Provision of Affordable Meals and Other Contractual Obligations at Socially-conscious Enterprise Hawker Centres

Mr Chua Kheng Wee Louis asked the Minister for Sustainability and the Environment (a) what principles currently guide who should bear the cost of providing affordable and nutritious meals to low-income patrons; and (b) whether the Ministry will review the current distribution of responsibility for providing such meals to low-income patrons between Socially-conscious Enterprise Hawker Centre  operators, their stallholders, NEA, and consumers.

Mr Chua Kheng Wee Louis asked the Minister for Sustainability and the Environment (a) whether Socially-conscious Enterprise Hawker Centre operators require the approval of NEA to change contractual terms with stallholders; (b) how regularly does NEA review contracts between SEHC operators and stallholders; (c) whether NEA can and has exercised its veto against such contractual terms; and (d) whether NEA intends to conduct a comprehensive review of the SEHC model.

My response to this Parliamentary Question (PQ) will also cover questions filed by Mr Gerald Giam, Mr Abdul Muhaimin Abdul Malik, Mr Ng Shi Xuan1 and Ms He Ting Ru regarding Socially-conscious Enterprise Hawker Centres (SEHCs). If their questions have been addressed in today's combined response, they may wish to withdraw their questions.

Mr Speaker, I thank Members for raising various questions about SEHCs. I will explain the SEHC management model and address various concerns, including the Government's role in overseeing SEHC operators and their relationship with stallholders.

When the Government resumed building hawker centres in 2011, we introduced the SEHC. This is to harness the experience and expertise of food and beverage (F&B) industry players to bring fresh perspectives and best practices to hawker centre management, active placemaking and meeting residents' needs for accessibility to affordable food options across all three meals.

The National Environment Agency (NEA) maintains oversight over operators who are appointed to maintain and manage SEHCs. Operators must comply with the requirements set out by NEA. These requirements strike a balance between ensuring that patrons' needs are adequately served and safeguarding stallholders' well-being. NEA also seeks to provide SEHC operators with sufficient flexibility to allow them to operate SEHCs effectively.

To safeguard the interests of stallholders, the NEA has, and since 2018, put in place basic guidelines for tenancy agreement terms. For instance, stalls should not be required to be open for more than five days per week and no more than eight hours a day, and limits are set on amounts that operators can charge stallholders for contractual breaches. The key features of NEA's guidelines had been made public during the Parliamentary debates in 2018 and 2024. Before stallholders sign these tenancy agreements with an operator, NEA would review the agreements and engage operators to adjust their clauses if necessary.

Since 2019, the NEA has capped stall rentals to average independently-valued rents, as well as discounted rent in the first two years of a centre's operation as we recognise that an SEHC's footfall and operations would require time to be built up and stabilise.

Beyond these guidelines, operators have the flexibility to state the other terms of their agreements with stallholders, based on operational needs. However, these terms must be made upfront by operators, so that hawkers can make informed decisions based on their business preferences and cost considerations. Operators must also explain these terms clearly to stallholders. NEA officers would usually be present at these tenancy agreements signing sessions. After tenancy agreements are signed, operators must not impose any charges that were not specified in the agreements.

As tenancy agreements are private arrangements between the operators and stallholders, it would not be appropriate for NEA to mandate public disclosure.

Some Members have asked about affordable meal options. In line with the primary mission of hawker centres to provide affordable food options, NEA requires SEHC operators, as part of tender requirements, to implement ways to make food affordable. So far, SEHC operators have done so by making at least one value meal available at each stall. Value meals are part of the range of food options afforded by the SEHCs at variety price points.

SEHC operators explain the value meal requirement upfront to stallholders when signing the tenancy agreements. Each stallholder then has the flexibility to propose his or her value meal item, while retaining the prerogative to offer other food options at higher prices. This takes into account their costs and pricing strategies. Operators will also review their value meal prices from time to time and have previously adjusted prices upwards based on feedback from stallholders. Importantly, stallholders are not expected to make a loss from selling such value meals as they should have taken these into consideration when negotiating the rent with the operators.

