NEWS

Parliament Q&A

Oral Reply by Masagos Zulkifli, Minister for the Environment and Water Resources, to Parliamentary Questions on Hawker Centres on 19 November 2018

1.    Mr Speaker, I thank the 13 Members for raising many thoughtful questions on the socially-conscious enterprise hawker centres (SEHCs). I will speak on why we embarked on the Socially-conscious Enterprise Hawker Centre (SEHC) model, how we select operators, and share our views on how the SEHCs are performing. SMS Amy Khor will elaborate further on our efforts to refine the SEHC model, and better support our hawkers.

2.    Hawker centres are an integral part of Singapore. They are our community dining rooms – well-loved by Singaporeans from all walks of life. They serve three key social objectives by providing: affordable food in a hygienic environment; a decent living for our local hawkers; and vibrant social spaces to bond our communities. These are good objectives to achieve individually; but together, they compete against one another. So trade-offs need to be made for an optimal outcome.

HAWKER CENTRES AS A BALLAST TO STABILISE COOKED FOOD PRICES

3.    Let me start by recalling that the Government restarted building hawker centres in 2011, after a hiatus of almost 30 years. We were concerned about the lack of affordable dining-out options for Singaporeans at a time when there was a boom in coffee shops and food courts. Natural market forces were pushing up rentals at those private Food & Beverage (F&B) outlets, and consequently food prices. The public was concerned about the rising cost of living. In response to widespread appeals from Singaporeans, we resumed building hawker centres to serve as a ballast to stabilise cooked food prices against the emerging dominance of coffee shops and food courts.

4.    The Government has committed to building 20 new hawker centres by 2027, in new estates or existing ones that are relatively under-served. These will provide about 800 new hawker stalls at significant investment – each hawker centre costs $15m to build. The Government absorbs the building costs and subsidises their ongoing maintenance, but does not recover such costs from stall rental.

HAWKER CENTRES MUST KEEP UP WITH THE TIMES

5.    We recognise however, that just by building new hawker centres, we cannot automatically expect them to be viable and sustainable. In the early 1970s, the Government started building hawker centres to resettle street hawkers, so as to improve hygiene and food safety standards. Over time, they became our signature community dining rooms – to this day they enable us to preserve the important culture of eating out together, regardless of our status – rich or poor, young and old.

6.    Over time too, a good number of these first and second generation hawkers, who receive cheap subsidised rentals, only work short hours. Residents in turn feedback that some existing centres do not fully cater to their dining needs. I was at Shunfu Mart Food Centre during a recent Ministerial Community Visit in Bishan East-Thomson Constituency. The hawkers only open for breakfast and lunch; some even just for breakfast. Residents do not have access to affordable food in the evening. This situation reflects a need for the careful balancing act to look after the interests of both hawkers and the community. Ultimately, hawker centres exist to serve Singaporeans. But we also have to be fair to hawkers and safeguard their well-being.

7.    Our social and demographic landscape has changed significantly. Today, the median age of hawkers is about 60 years old. We have about 6,000 cooked food stalls at our 114 hawker centres. More than one third of our hawkers and their assistants will retire in the next 10 years. Being a hawker is physically demanding. Many successful hawkers tell us that they hope their children will not follow in their footsteps. The challenges of the trade deter many young Singaporeans. We have to transform and find ways to make the hawker trade sustainable; or we may end up with hawker centres without hawkers.

8.    The demographic profiles and needs of residents have also evolved, particularly in newer estates. Patrons are more well-travelled and demand fresh concepts and wider food variety. Hawker centres have to compete with coffee shops, food courts, and other food outlets in the community. Even the traditional model of dine-in meals has been disrupted by central kitchens and food delivery services. We must help our hawkers meet these challenges, just like how we try to help our taxi drivers face the wave of challenges from disruptive competition like Uber and Grab.

9.    To adapt to changing needs and circumstances, it is critical to find new operating models to sustain the hawker trade. This is similar to the role which NTUC Fairprice has played in the supermarket landscape. Over the years, NTUC Fairprice has been innovating and moderating prices of essential groceries, which has catalysed the transformation of the mom-and-pop grocery shops. Over time, as customer profiles change, NTUC Fairprice continues to meet the needs of a wide spectrum of customers, by providing diverse product lines from affordable house brand options to premium brands. Even NTUC Fairprice would not have been sustainable if they only provided affordable alternatives without the attraction of choice for their customers.

