Unsustainable promises of sustainability: The real cost of SEHC framework on Singapore’s hawkers

Singapore’s hawkers, often celebrated as icons of the nation’s vibrant culinary culture, are facing increasing financial pressures. Despite their cultural valorization, including being listed on UNESCO’s Intangible Cultural Heritage List, many are grappling with the harsh realities of rising costs and stringent contractual obligations imposed by Socially-conscious Enterprise Hawker Centres (SEHC).

The Singapore Government has committed to building 20 new hawker centres by 2027 in new estates or existing ones that are relatively underserved. These will provide about 800 new hawker stalls at a significant investment—each hawker centre costs S$15m to build. As of 31 December 2023, there are 12 hawker centres operated by SEHC operators.

According to Mr Masagos Zulkifli, then Minister for the Environment and Water Resources, in response to queries from Members of Parliament in 2018 on the SEHC framework, it was critical to find new operating models to sustain the hawker trade, which is why the SEHC framework was introduced.

These queries arose in light of news reports about the closure of stalls and complaints concerning the terms imposed on hawkers by SEHCs.

In support of the framework, Mr Masagos stated, “These SEHC operators bring new ideas and inject innovation that hawkers individually or the Government cannot. We are giving an opportunity to those with expertise and networks in the F&B industry, to apply themselves to socially oriented purposes.”

“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,” said Mr Masagos.

Dr Amy Khor, Senior Minister of State for the Ministry of the Environment and Water Resources, promised that the government will continue to make adjustments and recalibrate the SEHC model to ensure that it continues to achieve the key social outcomes of the hawker centres, which are: “to provide affordable food in a clean environment, allow our hawkers to make a decent living and build communities.”

“We will seek and listen to feedback from hawkers and patrons, and continue with our stock-take to further improve the model.”

However, interviews conducted by Straits Times with 25 hawkers across various SEHCs point to a concerning trend despite the earlier assurances about the SEHCs: the unsustainable nature of their business due to imposed financial burdens.

A particularly contentious issue is the requirement for hawkers to offer budget meals at capped prices and to provide a 10% discount on orders made through specific apps, absorbing the cost themselves. These measures, intended to make meals affordable for lower-income families, ironically impose a heavy financial burden on the hawkers.

Exploitation of hawkers

Veteran food critic K.F. Seetoh has been vocal about these challenges, criticizing the SEHC model for exploiting hawkers under the guise of social entrepreneurship.

In a recent blog post on Makansutra, Mr Seetoh highlighted the punitive nature of these contracts, which include hefty fees for basic services and rigid menu pricing that doesn’t adapt to the realities of inflation or individual circumstances.

“Stop harassing and bullying the hawkers,” Mr Seetoh wrote. “No one looks after their interest and concerns… These SEHC operators were brought in to help them. But it seems they are helping themselves on them.”

He describes the contracts as “heavy handed and draconian,” a sentiment echoed by many within the hawker community who feel overwhelmed by the lack of support and the top-down management style that limits their operational freedom.

Under the SEHC framework, hawkers are subjected to a series of stringent terms that notably affect their day-to-day operations and financial sustainability.

A primary concern is the enforced capping of meal prices to ensure affordability. While the intention is to provide inexpensive meals to accommodate low-income patrons, the reality places a disproportionate financial burden on the hawkers themselves.

For instance, they are required to offer certain dishes at a fixed low price, irrespective of the rising costs of ingredients and utilities. This policy, meant to serve a social good, often results in hawkers struggling to cover their operational costs, let alone turn a profit.

This is highlighted in the interviews with hawkers, who shared that “it is impossible to make a profit from these meals.”

An image of a purported agreement between the hawker and the operator, shared by Mr Seetoh on his blog, notes that the stall tenant must participate in the Pay-it-Forward program implemented by the company and set aside 30 meals a month at the tenant’s own expense.

The tenant must also participate in the loyalty program under the company’s CRM system and set aside 30 meals a month at the tenant’s own cost and expense for the fulfillment of meal awards.

The agreement also grants the operator the right to implement additional programs to promote the hawker center, which may include discount activities, and the hawker, as the tenant, cannot opt out of participation.

Additionally, the rental terms within SEHCs add another layer of financial strain. Hawkers must bid for their stalls, and these bids can sometimes reach exorbitantly high amounts due to competitive pressures, despite the public funding involved in setting up these centres.

The SEHC operators then impose a flat rental fee, which does not account for the variability in the popularity or profitability of different types of food sold.

This one-size-fits-all rental approach fails to consider that not all dishes yield the same profit margins; a stall selling simple beverages could be paying the same rent as one offering intricate, labour-intensive meals, further distorting the economic viability for individual hawkers.

Moreover, the SEHCs often include additional charges that many hawkers find exorbitant and unjustifiable. For example, the cost of cleaning and washing of utensils and crockery is typically high, yet hawkers are also charged a separate fee for the return of cleaned items to their stalls. Such costs are not trivial and can add up to significant amounts each month, diminishing the hawkers’ already slim profit margins.

The insistence on using only SEHC-approved suppliers for essentials like gas, utensils, and even ingredients limits hawkers’ ability to reduce costs through sourcing cheaper alternatives, effectively locking them into higher operational expenses.

Deep systemic issue

The financial strains are not merely operational challenges but are symptomatic of a deeper systemic issue within the SEHC framework. The current model requires hawkers to absorb costs that are often unsustainable, particularly in an economic climate marked by rising inflation and operational costs.

This raises fundamental questions about the fairness and sustainability of expecting hawkers to shoulder the burden of social assistance through their business operations.

The situation is exacerbated by inadequate foot traffic and sales, as noted by stallholders at Bukit Canberra and One Punggol Hawker Centres. The shortfall in daily customers means that even basic break-even points are not met, adding to the financial woes of these small business operators.

A thread on the HardwareZone forum titled “At a food stall yesterday, this hawker said, ‘Does the government want us to die?'” discusses whether food prices are determined by market forces of demand and supply or if there are any behind-the-scenes governmental measures controlling food prices.

The post included comments reportedly from a hawker: “We have to apply to NTUC for prior approval at least three months in advance. We’re allowed no more than one price increase every nine months. Our suppliers don’t need approval to increase their prices. We hawkers are squeezed in the middle.”

Experts like Dr Ye Junjia from Nanyang Technological University, cited in the ST article, suggest that the economic sustainability of hawkers is being undermined by these practices.

She calls for a reevaluation of what is deemed affordable, pointing out that while Singaporeans enjoy high-quality food at low prices, the economic burden placed on hawkers is unsustainable.

As Mr Seetoh and other advocates argue, there needs to be a significant shift in how hawkers are supported by SEHCs. This might include direct financial interventions such as government subsidies or rental rebates, and a fundamental reconsideration of contractual obligations to ensure that the burden of social change does not disproportionately fall on hawkers.

Mr Seetoh also has been advocating for the formation of an independent body to represent and protect hawkers’ interests, suggesting that it includes professionals from various fields to provide advice and support.

Currently, the Hawker Centres Group (HCG) of the National Environment Agency oversees the management of hawker centres and reviews and implements policies related to hawkers.

In his 2018 speech in support of the SEHC framework, Mr Masagos said, “We have to transform and find ways to make the hawker trade sustainable; or we may end up with hawker centres without hawkers.”

However, while the intention behind SEHCs and budget meal programs is commendable, the execution — as shown in the terms and conditions for the hawkers — leaves much to be desired.

It is crucial for policymakers and social enterprise operators to revisit these initiatives, considering the economic sustainability of hawkers and the true cost of affordability in Singapore’s beloved hawker culture.