Some Members have also asked about charitable meal schemes. So far, only Bukit Canberra Hawker Centre has such a scheme. The operator's Pay-It-Forward initiative was a well-intentioned initiative to give lower-income members of our community some additional support as part of our shared interest to make the hawker centre an inclusive community dining option.

The scheme was made known to stallholders upfront before they decided whether to rent stalls at this particular SEHC. NEA was also aware of the scheme. Therefore, stallholders who decided to proceed with renting stalls at the centre, rather than choose other centres without such a scheme, would have factored the costs into their business consideration. Notwithstanding this, I understand that the operator has not implemented the scheme to-date and following feedback from stallholders and the public, the operator has decided to remove the requirement from new agreements and tenancy renewals.

Some operators have developed phone apps which offer discounts to loyal customers. This is among various initiatives introduced by operators to attract patrons, increase footfall and encourage repeat customers at their SEHCs, which would also benefit stallholders. SEHC operators bear the costs of developing such apps and conducting marketing and publicity efforts, while stallholders bear a portion of the costs by providing discounts in return for increased sales. This is an example of the partnership and shared efforts of operators and stallholders to make their SEHCs vibrant and successful.

SEHC operators are required to conduct quarterly feedback sessions with their stallholders, which are also attended by NEA representatives. This serves as a regular platform for stallholders to provide feedback or ideas on improving the operations of SEHCs, or raise any areas of concern. For example, one operator took in feedback about high gas costs and will explore lower cost options after the current gas contract expires. Another operator stepped up checks on the segregation of trays and crockery following feedback from stallholders as well. This consultative approach between operators and stallholders fosters trust and understanding and allows differences to be addressed and SEHC operations to be improved.

Mr Speaker, our SEHCs have been vibrant and have brought many benefits to our community. Satisfaction levels for various aspects of SEHC management have been higher than 80% based on NEA's surveys between 2021 and 2024. Stall occupancy rates are at about 96%.

Nevertheless, we always welcome and have heard your feedback. NEA has always sought to strike a balance between safeguarding the interests of both hawkers and patrons, whilst giving SEHC operators sufficient room to set requirements aligned with their business strategies to help their SEHCs thrive and succeed. Moving forward, we will continue to improve the SEHC management model through constructive engagement with stakeholders and continuous refinements to better serve the interests of our community.

Thank you, Speaker. I thank Senior Parliamentary Secretary for her very comprehensive reply as well. I have three supplementary questions. The first, how do the average independently assessed value rents, which the SEHCs rentals are kept at, compare against that of NEA's own-managed hawker centres?

The second, while the Senior Parliamentary Secretary has mentioned the intent is that stallholders are not expected to make losses from selling the value meals, has NEA conducted a survey to understand if that is how indeed all hawkers understand the policy intent and have implemented it in such a way? I ask because I would expect there to be a wide variation in the practices on the ground, because there are some food types like "cai png" or economy rice, where this would be much more easily implementable as compared to say, Japanese food, where the base of the food cost is already higher.

My third clarification is, I understand that the discounts that the operators have on their apps for loyal customers can benefit the stallholders, but I would argue that they certainly would benefit the operators as much, if not more. So, my question is, does NEA know the proportion of the costs being borne by both sides? Is it the operators that bear the bulk of the cost, or is it the hawkers? I would argue that the operators should bear the bulk of the cost, because if indeed, it is for attracting footfall to the hawkers, then we can leave it to the hawkers themselves to implement their own discounts, rather than having one centralised and imposed on them.

I would like to thank the Member for his questions. For the first question, the Member asked about the average independently valued rents at the SEHCs, how do they compare with that at NEA-managed hawker centres? Sir, I have some figures here. They are generally comparable. In 2024, the median monthly rent at SEHCs, compared to non-subsidised stalls at similar NEA-managed hawker centres, were $1,750 for the former and $1,450 for the latter. So, pretty comparable.

