1.

History of Hawker Centres

While every prominent city has its iconic attraction, Singapore's most beloved icon is undoubtedly our
hawker centres - a scene you would not find anywhere else in the world. 
The start of Singapore’s hawking culture can be traced back to the 1950s, where post-colonial days saw a
high unemployment rate in Singapore. As a result, many resorted to hawking as a means to make a living. It
was a trade with a low barrier of entry, requiring little capital investment and technical skills (Ghani, 2011).
Street hawking then became widespread as the demand for its affordable and convenient access to a broad
range of goods and services rises.
With demand generating supply, the increase of hawker stalls has also raised social problems. Amongst it
was poor hygiene practices - the most prominent concern as inappropriate disposal of refuse led to a
proliferation of pests, fuelling the spread of cholera, typhoid, and even malaria (Heng & Tung, 2010). The
much filth and refuse left on the street due to hawking activities further worsened the situation, posing a
severe threat to public health. Street hawking was also deemed rowdy and chaotic due to its haphazard and
disorganized operation (Heng & Tung, 2010). As a result, much friction surfaced between hawkers and law
enforcers as hawking obstructed traffic and impeded pedestrian flow. Although authorities attempted to
resolve this through licensing, corruption rose as many unlicensed hawkers resorted to bribery to avoid being
raided (Heng & Tung, 2010). 
Recognizing that eliminating street hawking is the only solution to benefit public health and keep Singapore
clean, the government decided to build a proper hawker premise - Hawker Centres. A massive island-wide
hawkers' registration exercise and relocation initiative took place in 1968 and 1969 (Ghani, 2011), intending
to move street hawkers away from main streets with rules implemented. Such initiative was enforced half-
heartedly as it was acknowledged that hawking was still a means for families to earn an income due to the
high unemployment rate. It was only until 1971 where the employment rate increased that the government
enforced licensing and relocating hawkers to properly constructed nearby hawker centres, with piped water,
sewers, and garbage disposal (Ghani, 2011). By the early 1980s, all hawkers were successfully resettled
(Ghani, 2011).
Evolved from the past street hawking, hawker centres have become Singapore's icon as a multi-cultural city-
state. Today, there are a total of 114 Hawker centres across Singapore (“National Environmental Agency”,
2020), which continue to provide affordable meals and livelihoods to the diverse communities in residential,
recreational, and business districts.
2. Ownership of Hawker Centre
2.1. 1974 – 1st April 2004
In 1974, the Hawkers Department’s Special Squad was formed and proposed for the Housing and
Development Board (HDB) and the Jurong Town Corporation (JTC) to incorporate hawker centres as part of
the development of new residential and industrial estates respectively (Heng & Tung, 2010). The market
structure of hawker centres was an oligopoly all the way from 1974 till the end of March 2004 as they were
managed by HDB and JTC. 
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Operating in an oligopoly market structure with only 2 large suppliers, hawker centres benefited from the
competition among the 2 suppliers. With the competition, suppliers are more incentivized to invest in
improving the facilities and the condition of the hawker centres. However, a problem arising from the
oligopoly market structure is that the government would not be able to control the cost of rent for hawker
stalls. This means that the government would not be able to intervene if the rent is either too high or too low.
2.2. 1st April 2004 Onwards
On 1 April 2004, the management of hawker centres was consolidated under the sole control of National
Environment Agency (NEA) (Heng & Tung, 2010). This allows the NEA to manage and enhance the hawker
centres by planning and building new hawker centres, formulating, implementing and administering hawker
policies, including licensing, tenancy, and public health matters of the centres (National Environment
Agency [NEA], n.d.). NEA currently manages and regulates all 114 markets and hawker centres in
Singapore (National Environment Agency [NEA], n.d.). With it being the sole authoritative figure to manage
and regulate all the hawker centres in Singapore, hawker centre is currently a Monopoly under the NEA. 
