NEA denies rental is the main driver of hawker food prices

NEA denies rental is the main driver of hawker food prices

Operating costs, market competition, and what patrons are willing to pay will be taken into account when the hawkers decide on their food prices, said National Environment Agency (NEA) on Sunday (12 Jan) in response to a forum letter, titled “Keep hawker food affordable”, concerning high-priced hawker food.

NEA, in its letter, referred to a study from Ministry of the Environment and Water Resources (MEWR) and Ministry of Trade and Industry (MTI) which said that the food prices were influenced by several costs such as raw materials, manpower and rent – while stressing the rental costs, which take up 12%, formed a relatively small proportion of costs for typical hawkers.

“Raw materials were the largest cost component, at 59 per cent. Manpower accounted for 17 per cent of operating costs. Mewr updated the study in 2018, and the findings had not changed — raw materials remained the largest cost component.”

Following this, Founder of Makansutra, K F Seetoh wrote on his Facebook page on Wednesday (15 Jan) condemning the government’s statistics of the costs.

He wrote, “First, it says total rents adds up to 12%, then say raw materials sets in at 59%. (that’s already 71% of total operating cost). No sane minded folks in this trade will even glance that operation cost model, even the insane will go “59%, xiao la (crazy) ”. The world standard is 30% or under.”

“It is easy to spout hard core statistic numbers on the industry like a 17% cost for manpower. But it’s the soft statistics that matter,” he added.

Concerning over the manpower costs for the hawker trade, Mr Seetoh pointed up that NEA’s move to install centralised dishwashing and automated tray return system – for which the government’s subsidises on average 50% of cost – will only last for up to four years.

In his post, Mr Seetoh also remarked that the open market bidding that went as high as $4k to $5k today has resulted in the most expensive rental of public hawkers in the world.

“If the average rentals these days which hovers around $2k a month, that’s already about 10% of operations (assuming a hawkers rings in $20k gross, a month. If they don’t, they might as well get a regular job),” he said, rebutting the NEA’s numbers.

“So all these percentage figures by the statistics team don’t mean much, it’s the actual numbers and dollars on the ground that matters.”

He further explained that most of the hawkers only lived on less than 17% of their salary after all the operations costs such as rentals, suppliers, utility, cleaning and “marketing” plus profit percentage or GTO commissions have been deducted from what they have earned.

“And in one sentence it says hawker’s rent cost is 12%, and raw materials 59%, manpower 17% and we’ve not factored cleaning, utilities n other cost. That’s a ridiculous 85% at least, almost a suicidal business to be and its unstable,” Mr Seetoh added.

Speaking about how’s NEA flaunted on the “removed reserve rent since 2012 to reflect market conditions”, Mr Seetoh highlighted that hawker centres should not be a place to reflect “market conditions” because no one is considering hawker – selling below market price food – as a career.

“Hawker centres are created for entry level sole proprietor cooks who know they have to sell below market rate prices to feed the masses. So, why the commercial tone to rentals and operation for them,” he said.

Mr Seetoh also mentioned that the income of hawkers has been affected due to the renovations and repair works of hawker centres funded by government.

NEA denied that the rent increased after the renovation, saying that they have provided rental remission to the hawkers who are unable to operate stall during the renovations.

Mr Seetoh, hence made a comment, “I say, not only should hawker centre rentals no rise after renovations, but bring back low reserved prices and encourage new players, not just the younger ones.”

“Hawkers depend on their daily work and sales to get by, when it closes for long periods for renovation and maintenance, their hand to mouth dependence on their daily sales, disappears, and giving them “rental remissions” is not helpful. So, when you renovate, and expect food prices to remain low, you should rethink what the bigger objective or having hawker centres is.”

He urged the authorities to eliminate the practice of “market rental and management” and mindset of commercial KPIs to keep the hawker food prices low and affordable.

“Just take a look at how many hawkers are shuttering up, retiring and the eerily low replacement rate by younger or new hawkers and you’ll get an idea how fast this Unesco class hawker culture of ours is fading,” Mr Seetoh addressed the recent condition of hawker centres in Singapore.

Mr Seetoh is known for voicing out on issues faced by hawkers. Last year (14 Jan), an auntie hawker had showed her gratitude to Mr Seetoh for his untiring efforts in helping the hawkers.

In 2018, Mr Seetoh, who wrote an open letter to Senior Minister of State Dr Amy Khor, uncovered the injustice practices adopted by Social Enterprise Hawker Centre (SEHC) operators against hawkers and appealed the government to take back control of the publicly owned hawker centres.

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