However, I would also like to highlight that when we compare rent, it should also not debase on absolute rent because we have to consider stall sizes and amenities in the centre. Those who have been to SEHCs would recognise that the stall sizes there are slightly bigger and also, there are other amenities that the stallholders would benefit from.

The second question that the Member asked was about whether NEA has conducted a survey to understand how hawkers have understood the requirements and implemented the value meal requirement. To talk the Member through the process of how hawkers are made aware and how they implement the value meal requirement: first, these terms are made clear upfront by the operators prior to signing the tenancy agreements with the stallholders and they are required to then explain the terms clearly to the stallholders. So, the stallholders walk in with their eyes wide open about what is required and what they need to provide for the value meals.

Operators then work closely with the stallholders on the provision of these value meals, so that they can determine what to sell for these value meals. As the Member has suggested, a "cai png" stall will have a very different way of putting together some ingredients to meet the budget meal price, whereas a Japanese stall or a noodle stall would have a different way of putting together a meal that is within this price. I think it is also important for me to highlight that stallholders are not expected to make a loss when selling the value meals. The price is given and the stallholders then have the flexibility to put together a range of ingredients to meet that price.

And that is not the end of story. From time to time, we understand that prices would increase with inflation and other reasons. Operators have also then reviewed these value meal prices and adjusted accordingly based on feedback from the stallholders. So, I would say that it is an ongoing process and the stallholders are continuously engaged to ensure that they understand and implement these value meal requirements properly.

For the last question that the Member raised about the proportionate contribution between stallholders as well as the operators, I am glad that the Member has also pointed out that a loyalty programme pretty much benefits all parties in this situation. It benefits the stallholders because of increased footfall. Operators tend to gain as well and, of course, patrons tend to benefit from these discounts.

The discounts are then born by stallholders at the stall level. And this will help to attract returning customers. Operators then invest in centralised systems. So, in all the cases that we have seen across SEHCs that have operated such programmes, the operators are the ones that develop and maintain these apps and publicity efforts. Because these apps and different publicity efforts vary from location to location, the cost then varies across centres. But what is clear is that these are not passed on to the stallholders. These are done and extracted from the 50% of operating surplus that we require SEHC operators to plough back into the centre.

I would also like to highlight that beyond developing these apps, there are other ways that our operators have also driven traffic to centres, which, I think, we can agree could be very costly undertakings, such as shuttle buses, organising festive events, fringe events and so on.

Two supplementary questions for the Senior Parliamentary Secretary. The first is in relation to the "Pay It Forward" free meals. Can I understand if NEA was aware of the contractual obligation of this, especially given that the operators would also have explained this to the hawkers themselves? And given, I think, what Senior Parliamentary Secretary said just now about how hawkers are not supposed to be making losses on these charitable initiatives, does NEA now take the view that these should not actually be part of the SEHC operator contractual agreements, and that these will be also included in the NEA guidelines going forward?

The second is in relation to the part on my original PQ, in terms of whether the Ministry will review the current distribution of responsibility for the provision of affordable and free meals, given that now it seems to have befallen squarely on the hawkers themselves?

Sir, the Member asked two questions. I will answer the first part of the first question squarely, and then I will combine my answer to the first and the second question.

So, the first part of the first question is, was NEA aware? I mentioned in my reply just now, NEA was aware of the "Pay It Forward" programme and the requirement that was put into the tenancy agreement. To explain, for tenancy agreements, NEA has specific guidelines that were shared in previous Parliamentary debates. I mentioned examples of working hours as well as liquidated damages and a cap to those amounts. Beyond these hard guidelines, NEA does provide flexibility for operators to then commercially decide, together with the stallholders, on what might be the most appropriate other conditions to build in that recognise location and centre-specific differences. So, it will safeguard a certain set of guidelines; and for everything else, there is flexibility for operators to decide on that to stallholders.

