Audits on Social Enterprises Managing Hawker Centres to Prevent Charging of Hidden Fees

14 Assoc Prof Daniel Goh Pei Siong asked the Minister for the Environment and Water Resources whether the Ministry has been conducting audits on social enterprises managing hawker centres to prevent the use of hidden fees and charges and what level of surplus of income is deemed acceptable for these social enterprises.

The Senior Minister of State for the Environment and Water Resources (Dr Amy Khor Lean Suan) (for the Minister for the Environment and Water Resources): The National Environment Agency (NEA) started appointing socially-conscious operators to manage new hawker centres on a not-for-profit basis in 2015. As private sector operators, they have experience in food and beverage operations as well as property and lease management. This expertise could be harnessed to attract new hawkers to the trade, provide residents with a variety of good and affordable food choices, and improve the vibrancy of the hawker centres by, amongst others, ensuring that sufficient stalls are open during meal times and organising place-making programmes at the centres. This is in contrast to some existing hawker centres where stallholders operate shorter hours, and hence do not fully cater to the dining needs of residents.

The operators have brought benefits to patrons and stallholders. They have ensured that hawkers provide clean and tasty meals to residents. The operators have also introduced interesting food concepts and options such as prawn paste chicken rice and halal tze char, and new dining concepts such as the "Fareground" at Pasir Ris Central hawker centre which brings together "hipster" hawker fare such as beef bourguignon and kebabs to attract younger patrons to the hawker centres. Almost every stall in the new hawker centres offers at least one economical meal option, priced at $3 or less.

The operators have also implemented productivity improvements that are critical for this manpower-intensive sector. Centralised dishwashing has reduced hawkers' workload while improving the cleanliness of the centre. During my recent visit to Our Tampines Hub hawker centre, a stallholder expressed that centralised dishwashing helped him save on water charges and addressed his challenges of hiring dishwashers. The operators have also complemented the Government's efforts to support aspiring new hawkers. One example is the Entrepreneurship Programme introduced by Fei Siong at Hougang Ci Yuan hawker centre, where new hawkers are provided with on-the-job training to help new entrants operate their stalls. They are mentored by veteran hawkers some of whom have even shared culinary experiences as well as their recipes. Sixteen hawkers have benefitted from this programme to date.

Nonetheless, we recognise that there have been concerns over costs to stallholders. NEA ensures that rentals charged and essential services that contribute to operating costs are reasonable. One key tender evaluation criteria when evaluating bids from potential operators is the rental and operating costs that the operators will charge stallholders. Operators who propose lower rentals and operating costs will be considered more favourably, and they are not permitted to vary these charges over the term of the tenancy. Before signing any tenancy agreement with potential stallholders, the operators will have to make known these charges to them. Operators must also bear the risks of rental arrears and stall vacancies. In addition, NEA requires operators to be transparent about costs. Any new charges, including optional charges for value-added services offered by the operators, are subject to NEA's approval.

These measures limit the potential profits, if any, of operators and ensure that rentals are affordable for stallholders. Today, the stall rentals together with operating costs at our new hawker centres are significantly lower than those in comparable food courts and coffee shops. The operators also fund their own initiatives to achieve social objectives and enhance the vibrancy of the hawker centres. These include the $1 Meal Carnival at Yishun Park hawker centre in June this year to attract the community to dine at the centre, and the offering of drinks at concessionary rates for senior citizens at Jurong West hawker centre.

It takes time for a new hawker centre to establish itself. The Government will continue to refine and improve the management model, so as to provide affordable food in a hygienic environment while allowing hawkers to make a decent livelihood. With time, we expect the new hawker centres to enhance their vibrancy and grow into valued community dining rooms.

Assoc Prof Daniel Goh Pei Siong (Non-Constituency Member): Two questions, please. Was NEA aware of the extra costs that were at the centre of the recent public concerns? The second question is, does NEA conduct regular surveys of hawkers with respect to satisfaction with management or any other management issues that they bring up to NEA?

