Tuesday, October 23, 2018

A new way to operate the social enterprise hawker centers

The social enterprise hawker center model seems to be a mess.

Is there a better way?

The govt agency, i.e. National Environment Agency, should decide on the rent to charge for each stall and the people who are qualified to be allocated the stall. They can also determine the prices allowed to be charged.

Is this difficult? No, it is not. Why do I say so?

If the agency carries out a survey, they will know what are the typical stall rentals in the food courts and hawker centers and the prices that are charged for various food items. This information is readily available.

If the agency is not familiar with this process, they can engage an independent survey firm to carry out the exercise.

After the information is collected, they can determine the stall rentals and the prices for the food items, by providing a suitable discount. They can invite the stall holders to apply.

If the economics does not work right, the stall holders will not apply. Even if the stall holders apply and are allocated, they will give up if the business is not viable. These indicators will allow the agency to change the rental and the prices.

The stall rentals and food prices can be adjusted every two years. This adjustment reflect the market for the "affordable" hawker centers.

An advantage of this system is that the adjusted rentals and prices reflect the market in general, and is not specific to a particular stall.

For example, some stalls may be successful and do a lot of business. A private enterprise owner may increase the stall rental to a high level, knowing that the stall holder has no choice. The owner wants to maximize the rental.

The govt agency should not operate like a private owner. The rental should reflect the general market and is not specific to certain stalls.

The consideration is fairness, and not maximization of profit.

What about the daily operation, including paying the bills for the management and cleaning?

The agency can ask for the operators to tender for the management of these services. They can do their calculation of the cost of employing the cleaners, the number required, etc. This is included in the tender price, together with their profit margin.

The social enterprise model can work, but the framework has to make sense for all the parties. The operator should not be given the freedom to maximize the profits and to pass the profits to related parties through outsourcing of the work.

We need a better approach.

Tan Kin Lian

1 comment:

Yujuan said...

A shame that a supposedly social enterprise hawker food centre could be just in name only, it's still run as a commercial enterprise to maximise profits, not for the hawkers but for the managing agent, and of all agents, the NTUC, a quasi Govt Agency, established by the pioneer leaders to benefit the public.
Such hypocrisy, really give my hat to this Govt, always thinking of ways to dig money out of the people, and under such clever disguise, till someone brave like Makansutra Seetoh blew the dirt out into the open.
Poor little struggling hawkers, have to struggle with high rents, high maintenance and cleaning charges, forced to cap prices, to open stalls till the wee hours with few customers, worst of all, being made use of by NTUC to fatten up their bottom line.
Even small businesses like hawking food, Govt also wants get a foot in.
Maybe even selling kachang puteh Govt also wants a share, in the near future.

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