What is important to us is that these are made clear and agreed upon with stallholders when tenancy agreements are signed. Because that is where stallholders should also have the responsibility and the ability, frankly, to then agree to these things, calculate it as part as their business decisions when deciding to locate their business in the SEHC versus other SEHCs or NEA hawker centres. So, NEA was aware.

The point about charitable initiatives and hawkers not expecting to make a loss, I would like to first differentiate. There are the value meal requirements, which are your lower-cost items, generally between $3.00 and $3.50 per meal, versus the "Pay It Forward" initiative. So, these are two very separate concepts. For the value meal requirement, that is where we say that hawkers are not expected to make a loss. I give you a price, $3.00 to $3.50, and then you figure out how to meet that within the cost of your ingredients so that you are not making a loss. So, my comment was related to the first concept.

The second concept on "Pay It Forward", because the stallholders then discuss that together with the operator, it is within the stallholders' consideration set as well, how they will then meet that. If they say they are able to, that is their business decision. And I assume that accounts for their pricing and their marketing strategies as well. I thought to make it very clear that these are two very different concepts.

To the Member's question about the distribution of responsibilities for providing low-cost nutrition meals and whether that is entirely fallen on the hawker itself and whether we should review the spread of responsibility. I think we should recognise that the value meal requirement, firstly, again to reiterate, that hawkers are not expected to make a loss. An additional point is that, today, value meals account for 5% to 20% of the number of meals a hawker sells. So, the hawker themselves, this is not expected to result in any business losses.

This should also then be seen in the context of what the other parties in the system are supporting hawkers with as well. As I mentioned earlier, operators, for instance, are expected to plough back 50% of operating surpluses to conduct activities that drive traffic to the centre and that benefits the hawkers. And now, the Government steps in as well: the cost of constructing and maintaining a hawker centre, we all know it is in the millions, and that is something that the Government does not recover from the operator and the stallholders.

So, in fact, there is the value meal requirement, but there is also the context in which we are supporting hawkers that we should also recognise that other parties have provided support for our hawkers too.

Sir, the Senior Parliamentary Secretary said that NEA officers are present at the contract signings. Does NEA have the power to veto specific clauses, specifically those regarding the turnover-based rent, mandatory supplier use or punitive fees?

And secondly, I want to come back to the point that the Senior Parliamentary Secretary has addressed just now about the value meals. The Senior Parliamentary Secretary said that the hawkers are not expected to make a loss selling the value meals, and the Senior Parliamentary Secretary went on to say that the provision of the value meals is a shared responsibility and pointed out the Government already heavily subsidises the construction and running of the hawker centres. However, given that hawkers are often low-income earners, why should individual hawkers have to bear any of the cost of a social programme, like the provision of a value meal? Should the cost of this not be socialised?

The Member's first question was about contract signing and whether NEA has any veto rights within the contract signing process. First and foremost, NEA officers are generally there during the tenancy agreement signing to ensure that terms are explained properly and that hawkers and the stallholders themselves understand what is being communicated. NEA would step in: one, I mentioned earlier on when the guidelines that we put out, the few guidelines that we think are "no-nos", we will step in if those are being infringed. And the other point that we may come in is when we believe that some of the conditions might be too one-sided or overly legalistic. In certain cases when we see that there may be hidden costs, we would then step in.

Certainly, there is space for us to come in to do that, but more often than not, I think it is reasonable for us to leave some flexibility because the stallholders are there, and if it is understood and it is clearly explained to them, then the conditions and terms would be inside the contract.

The other question is why should hawkers have to bear any of the cost? I suppose my question back is what is the cost that the Member is referring to? Over here, we are saying that value meal items, it should be a price point and then the hawkers themselves would sell a meal that is at that price point, within a suite of food options that could be at different prices. So, you have one at $3.00 or $3.50, and then you have the ability to sell other meal items at various price points, depending on your business strategy.

We are not asking the hawkers themselves to dish out a subsidy for these budget meal items. We are asking them to come up with an item on their menu. And so, the cost, in this case, is not as direct as the Member has said, in terms of us forcing the hawker to provide a certain subsidy upfront.