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The cooperative spirit is still alive

NTUC FairPrice returns to its original objective with 5% discount on house brands

Kog Yue Choong

NTUC FairPrice's 5-per-cent discount on 500 house brands for essential food items for two months could not have come at a better time — not just due to worries about the increase in food prices and other costs of living.

The move reinstates the principles of the cooperative into an enterprise that has proven highly unique internationally.

And the supermarket chain's return to one of its original objectives comes at a time when the character of the cooperative movement in Singapore seems to have lost its moorings.

Cooperatives control business for the mutual benefit of members, with profits and income to be incorporated into meeting the needs of stakeholders. The owners and beneficiaries are the same, and benefits to members are the foremost goal that drives the affairs of businesses run this way.

For those familiar with the cooperative movement here, Singapore has been one of the most successful cases in terms of putting cooperatives to work in businesses ranging from food distribution to transport, insurance and healthcare.

The FairPrice story can be traced back to the early '70s when Singapore faced the oil crisis and its inflationary pressures. In 1973, the National Trades Union Congress launched a supermarket cooperative called NTUC Welcome in Toa Payoh.

Other unions such as the Singapore Industrial Labour Organisation and Pioneer Industries Employees Union set up cooperatives to run supermarkets to help curb profiteering. In May 1983, NTUC Welcome and the other cooperatives merged to become NTUC FairPrice Co-operative Limited.

NTUC FairPrice has played an important role in stabilising the prices of essential goods and helping reduce the cost of living in Singapore. It used to be able to claim in its ads that prices of goods sold in its supermarkets were the cheapest in Singapore from the '70s to the '90s.

Today, it has become Singapore's leading supermarket retailer with a network of close to 180 shops island-wide and is owned by about 500,000 Singaporeans, according to its website.

But, can FairPrice claim to give its members the lowest prices in basic goods? Some privately-owned supermarket chains have been known to sell selected groceries more cheaply than FairPrice. This is difficult to comprehend because in the retail business, higher volume should translate into economies of scale and hence, cheaper goods for FairPrice.

Then, there was NTUC Comfort, which Mr Lee Kuan Yew launched in 1973. It was listed on the stock exchange in 1993. The merger of Comfort Group Limited and DelGro Corporation Limited to form ComfortDelGro Corporation Limited took place in 2003.

NTUC Comfort started off as a cooperative and its taxis were owned by the drivers, who now rent rather than own the taxis. All taxi drivers now contend with rental rates whether they drive for Comfort or other firms like SMRT. Naturally, the main corporate objective is to maximise profit for shareholders.

NTUC Income's insurance plans, too, appear to have few of the characteristics of a cooperative meant to function mainly for the benefit of its members.

The top plan (class A hospitalisation) for medical insurance with a rider policy (to cover the co-payment portion) provides reimbursement that is only slightly less than 10 per cent of the total expenditure in certain medical treatments because of the unrealistically low monthly limits.

The concern is for policyholders warded in class C, because the medical expenditure would be the same for the illness, but their reimbursement would be less under their plans.

One wonders whether the balance between profit for shareholders and service to customers and members is consistent with the objectives of a cooperative.

Fortunately, NTUC Income has introduced enhanced medical insurance policies recently, which reimburse more than 60 per cent of the expenditure on medical treatment with only a slight increase in the annual premium. This will help to restore faith in the cooperative.

It is good the cooperative spirit is still alive in Singapore, judging by this and FairPrice's recent announcement. Is there any basis to hope that all cooperatives can do more for their members and people in Singapore to help them cope with the rising costs? They did this once in the 1970s and such a move is very much needed again.

The writer is an engineering consultant.