By Yap Shiwen
Ensuring Hawker Centres Survive
There’s been a rash of recent measures and moves to save Singapore’s heritage, specifically the food heritage of our hawker centres. K.F. Seetoh of Makansutra Asia fame has led the push to preserve knowledge of our hawker cuisine, as has Elaine Chew, who leads a government initiative seeking to recognise the quality of hawker food and the hawkers who make them.
At the end of the day, we need to recognise that hawker centres serve as one of the centres of a community. They’re a place for families to eat, for friends to socialise or for couples to meet for a meal. In as much as they’re a place of business, they’re also a place that helps to facilitate and foster the bonds of a community.
But ultimately, they are also places that need to be economically viable. By offering inexpensive food, you also need to offer affordable, inexpensive rents. In the past decade, this has turned out not to be the case.
Subject to a quick analysis, the hawker centre has always served 3 objectives:
- nucleus for social activity
- inexpensive food
- facilitate small business activity for economically deprived segments of society
This 3 objectives are all socially related in nature and originate from the fact that from the 1960s onwards, the government had to relocate the street hawkers into sanitary locations, where they could then ply their trade to feed the workforce of a rapidly industrialising Singapore, affordably and efficiently as possible. So were the hawker centres born.
Now, hawker centres are managed by the National Environment Agency (NEA). However their ownership is split amongst several bodies. Namely, they are the Jurong Town Council (JTC), Housing Development Board (HDB), NEA, Ministry of Environment & Water Resources (MEWR). MEWR is a ministry, HDB and NEA are government statutory bodies and JTC is a major GLC (Government-linked Corporation).
If they want to foster the growth and ensure the survival of a crucial part of Singapores heritage, then one needs to look at the economics, as well as the socioeconomic aspects and demographics of those who go into the business. For now, this will only look at the economic and management aspects.
The rental costs, and the resulting increase in food costs, are in part caused by the privatisation push of the NEA, HDB and government as a whole to push management of the hawker centres to private operators. Like any business entity, the natural desire is to then optimise, if not maximise, the amount of profit that can be gained from the enterprise.
This is entirely a natural part of business and happens in any market. However, the difference with hawker centres is that since they are such a big part of the fabric of Singaporean social existence, any cost increases are keenly felt, by all segments of society. Combined with the fact that there has been little real wage growth and decreased purchasing power to deal with the increased inflation and consumer price over the last decade, this results in a social harm.
People cannot afford to pay much for food. As the rentals become higher, hawkers are forced to increase their costs, which they pass on in turn to the consumers. And as small businesses, they are unable to handle or buffer the costs as much as larger business entities, which have more options available to them.
So whats a possible solution to this whole problem?
Firstly, deny the right to operate any hawker centres owned by government agencies and ministries to private companies. The case of Sengkang Kopitiam Square shows the deficits involved in letting private operators build and run their own. The result is increased food price and higher business costs for hawkers, as well as a greater initial capital expenditure, discouraging existing hawkers from expanding or new hawkers from getting into the business. You will still get hawkers, just a lot less, and not in the numbers you desire.
Secondly, relook the way that NEA manages the hawker centres. Rather than just operating as a landlord, look at forming a workers cooperative within the hawker centre, with the hawkers as stakeholder-tenants. NEA would be granted oversight of each cooperative, while the hawkers would have greater investment and control over the management process and costs as well as critical decision, and creating a degree of employment for PMETs, due to the necessary administration to sustain a cooperative.
“Capital and the Debt Trap”, a research monograph in co-operative economics published by Palgrave Macmillan and authored by C.S. Bajo and Bruno Roelants, found that cooperatives tended to be more sustainable, possess a longer life cycle, had a higher level of entrepreneurship sustainability and were less vulnerable to perverse incentives – incentives that have unintended and undesirable results contrary to the interests of incentive makers.
In the case of Singaporean hawker centres, the incentive was to let private operators handle management, with the net effect of greater efficiency imposed via market mechanisms. However, the result has been an increase in prices and decreased uptake in the hawker trade.
Thirdly, if not the cooperative model, then NEA should look at applying social business principles to managing the hawker centres. Given their community role and the social role they serve, in offering a means to make a living for economically deprived Singaporeans and in supplying inexpensive food to the community at large, they should be considered as a Type 1 social business, focused on providing the service they currently do. Hence, NEA could aim to run them at cost, with no profit motive in mind, since they would then be maintaining and managing it at the same price level as they rented it out to hawkers.
Alternatively, they could run it as a Type 2 social business, being profit-oriented but with any profits being invested back into the hawker centre and the hawkers, to act as a buffer against further price increases and allow the hawkers to maintain their prices, and for upgrades in the future. This would also lessen public expenditure to some degree, as the money needed to upgrade hawker centres comes from public funds.
In the end, if we’re looking at ways to enhance the existing social compact and situation, as well as maintain our hawker heritage, we need to look at empowerment. Muhamad Yunus, who was awarded the Nobel Peace Prize in 2006, said that “…the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labor. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty.”
Either we give our hawkers a financial buffer and greater market protection, or we grant them control over the capital and management of the hawker centre. We empower them and enhance its role as a trade and small business in our society. Or we continue as we are and lose a key part of our Singaporean heritage.
Notes:
Bajo, C.S. & Roelants, B. (2011). Capital and the Debt Trap. Palgrave Macmillan.
What is Social Business? Social Business World. http://socialbusinessworld.org/pages/view/8964/what-is-social-business
Types of Social Business. Social Business Earth. http://socialbusinessearth.org/types-of-social-business/
Sessoms, G.(2013).The Advantages of a Cooperative Business. Houston Chronicle. http://smallbusiness.chron.com/advantages-cooperative-business-23592.html
Mohamed, K. (2013). Saving the hawkers and the hawker trade. The Online Citizen. https://www.theonlinecitizen.com/2013/04/saving-hawkers-hawker-trade/
