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NTUC – Social Enterprise or Profit-driven Business?

By Jen ,

MP and head of NTUC FairPrice Seah Kian Peng feels “insulted” by Workers’ Party MP Png Eng Huat’s comments questioning why NTUC FoodFare is entering the hawker centre business in Bukit Panjang.

As reported by Channel NewsAsia today, Seah asserted “…for the avoidance of doubt, NTUC FoodFare does not enjoy any subsidised rental from government or NEA (National Environment Agency) in any of the premises they occupy as Mr Png suggested. They have to make an offer and if successful, pay market rates for the (use of the) premises, like anyone else.

“Thus I find Mr Png’s insinuations insulting, not only to the co-operatives, (but) they also cast a slur on our efforts and demean the work of the many people who work in and for co-operatives.” Seah also said that co-operatives are a check on pure market forces and they have social, not political ends. (To this, I disagree, as NTUC is clearly also being used to support the PAP and government causes).

To those who are unaware, FoodFare operates a chain of food courts across Singapore and is but one of the many chain businesses operated by the NTUC Group which include insurance, childcare, supermarkets and property development (yes property development under Choice Homes business  social enterprise)

I too am insulted. Insulted by Seah’s act of indignation and his blustery defence of the NTUC.  Although he has stressed that the group does not enjoy subsidies from the government he has conveniently failed to mention that the NTUC businesses do not pay any taxes as they have classified themselves as cooperatives! No Tax means a HUGE, HUGE savings every year! Isn’t this a clear advantage in NTUC’s favour?

Shouldn’t these savings translate to much lower prices across all their businesses – cheaper food, cheaper groceries, cheaper apartments, cheaper insurance policies and lower rentals? In the FoodFare annual report, they claim that their prices are a bit cheaper than other competitors in the same area.  Well, I don’t see it when I eat at a FoodFare foodcourt having paid $5 for a plate of economy rice at one of its outlets.

With such big tax savings, shouldn’t they reduce prices meaningfully to fulfill their national mission and social enterprise roles to help consumers cope with the rising cost of living?  And please hor, don’t try to pass off the usual supermarket promotional prices and the occasional community events as fufilling their duties. As for keeping prices low at the FairPrice supermarkets, yes they have a small basket of basic essentials where they keep prices competitive, but then so do some of the other major food retailers.

The NTUC group of businesses are self-defined as a social enterprises.  Click on this link to view the full list and full scale of all the businesses social enterprises owned by NTUC.

Granted, they do have some community projects to help the needy but fact is they are being run like a mega profit-driven conglomerate.  There was a time, I heard, when one of their CEOs even took great pride in announcing to the press how much fat profits his chain of outlets made.

Once a upon a time, the NTUC group may have started with well-meaning intention of being a social enterprise to help the people and society. But somewhere along the line, they have grown and morphed into a giant GLC-that-doesn’t-pay-taxes.  Fact is,  their businesses are guided by profit maximisation doctrines and given their size, they compete intensely with SMES and MNCs for business, for commercial space and for labour resources.

And from what we have seen, they charge similar prices as other private businesses for the items they sell – be it a bottle of ketchup, a condominium or an insurance policy.  Go and have a meal at NTUC FoodFare and shop at FairPrice and the atas (pricey) Fairprice Finest and the prices speak for themselves. Come to think of it, why did NTUC even venture into operating the upmarket FairPrice Finest supermarkets? What value does it bring to their social enterprise mission and how does it benefit society?

Meantime, all other normal businesses pay taxes and many smaller players struggle to compete as they do not have the size nor the power and connections that NTUC has.

For Seah to imply that NTUC has zero advantage in running its businesses is truly disingenuous.  To what extent are the NTUC “social enterprises” really benefiting and helping consumers and to what extent are they actually hurting the business arena here is seriously open to interpretation.

A month ago, the well-respected Willie Cheng, a retired management consultant, wrote n excellent paper on Social Enterprise published by The Straits Times. In it he noted that “a social enterprise is loosely defined as a business with a social mission. However, there is a surprising lack of clarity and agreement about what it actually constitutesdespite the abundance of literature and conferences on the subject.”

Cheng also noted that “currently, there is no legal structure for a social enterprise in Singapore. An organisation can choose to either be registered as a charity (in which case it forgoes doing business) or be registered as a full commercial company (where the profits can, but need not, go to charity).

He added : “Most social enterprises in Singapore are set up as private limited companies and we have to take the word of these companies that they are social enterprises”.

Do we have to take their word for it? Or is the onus on such companies to be more transparent and to start behaving more like the social enterprise that they claim to be?

 

Article first published at Jentrified Citizen. TOC thanks for the use of the article to be published in the site.