suggested in Parliament so one of them which I alluded to earlier on is at the moment we have restrictions on the ability to have foreign manpower now to be clear I understand the premise behind this principle to have a cap on or a ratio rather it's called the dependency ratio ceiling for the number of locals that businesses can hire relative to foreigners that said it's empty clear especially from the perspective of the small business owner that some of these ceilings aren't working they aren't working because there's no desire for Singaporeans to want to enter into F&B and this is and I was shocked when I first heard this this is in spite of salaries that are in the order of four or five grand so competitive even relative to an office job but of course the lifestyle is very different it tends to be intense and it can be tough so the question is do we want to adjust this as well and it's not unprecedented in fact if you look at different sectors of the economy. If you look at marine shipyards, if you look at construction, they have different ratios. So what I'm suggesting is that we can think about how much we want to preserve this local F&B culture and say perhaps one of the tradeoffs that we can make is to relax some of these DRC ceilings in this particular sector. James Lorraine agrees. Lorraine says James's recommendation on rent, rate, increase, control/cap may work in the freest market like the USA. Certain cities also have rent, rate, increase caps at say 10% and so on. I mean are there international examples like the US that you turn to that you think could potentially work in Singapore? Yeah, so in fact one of the previous listeners was saying that they are uncomfortable with interfering with the free market. And again, just to be clear, I'm not suggesting that we cap the level that rent can get because I am absolutely certain that if we were to do that we would end up with situations that not only will you be uncompetitive but you run the risk that landlords allow their own properties to deteriorate and you end up with these slum landlords. We don't want that at all. What we want is some kind of friction introduced into the market because otherwise as a small economy, as a small market, we run the risk that our local entrepreneurs can't compete with those that are coming in with much deeper pockets just because they serve a much larger markets elsewhere. So Lorraine also came in to say local restaurants closing one after another is a sign of economic trouble brewing underneath. People's purchasing power is weakening. The truth is local or foreign, if it doesn't suit the taste buds of fellow Singaporeans it will eventually close down. Well, what do you say to this if we don't like we don't buy? It's true. We aren't very ruthless when it comes to our food choices. We are. What I will say, as I alluded to earlier on, is that those choices, as much as we like to say they reflect the pure free market, aren't always so, right? Because in the end, the things that come in firstly were affected by fads. I was alluding to early on in the late 1980s and 1990s. We had this bubble tea fad. I loved it. Well, I still love the tea. That's why it became a fad and that's why it caught a nation by storm. But in the end, what happened was that you had three, four bubble tea shops in a row, not all of them could compete in the long run. And what happened in the meantime was that you crowded out other legitimate options. So we must be mindful that as much as the consumer drives a lot of this, the consumer may also be subject to these kinds of fads. And in the end, we are worse off, I believe, if we just have bubble tea as our only beverage option, very much like an expanded menu of drinks, thank you very much. Okay, crystal ball time, economic crystal ball time. If I walk into Compass 1 or River Val Plaza, five, ten years from now, what would you hope I find in the average heartland more? So I would expect, and I don't think that this will change necessarily, the presence of chains, right? Maybe it will be a McDonald's or some other Western fast food chain. Maybe it'll be something that would be an Eastern brand, like Amala stall and so on. But I will also want to have the opportunity to stumble on a local business, for which this is the only stall that they operate. It's family run. They're doing their grandmother or great-grandmother's recipes. And I would also like to see local businesses that found their own niche, right? They adapted some concept, just like we talked about Hainanish chicken rice, lots of Singaporeans who go to Hainan, I disappointed, because chicken rice does not taste like the chicken rice that we have adapted, and in my view, made better. So we want that ability as well to be able to say we have our local champions that have adapted tastes and cuisines and styles from the rest of the world, but we need to give them the opportunity to be able to compete today, so that they can be present in the future. And that's the thrust of what I've been pushing for. Yeah, well, we have so many listener comments, and I want to give a final shout out to Nathan, who says, "Hi, Neil, James, I live in your neighborhood of Sankang. Just ping me up whenever you're free and available. We can always catch up for a local coffee chat at Compass One." How about that, James? Always happy to meet with residents. So we've been talking about the growing presence of foreign FNB chains in Singapore and whether local businesses are getting a fair chance to compete for space in our neighborhood malls. Thank you once again, James Lim, MP for Sankang GRC for coming in to let talk Singapore. Thank you for having me.