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Controlled by NEA, the ownership of hawker centres is now a government-controlled monopoly.
There are four reasons as to why it is a monopoly with the Government not wanting other competitors to
enter. 
1. This is due to the Government building hawker centres to provide benefits to the society such as
jobs, lower rents for stalls and subsidies so that the hawker stalls are affordable (Thomson Reuters
Foundation, 2019). 
2. The Government would also be able to control the hygiene ratings and demerit points given to the
hawker stalls to determine if there should be suspension of licenses (Ong, 2017). 
3. The Government would also be able to control who is able to open the hawkers stalls by assessing
their eligibility and whether they fulfill the necessary requirements before approving the submission
of the tender by the hawkers when applying for the opening of their stall in the hawker centres
(NEA, n.d.). 
4. There are scarce resources of land available in Singapore. With the Hawker Department of NEA
obtaining land directly from the Land Office to build its own hawker centres in Singapore (Ghani,
2011), it is not optimal for the Government to release the State lands for sale for other competitors to
purchase and build more hawker centres when the market demand for other usage of the land is
high. 
Current Situation

Market Structure: Monopoly

In today’s context, Hawker centres are unique as they are all owned and run by NEA, which is under the
government. Many may question the government’s role in managing these hawker centres and whether they
need to be the only body in charge of them. With the goal of “providing jobs for the less privileged, ensuring
cheap meals for low-income residents and attracting tourists” (Thomson Reuters Foundation, 2019), Hawker
centres provide many benefits to our society, making it socially desirable. With special reference to the point
of providing jobs to the less fortunate who are unable to set up stalls elsewhere, the rents for hawker centers
stalls must be low enough or even subsidised so that they are affordable. However, due to lack of glamorous
job prospects, there has been unable to attract youths to take up these jobs and competition has been scarce
(Thomson Reuters Foundation, 2019), there will be a lower demand for hawker stalls, leading to a vacancy
of hawker stalls. Thus, the quantity demanded for the stalls will be lower than socially desired. 
With NEA as the one owners of hawker centres, the market can be considered a monopoly. There are both
benefits and consequences of a monopoly. One of the main pros of NEA being the only owner is that they
are able to control the rent of these hawker centres, and provide more subsidies to the hawkers when deemed
appropriate. This also brings out an issue where there is no incentive for the government to lower rent. As
they are acting directly under the government, the assumption would be that the government would make the
best choices for the country and its people. However, proponents of paternalism will feel that government
action and intervention is not necessary in the market. Furthermore, it is not certain that the government will
work in everyone’s best interest. Another issue with a monopolised market is the lack of incentive for the
market owners to invest in research and development. In the case of hawker centres, NEA will not be
incentivised to improve the condition of hawker stall and the facilities for hawkers. 
However, this is difficult as the barriers to entry are high, and the revenue is not high as the demand for the
service is lower than the socially desirable level. Thus, there is a need for it to be run by the government.
3. Competition in Hawker Centres
Hawker Centres exist in a monopolistic competition market structure that consist of three main
characteristics: a large number of buyers and sellers, low barriers to entry and exit and products that are
slightly differentiated (Boyle, 2020). Likewise, there are a large number of buyers and sellers in the Hawker
industry; over 18,000 stallholders scattered across the 114 hawker centres in Singapore (National
Environment Agency [NEA], n.d.). Furthermore, barriers to entry and exit are low as not only is the cost of
setting up a stall inexpensive, there are only a few simple and straightforward steps like bidding for a tender,
completing The Basic Hygiene Course and applying for a Hawker Licence to open a stall (NEA, n.d.).
Lastly, hawker stalls sell a wide range of differentiated products like chicken rice, prata and nasi lemak.  