SEHC OPERATORS CAN HELP SUSTAIN HAWKER TRADE

10.    This is why we are trialling the SEHC model for our new hawker centres. We have started at 7 new hawker centres, out of more than 100 managed by the NEA. These SEHC operators bring new ideas and inject innovation that hawkers individually or the Government cannot. We are giving opportunity to those with expertise and networks in the F&B industry, to apply themselves to socially oriented purposes. For example, they are able to curate food stalls for quality and variety. They are also able to bring in famous food recipes, and are better placed to run hawker incubation programmes to help sustain the hawker trade. They also innovate to improve footfall and enhance vibrancy of the centres through better marketing and place-making programmes, and not just leave it to chance. As the single operator of each hawker centre, with F&B and management competencies, these SEHC operators can help our hawkers weather the competition from other F&B alternatives and adapt to technological disruptions, better than the hawkers can individually. In time to come, the better SEHCs will develop capabilities to support and sustain the hawker trade that we will appreciate.

11.    To ensure that we select the right operators who do not profiteer, NEA has put in place safeguards through the tender and evaluation process. First, NEA favours operators with lower overall charges to stallholders. Operators are required to propose rentals and operating costs upfront, and cannot change these over the term of the tenancy. Second, operators must be transparent about costs. All new charges, including optional charges for value-added services, must be approved by NEA. Third, a large part of the hawkers’ operating costs, like the Service & Conservancy Charges (S&CC) charges and table cleaning fees, are “pass-through” charges, which the operators do not benefit from. As a reality check, we compare some of these costs with the alternatives like hiring additional hawker assistants, or the consequences of cheap sourcing low quality workers.

12.    Fourth, operators are required to reinvest at least 50% of any operating surplus into social benefits for the hawker centres and stallholders.

SEHCS HAVE ACHIEVED SOME EARLY SUCCESSES 

13.    I am heartened by the recent public discussion on how existing NEA centres are run better than the SEHCs. It is testimony that existing hawker centres under NEA management have done well over the years to meet the needs of their communities and hawkers. But it is not enough to keep doing things the same way. This is why we have to continue with the SEHC model.

14.    Several Members asked what makes a successful hawker centre. I believe most of us have patronised our favourite stalls at popular hawker centres, such as at Tiong Bahru or Adam Road. Many such existing centres are well-established in their communities. They have anchor hawkers who draw customers from all over the island. The new hawker centres do not enjoy this advantage, and need time to build up a clientele. Location and connectivity are important factors. New hawker centres at Kampung Admiralty and Our Tampines Hub (OTH), situated at transport nodes and co-located with other public services or amenities, have enjoyed good business. Higher business volume will help stallholders cope with costs.

15.    On the whole, SEHCs have achieved good outcomes despite the short time they have started operations. Foremost, food prices at SEHCs are affordable and comparable to existing centres. These are generally lower than prices at surrounding coffee shops and food courts. We cannot force hawkers to sell at cheap prices for all dishes at each stall. Instead, the operators have made available at least one affordable meal option at $3 and below for each stall, and allowed hawkers to determine prices for other dishes. This means that prices are not kept artificially low. Instead, operators work with hawkers to offer a range of food offerings at different price points, so that there are both attractive options that residents are willing to pay for, and at the same time affordable options when residents want that. Some hawkers have also chosen to price their dishes low to attract more customers. For example, “Old Times” at the Kampung Admiralty Hawker Centre prices all dishes below $3. Indeed, at each SEHC, there are close to 40 affordable options of various kinds of meals from 40 different stalls.

16.    Secondly, SEHC operators have curated food stalls for quality and variety. They have tapped on their networks of hawkers, and have the expertise to conduct food tasting when letting out stalls. They have also introduced interesting food options such as prawn paste chicken rice and halal tze char, and new dining concepts. This ensures a good variety of food options, which is not always a given in existing hawker centres. Even in popular hawker centres like Tekka, we can find rows of stalls offering similar food because NEA is required to award one vacant stall at a time based on tendered rentals to the highest bidder. NEA does not have a mechanism to curate an attractive collection of food options at each hawker centre, like in the case of SEHC model. Such an allocation system run by NEA would be complex to execute and be subject to potential audit issues.

17.    The SEHCs are establishing themselves within their communities and serving the residents well. Ci Yuan Hawker Centre, recently passed its 3-year mark. The hawkers are doing well, and 97% of them chose to renew their contracts in July this year. At Bukit Panjang Hawker Centre, the renewal rate is similarly high at 96%. SEHCs at Kampung Admiralty and OTH are also doing well with hardly any vacant stalls and a long waiting list of potential hawkers. This is similar to NEA-managed hawker centres, where only 3% of cooked food stalls are vacant.

