Free market and the common people

Categories: Singapore

Starting a business has always been difficult. This is because one must have a sum of money before one can get started. In Singapore it is no different. Two of the most substantial recurrent cost are rental and staff salaries. Staff salary can be regulated but shop rental is different.

Housing and Development Board (HDB) used to set a fixed rental for the people. For new premise, anybody who wish to set up a business will subscribe to a balloting or 'lucky dip' system. In this way, there is a level playing field for the common people. In the older premise, such rented shop can transferred to another person who will then pay the same rental rate as set up by HDB. Of course the new tenant will have to 'compensate' the previous owner for the transfer.

However things change a few years ago when the HDB started the bidding system. In this system, those with deep pockets will have an advantage. To the common people, this add to an already big hurdle they have to clear. How are these people going to compete with the big players in bidding for a shop space? They can't compete for shops in the open private establishments. Unlike before, where the only avenue is the HDB shops, now this avenue is also closed to them. Starting a new business just got that much more difficult!

In fact now the big players can decide the fate of the common people. Whether the common people can open a business depends on the 'goodwill' of the big players. It is as if the big players are the hunter and the small common people the scavengers. Whatever is left behind by the big players, will be taken up by the small people. Luckily the large players has essentially shy away from the heartland. However when the turf gets smaller and smaller, there is nothing to stop these big players from squeezing out the small common people.

Free market is only good when the competing parties have similarly deep pockets. Once there is too much of discrepancy, the smaller player will be elbowed out of competition.

Should the government control the market again? Answer is no. The irony is that Singapore needs free market to compete internationally. On the other hand at the micro-level, such practice will put further pressure on the poorer segment of society. Starting a business becomes more and more difficult. Even those small businesses will be at the mercy of the larger controlling party. There is nothing to stop such party to increase the rental or even increase a bid for an already occupied shop space thereby displacing the original tenant.

In the attempt to narrow the widening gap between the rich and the poor, it is hoped that the government bring back the balloting system for its shop space and hawker centres. This at least will give the poor common people a chance to compete 'equally'. Otherwise, one day we may see a whole hawker centre being run by Kopitiam or Banquet. Already these once classy foodcourt establishments has slowly muscles into the heartland and there seems to be nothing the poor common people can do to stop them.