3.1. Fierce Competition
Since there is a large number of sellers in a monopolistic competition selling similar items and barriers to
entry are low, the demand for a good is highly elastic. This would mean that a decrease in the price of a good
would lead to a more than proportionate increase in the quantity demanded for a good. As seen in Figure 1,
if a hawker stall decides to decrease the price of its food from P 1 to P2, this will lead to a more than
proportionate increase in quantity demanded from Q1 to Q2. As such, the total revenue of the Hawker would
increase from area AB to BC. On the other hand, if the hawker decides to increase prices from P 2 to P1,
quantity demanded would decrease from Q2 to Q1, and total revenue would decrease from area BC to AB.
Due to the high elasticity of demand, most hawkers would tend sell at a lower price to maximise revenue.
However, some hawkers such as those recognised by Michelin have a greater ability to set prices as they are
able to differentiate their products by improving the quality of their food. For example, in the case of a
famous hawker stall that sells a more palatable and unique product, not only will there be a greater demand
for the food but the demand will also be more inelastic. Thus, as seen in Figure 2, the hawker may choose to
increase prices from P1 to P2, leading to a less than proportionate decrease in quantity demanded from Q 2 to
Q1. Hence, total revenue would increase from area BC to AB. 
Therefore, because of the competitive pressures, hawkers are incentivized to reduce cost or provide better
products to maximise their profits.
3.2. Supernormal Profits (Short Run) and Normal Profits (Long Run)
In the short run, hawkers maximize profits by producing at the quantity where marginal cost equals to
marginal revenue. As seen in Figure 3, the hawker manages to earn supernormal profits of the area A since
the average total cost P2 is lower than the market price P3. However, due to the low barriers of entry, in the
long run hawkers will earn normal profits as more hawkers will be incentivized to enter the industry when
the industry is earning supernormal profits. As seen in Figure 4, at quantity Q 1, average total cost is equal to
the market price at P1.
3.3. Consumer preference
As mentioned, stalls that are well regarded or have won awards tend to have a higher demand for their goods
as they are preferred by consumers. Other preference consumers look out for includes stall cleanliness and
dietary requirements. 
The demand for goods from a stall with an A-grade cleanliness rating from NEA tend to be higher than those
of a lower grade. This is because consumers would avoid consuming goods from stalls with poor hygiene as
there is a higher risk for food poisoning (Mahmud, 2018). As Singapore has a multicultural society, different
religions have different dietary requirements. For example, the consumption of Halal certified food by
Muslims. As Muslims can only consume food that is Halal certified, stalls with the Halal Certification would
not only cater to the masses but also to Muslims. This results in a higher demand for their goods as compared
to stalls that are not Halal certified. 
4. Future of Hawker Centres
4.1. Increasing prominence and Covid-19’s impact
The hawker centre’s raison d’être has expanded beyond a place for satisfying hunger. There are initiatives to
preserve our much-treasured hawker heritage and culture. For instance, the nomination of hawker centres
into the UNESCO Representative List of the Intangible Cultural Heritage of Humanity in March 2019 (Sim,
2019). The future has already begun as the Singaporean government in consultation with stakeholders, have
begun to redefine the future scope and functionality of hawker centres through the Hawker Centre 3.0
Committee established in 2016 (Khew, 2016).  First, hawker centres will serve as social spaces which
advocate interactions with all walks of life and enhance neighbourliness. The National Environment Agency
(NEA) has launched the Vibrant Hawker Centres Program which provides funding of maximum $2,000 per
event and $10,000 for five or more events per year (NEA, 2020). This is to promote consistent communal
bonding through frequent community events like mini concerts at hawker centres. According to the 2018
Perception Survey of Hawker Centre Patrons (PSHCP), 91% of the participants agreed to hawker centres as a
platform for developing interactions with fellow Singaporeans (NEA, 2019). Future hawker centres can be
integrated with healthcare and elder-care facilities, to conserve and efficiently utilise scarce land while
providing convenience to Singaporeans (Samant, 2019).
