F&B association calls for rental caps, foreign worker levy removal in Budget 2026 wish list

[SINGAPORE] As the food and beverage sector continues to grapple with a “perfect storm” of challenges, the Restaurant Association of Singapore (RAS) has called for strategic intervention in the upcoming Budget 2026 to address the industry’s “financial fragility”.

In a media release on Monday (Jan 19), the association highlighted that the sector is primarily afflicted by “escalating operational costs, persistent manpower shortage and intense market competition”.

These factors threaten the long-term viability of F&B businesses, evidenced by the sector’s contraction in 2024 and record-high business closures, RAS said.

“The RAS has called for support from the government to consider targeted, structural interventions crucial to enhance cost predictability and stimulate domestic demand within the F&B sector,” the release read.

Manpower cost restructure

To provide higher co-funding support for wage increases, RAS recommended that the Progressive Wage Credit Scheme (PWCS) be stepped up to 75 per cent for another three years from 2026 to 2028.

The association noted that small and medium-sized enterprises and low-price operators struggle with the absorption of mandatory wage hikes amid depressed revenue.

Furthermore, RAS called for “more regular and timely payouts of PWCS” compared to the current yearly practice, which would assist employers facing delays in payment with cash flow management.

RAS also called for the removal of the foreign worker levy. The association argued that as the Progressive Wage Model (PWM) has been implemented since July 2023 to set a wage floor, the “initial policy intent of using levies to prevent wage depression may now be redundant”.

Rental and cost predictability

Citing rental as a major fixed cost for the industry, RAS emphasised that measures to provide cost predictability are essential for businesses to make informed financial projections.

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The association “calls for the introduction of policy interventions (for example, legislation) to control excessive rental renewal price hikes, potentially by capping increases or tagging them to macroeconomic performance (such as gross domestic product); and for rental data transparency from landlords to be made available to tenants as an essential part of lease negotiations”.

Supporting local brands and families

The association highlighted that local brands and concepts are integral to Singapore’s status as a vibrant hub, but noted that local owners “might not have the same resources as foreign brands that are entering Singapore more aggressively today”.

To help local brands compete on a “more level playing field”, the association asked for stronger support measures, such as an increased foreign worker quota and streamlined licensing fees.

Additionally, while supporting family friendly policies, RAS noted that small businesses face “significant costs finding and funding temporary replacements” for employees on parental leave, and sought government funding to offset this burden.

“Breathing room” for operators

Benjamin Boh, president of RAS, stated that the proposed measures are necessary to give owners and operators “breathing room to improve their business structure while surviving the external market environment”.

“There is no doubt that a vibrant and thriving F&B industry is key to making Singapore a great country to live in and visit,” said Boh.

He added that the industry has “uplifted standards significantly over the years”, including in food safety and paying low-wage workers better through the PWM.

For more of BT’s Budget 2026 coverage, go to bt.sg/budget26