18.    SEHC operators have also kept their centres open during breakfast, lunch and dinner – a major request made by the public. In contrast, some existing hawker centres focus on only one or two main meals a day, and some hawkers only work 3 to 4 days per week. To ensure vibrancy, SEHC operators have also introduced creative initiatives to increase footfall such as complimentary parking, lucky draw programmes and shuttle bus services for office workers.

19.    The SEHCs are leading a new model of clean and productive hawker centres, applying the best practices they have learnt in the private sector to overcome the constraints of labour shortage. All the SEHCs come with productivity initiatives such as automated tray return systems (ATRS) and centralised dishwashing (CDW). Providing trained and properly supervised cleaners and a more hygienic environment have increased table turnover rates, benefiting both patrons and hawkers. The average tray return rates at SEHCs are much higher than those at our existing hawker centres because of the operators’ efforts in implementing the ATRS. It makes the jobs of our cleaners easier and alleviates manpower challenges that our hawkers face in looking for workers to wash dishes. During my walkabout at Shunfu Mart Food Centre, I had noticed an Economy Bee Hoon and Nasi Lemak stall which had a faded sign advertising to hire a stall assistant. The hawker shared that her children were not interested in helping out at the stall, and she had been unable to hire an assistant despite advertising for a long time.

20.    SEHCs have also managed to attract new entrants to sustain the hawker trade. The median age of hawkers at the 7 SEHCs is 43 years old, significantly lower than the median age of 60 in our other 107 hawker centres. This is an encouraging sign and can be attributed to various initiatives introduced by SEHC operators. For example, Timbre’s Incubator Programme and OTMH’s Train and Place Entrepreneurship Scheme nurture new hawkers. Collectively, the 5 SEHC operators have trained a total of 38 aspiring hawkers since they started operations. These efforts complement NEA’s ongoing incubation stall programme (ISP), which has supported 12 aspiring hawkers to date. Eight of them are still on the programme, while the rest had decided that they were either not suitable for the hawker trade or withdrew due to personal reasons. In addition, the operators have introduced productivity measures such as centralised dishwashing, which allow hawkers to focus on their cooking and reduce the amount of menial tasks they need to do. Taken together, these initiatives reduce the physical burden of being a hawker, and can go a long way to help sustain our hawker trade.

MARKET MECHANISM IS WORKING; SEHCS SHOULD BE GIVEN MORE TIME TO STABILISE

21.    Nonetheless, the SEHCs will take time to establish themselves. Ci Yuan Hawker Centre, the first SEHC, only started operating three years ago, with the latest at Pasir Ris opening in January. Hawkers at these new centres need time to build up a clientele. Overall, the average monthly stall vacancy at SEHCs, at about 10%, is not exceptionally high and is not a bad result considering that most stalls are new. Many of the hawkers are also new to the trade, and need time to experiment with their recipes and decide if this is the career for them. The centres also need time to build up footfall.

22.    The market mechanism is working, and Government should not intervene unnecessarily, in mandating low or no rental, which could otherwise affect fair competition. Hawkers are entrepreneurs after all. We want to reward successful hawkers to sustain the trade and preserve our beloved hawker heritage. It is natural to have some level of churn as better hawkers replace those who are less suited for the trade. Market forces would lead to a fair distribution of hawker stalls, which ultimately benefits residents. It is inappropriate for Government to subsidise a hawker on the basis that business is poor. This would be unfair to a better performing hawker who thrives on healthy competition. It would also be unfair to other private sector food shop operators located in close vicinity to the centres. The model must therefore ensure that rentals and costs are transparent and fair to hawkers, but cannot subsidise hawkers to the extent that it distorts the workings of the market.

23.    In summary, despite implementation challenges, the SEHC model is generally sound. Food prices are kept affordable with a good variety of high quality options, and the majority of hawkers are doing well at the SEHCs. We should not undo these achievements. As with any trials and experiments, we cannot always get it right the first time. We have heard the feedback, and will adjust the model to better serve Singaporeans. We will continue with the SEHC model, and improve it so as to serve patrons well and look after the well-being of our hawkers.

24.    I ask members to give the model time to adapt, adjust and optimise the outcomes we seek to achieve:

a. First, availability of affordable food options that does not deny respectable earnings for our hawkers, and at the same time moderates the free market F&B alternatives;
b. Second, a decent living for our local hawkers that is sustainable even while providing affordable options; and
c. Third, to preserve our hawker centres, where we are proud of our unique vibrant social spaces, as community dining rooms where everyone goes to; where affordable food is also good food.


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