Hawker centres are increasingly a bona-fide attraction especially with the cheapest Michelin star meal by
Liao Fan Hong Kong Soya Sauce Chicken Rice and Noodles at $2 (Levius, 2017). Hawker centres will be at
the forefront of experience-based tourism, allowing them to attract more customers. 
Covid-19 has accelerated the use of cashless payment and social media to advertise and sell hawker food due
to social distancing and the dine-in ban during circuit-breaker (Tham, 2020). The implementation of the
Unified e-Payment Solution allows hawkers to receive payment from 19 settlement schemes e.g. DBS
PayLah! and GrabPay via a SGQR label at their stall. This is aligned with SG’s Smart Nation initiative to
transition into a cashless economy. To encourage proliferation of cashless payments, hawkers are financially
incentivised; minimum 20 transactions per month will be awarded $1500 over five months (SG Digital
Office, 2020). Additionally, no fees are involved until end 2023; afterwards, a 0.5% fee is charged on
monthly transactions. The Covid-19 outbreak has resulted in a drastic decrease of customers as people adapt
to the Work-From-Home and circuit-breaker mechanism, choosing to cook at home while an average hawker
suffers a 33% decline in income (Loke & Awang, 2020). With incomes declining and high commissions (30-
35%) by food delivery apps like Foodpanda, Facebook groups were used to communicate purchases and
delivery of hawker food (Quek, 2020). Post Covid-19, the emphasis on hand-hygiene and customer
convenience will prompt the continuation of these trends.
4.2. Hawker centres vs Restaurants
In the near-medium future, there will possibly be an increase in demand for foods from hawker centres than
those from restaurants. Consumers might change preferences due to changes in disposable income which will
affect the quantity demanded for restaurant and hawker food. According to a Randstad Singapore survey
conducted in June and July 2020, more than 50% of job-seekers are willing to take pay cuts as they transition
into new industries or sustain their current employment amidst Covid-19 (Tan, 2020). According to DBS, as
of May 2020, 26% and 33% of its clients suffered a decline in income, excess of 10% and 50% respectively
(Choy, 2020). As consumer income decreases, quantity demanded for inferior goods increases while normal
goods decreases. Hawker centres are more income inelastic than restaurants, as it is the more affordable eat-
out option. While restaurant food is considered to be a normal luxury good e.g. a 1% fall in income will lead
to more than 1% decrease in quantity demanded. This can be seen where the year-on-year August 2020 sales
change in “cafes, food courts and other eating places” (-17.6%) was lesser than “restaurants” (-32.2%)
(Singstat, 2020) despite Covid-19.
Demand for hawkers is forecast to increase as 17 more hawker centres are built by 2027 (Khew, 2016).
However, with the median hawker age of 59 soon to retire and the young generation’s unwillingness to
takeover due to stigma of hawkers - low pay, long hours and harsh humid working conditions (Kerr, 2020),
the decrease in supply of hawkers is more than the increase in demand for hawkers. This exert upward
pressure on rents and consequently food prices. For hawker centres to remain as a social safeguard by selling
food at affordable prices, the government can intervene by allowing foreigners to operate hawker stalls and
increase rent subsidies; increasing supply. While, introducing cash rebates in hawker centres, incentivises
people to patronise hawker centres e.g. 8% cashback on chicken rice. This ensures hawkers’ business and
consumer incentives are met.
4.3. Keeping Rental Low
In 2019, the government announced that there will be an addition of 13 social enterprise hawker centres in
Singapore by 2027 to the existing 7 (Teh, 2019). Built with the goal of supporting hawkers, rental for stalls
in social enterprise hawker centres are subsidised through the Staggered Rent Scheme. Hawkers will enjoy
20% and 10% discount on rent in the first and second year respectively, allowing them to build up their
clientele and business (Teh, 2019). To further subsidise the rent, dishwashing services will also be co-funded
by NEA during the first 2 years (Teh, 2019). Through social enterprise hawker centres, the interest of
hawkers are safeguarded and Singaporeans continue to have access to affordable food.
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