Friday, 31 May 2013

Serving up a good deal for hawkers

Building more hawker centres is the easier part in any revamp of this iconic institution. A mindset change all-round is needed too. It's a "wok" in progress.
By Feng Zengkun, The Straits Times, 30 May 2013

IN THE past few months, Singapore's iconic hawker-centre culture has been the subject of unsettling news. A survey of 541 hawker stalls released last month showed that prices of several popular hawker dishes had gone up at many places across the island.

Most commonly, fishball noodle prices went up by 50 cents last year, compared to 2011; vegetable rice cost 40 cents more.

Chicken rice was not spared: the highest price for it went up from $4 to $4.50 and fewer stalls offered it at $2.50 last year compared to 2011.

Last month, Environment and Water Resources Minister Vivian Balakrishnan warned that stalls may become vacant in future due to a hawker shortage. Despite a slew of government measures last year to lower rental costs, many entrants still found the going hard and gave up.

The Government used to set minimum rents for stalls. It scrapped this policy in March last year to lower costs for hawkers.

The National Environment Agency (NEA) said that between March and December last year, 59 out of 112 cooked food stalls were rented out at below their previous minimum rents. Despite this, 13 or one-fifth of the cheaper stalls were returned to the agency within just six months of opening.

"The challenge is, will there be enough Singaporeans to do very hard work for very long hours?" said Dr Balakrishnan.

The first generation

PART of the problem is the current market-based system of awarding hawker stalls, which makes it more difficult for hawkers to make a living.

It was not always so. Itinerant street hawkers were resettled in hawker centres in the 1970s. These first-generation hawkers, who paid heavily subsidised stall rents, offered cheap hawker fare. Many remain in business.

Today, subsidised hawkers make up four in 10 of all food and market stallholders. Those manning cooked-food stalls pay $160 to $320 in monthly rent. The low rental means they can charge low prices - hence keeping down prices at hawker centres.

A 1993 Straits Times article noted that chicken rice cost $2 in many places. That is only 50 cents cheaper compared to today.

But these first-generation hawkers can transfer their subsidised-rate stalls to only their immediate family. When they retire, and if their family members do not want to continue the business, they return the stalls to the Government.

The stalls are then put up for auction. The NEA now holds monthly tenders for vacant stalls, which are awarded to people who offer the highest rents for them.

But leaving rents to market forces means that stalls in popular areas such as Newton and Serangoon will fetch high rents. Successful bidders may then have to charge higher food prices.

Effect of market forces

AT THE Newton Food Centre, for example, stall rents typically exceed $2,000 a month. A plate of chicken rice there costs at least $3, and even starting for as much as $4 at one stall. Comparatively, the same dish costs $2.50 at the Taman Jurong Market and Food Centre, where monthly rents are usually less than $1,000. Such a price disparity exists for other dishes at both centres.

The market-based system also means rents are likely to be low only in areas with poor human traffic; these hawkers may find it difficult to survive.

Although two stalls in the Taman Jurong centre were awarded record-low rents of just $20 and $21 a month last year, they are still empty.

A bak kut teh seller, who wanted to be known only as Madam Lim, operates a stall next to one of them. She said: "The location is very bad. We're at the fringe of the top floor; people don't even see us." She has been working at her stall for eight years and relies on regulars to earn between $1,000 and $2,000 a month.

When The Straits Times visited the centre's third floor earlier this week on Tuesday, three-quarters of the outer-aisle stalls were vacant.

Incompatible goals?

AS MORE stalls come under the auction scheme, higher food prices seem likely. Hawkers who spoke to The Straits Times said that their net profit now ranges from slightly more than $1,000 to several thousands.

The Government wants to have more people in the hawker trade under the current system but also wants hawker fare to be cheap. Are the two goals incompatible? Low food prices mean less profit, which makes the job unattractive.

Many Singaporeans today are put off by the long hours and hard labour involved, said those who have worked in the trade for decades. Foreigners are not allowed to bid for stalls.

Earlier this year, the Government chose two organisations to train people for the food and beverage industry including hawker centres. Lessons will include cooking and stall management.

Mr Koh Seng Choon, executive director of Project Dignity, one of the groups, said most applicants have been middle-aged men and women looking for a second career, partly in case they are laid off. "Young people prefer to go into bakery or Western cooking as they feel they can get better profit margins," he said.

Food courts here also face manpower worries, said Mr Perry Ong, chief executive of NTUC Foodfare, a social enterprise which operates a chain of food courts.

Other experts said food tastes may be changing too. Between 2009 and 2011, the number of restaurants grew from 2,091 to 2,317, and their takings ballooned from about $2.1 billion to $2.7 billion.

To be fair, the Government has done much to arrest price increases and to help new entrants to the trade. Besides scrapping minimum rents, the Government has also banned practices such as full-day sub-letting for new hawkers, which encouraged "stall speculation" and led to increased rents.

The Government will build 10 new hawker centres by 2017 to increase the number of available stalls, especially in underserved areas such as Bukit Panjang and Sengkang. This will hopefully drive down rents. Social enterprises may also manage the new centres and introduce new ideas to keep the food affordable.

At Bedok, a social enterprise running a 32-stall private food centre is giving hawkers choices. They can rent stalls, be employed as cooks and draw a salary or choose joint ventures, under which profits are shared.

But more drastic action may be needed. The NEA could, say, extend subsidised rents for first-generation hawkers to all hawkers. In return, the agency could impose price caps. Since all rents will be the same, stalls could be balloted or awarded based on the lowest proposed food prices.

Mr Richard Ng, a representative for Maxwell Food Centre stallholders, said such a system would be "very good" for consumers but may greatly reduce the Government's receipts from stalls. "And some people may get the subsidised stalls but rent them out at higher prices," he added.

Other options could be to rent the stalls at fixed rates, set by the Government's valuers, or to have a mix of market-based and fixed-rate stalls in each food centre.

Mr Goh Ah Kee, president of the Bedok North 216 Food Centre and Market Hawkers' Association, said the effectiveness of rent measures may be limited. Newcomers will still find it tough to compete. "I see it all the time. It can get very crowded but the lines are always outside the same old stalls. If you're new, you may get one to two weeks of 'novelty' business. If you're not good, you won't survive," he said.

Lower rents will also not help stalls in areas with poor traffic, he added. Better centre designs are needed.

Alternatively, each cooked food stall could be mandated to sell at least one low-cost dish. People who can afford higher food prices can keep hawkers afloat while the poorer customers will still have access to cheap fare.

Social enterprise NTUC Foodfare already offers $1.99 meals in its Aljunied and Toa Payoh stalls for people on the Public Assistance Scheme, students, senior citizens and full-time national servicemen with concessionary cards, and NTUC union members.

More can also be done to lower the hawkers' other costs. Project Dignity's Mr Koh said hawker association heads could band together to help stallholders in different food centres bulk-buy ingredients at a lower cost.

Hawker food prices may still rise in future, given labour, utility and food ingredient costs, which have been rising in recent years.

Counter-intuitively, higher food prices may be a good thing if people are able and willing to pay. More people may then view the trade as a viable career. This is especially important not only because the hawker centre is an ingrained part of Singaporeans' lives but also could be key to drawing tourists here.
To ensure the longevity of this iconic feature in the Singapore way of life, building more hawker centres is a good first step. But the real challenge is in keeping rentals low, food prices cheap, the woks oiled and the stalls and tables filled.


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