Dr Amy Khor Lean Suan: I think the operator had explained, had come out to clarify, and we have also made clarifications that the costs are optional costs. If the Member is referring to, for instance, the Hougang Ci Yuan hawker centre managed by Fei Siong, that $600 was an optional cost and not a mandatory charge. As I have noted, all mandatory charges have to be declared upfront to the stallholders before they sign on the tenancy agreement. And if there are optional charges or any new initiatives that would impact costs, they are required to inform us and to get our approval. So, of the 40 odd stallholders in Ci Yuan hawker centre, for instance, only nine of the non-EP stallholders have taken up this optional charge.

Actually, even though we have appointed operators to manage our new hawker centres, we also have place managers that visit the hawker centres regularly, on a weekly basis to carry out checks on defects, on cleanliness as well as to engage the stallholders. So, the stallholders can, at any time approach our place managers if there are pertinent issues.

Mr Zainal Sapari (Pasir Ris-Punggol): I have a follow up question for the Senior Minister of State. I agree with her it takes time for the hawkers to establish themselves but there are some that are still struggling among the hawker centres managed by the social enterprises. So, I would like to ask whether NEA would consider lowering the rentals for a period of time until they could pick up enough business to make it sustainable?

Dr Amy Khor Lean Suan: As I have noted that for the new hawker centres, the rentals for the stalls as well as the operating costs for essential services – general cleaning, dishwashing and so on – are made known to the stallholders so you would assume that when they signed on the tenancy agreement, they would have taken into account all these costs in their computations. In fact, even in our existing hawker centres which are tendered out, they would also have tendered based on what they understand to be the market rate, in most instances.

At this point in time, we have no plans to offer any subsidies because they actually came in knowing what the costs are. But having said that, we do understand and appreciate the concerns of the stallholders and we are keeping a close watch on the situation.

As a matter of fact, for the new hawker centres, as I have said, it takes time for them to establish their business. And I think it is not unexpected that some stalls may not do as well as others at the beginning. In fact, the turnover or the vacancy rate for these new centres are actually quite comparable to our existing centres. The footfall for some of these hawker centres have increased over time significantly. So, we are keeping a close watch.

Mr Louis Ng Kok Kwang (Nee Soon): A quick point to echo what Member of Parliament Zainal Sapari has said whether we really can provide some subsidies for the hawkers at some of these social enterprise hawker centres who are really not doing well. I know they came in knowing what the rental is, but the fact now is that, in contrast to what Assoc Prof Daniel Goh had stated, some of them are really finding it hard to break even – the social enterprises. So, can we provide some help to the hawkers at these social enterprise hawker centres which really are not doing well because of very low footfall?

Dr Amy Khor Lean Suan: I think that when there are specific cases, it can be made known to us. But as I have said, we keep a close watch on the viability of the businesses in these new hawker centres. And as of now, even for the hawker centres which had some bad press coverage and apparently low footfall, they have actually improved their business significantly. The operators have been able to enhance the vibrancy of these hawker centres, for instance, providing free shuttle bus service to the nearby industries and factories as well as office workers to dine in the hawkers centres, complimentary car parking, as well as discounts, lucky draws and so on to bring them in.

For instance, in Jurong West hawker centre, they have managed to bring in some popular stallholders which have also significantly increased the footfall. So, based on our understanding and survey of what is happening, we do not see that there is a need to do this but as I have said, if there are individual stalls that face problems, we can always take a look at it.

Assoc Prof Daniel Goh Pei Siong: Just a quick follow up. With regards to the social enterprises, are they sustainable? Because if they are facing problems in terms of keeping up with costs themselves and trying to get more money because putting in all these extra costs to the hawkers, are they doing well? Is the model sustainable in that sense?

Dr Amy Khor Lean Suan: I think the earlier question was not about whether the social enterprise was doing well but the particular individual stallholders, from Member of Parliament Louis Ng.

With regards to the social enterprise, as I have said, when they bid for the hawker centres, they know that we will consider favourably those where they offer lower rentals, lower operating costs and so on. They have to bear risks of rental arrears as well as vacancies and so on. So, again the terms of the tenure are clear, transparent.

As far as we are concerned, Ci Yuan, for instance, had actually renewed their tenancy agreement with us, because they have actually met our KPIs: they have been able to provide a good variety of affordable food to residents, ensure that the hawker centre is able to provide meals at all times of the day, they were able to enhance the vibrancy of the hawker centres and also implement productivity initiatives. So, we have actually renewed their tenancy.