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The spicy taste of entrepreneurship: street food sellers and economic development

In Bangkok, food sold by street vendors provides more than just a cheap and healthy meal. For tens of thousands of people it is a vital source of income and a recipe for reducing poverty. According to a study recently published by the International Labour Organization (ILO), street vendors shouldn't be seen as a nuisance and a traffic obstruction but as entrepreneurs who generate "cultural capital" while building a healthier future for themselves and their families. The study says the right policies and positive social attitudes can benefit not just the vendors and their customers but entire economies as well. ILO Online reports.

Article | 09 February 2007

BANGKOK (ILO Online) - In this bustling Asian city you can get a decent meal for a pittance: this is the city of street food vendors-the "mae kha" or mother traders and the "phaw kha" or father traders who provide a daily menu of spicy, delicious food at a price nearly anyone can afford.

For a 45-year-old mae kha like Mali, selling street food has been a road out of poverty and to a better future. She left her village in northeastern Thailand when her family rice farm could no longer support them all. Since then street vending has allowed her to send one of her children to university and to build a "beautiful" house back home.

"I don't want my daughter to be embarrassed of her house", Mali says.

The hope that Mali's story will also be theirs' is what draws many to become street vendors. But not all find things go so well. When "father trader" Somsak and his wife Suvaporn first came to Bangkok in 1983 things were good. Somsak set up a noodle shop in front of his house and was quite successful. But after the Asian financial crisis hit in 1997 sales began to fall and production costs increased. Eventually they had to close the noodle shop. In 2003, the couple returned to manual work and their only child had to drop out of school.

What makes one street vending endeavour successful and another a failure is important not just for individuals but for a national economy as a whole. A recent study published by the International Labour Organization (ILO) has tried to shed light on the issue.

"Many underprivileged people depend on street vending for their survival and I wanted to understand what makes them successful", explains Narumol Nirathron, Associate Professor at Bangkok University and author of the study. "I believe that identifying the success factors - and formulating appropriate interventions - would benefit the mass of hardworking people earning a living from street vending".

Nirathron found that the factors important for success include self-confidence, knowledge of cheap sources to buy ingredients and materials, the right location for their stall and place of residence, good customer relations and -last but not least - the quality of their food. These are many of the same factors that govern the success of businesses in the formal economy.

Family support, access to low-interest loans and social networks are also important. Somsak and his wife had no relatives in Bangkok to help them. The couple became victims of a loan shark, a common occurrence when a business downturn leads to risk-taking behaviour.

Nirathron's survey also found a correlation between street vendors who considered themselves successful and those who looked for ways to improve their planning and administration skills.

Working out of poverty

Street vending, a form of self-employment, provides a livelihood for many workers who lost jobs after the economic downturn of the late 1990s, particularly in Thailand, Singapore and the Philippines. Despite small profit margins, the vast majority of street vendors in Bangkok - 82 per cent - said their earnings were adequate, according to university surveys.

Consumers have also benefited from the increasing number of food stalls. "The near miracle is that for all the hard work customers pay 30-40 baht - less than US$ 1 - for a full plate of chicken rice. And the stalls are a great social equalizer. Razor-thin profit margins and long hours of service not only benefit foreign tourists and wealthier Thais. Street vendors provide an important service to the poor at affordable rates," said Nirathron.

Thai street food sellers are also better off in other ways than many of their counterparts in other Asian cities, who face harassment by police, municipal authorities and speculators.

A 2006 seminar on "The Informal Economy: Labour Protection and Street Vending" in Bangkok examined the experiences of street sellers in Cambodia, Mongolia, Malaysia and India, as well as Thailand, and highlighted the enormous differences in their situations.

But even in Bangkok there is room for improvement in the handling of street vendors. The key to this Nirathron says is changing the local government's perception that street food sellers are unsightly and create disorder.

"It must regard street food vending as nurturing a space for entrepreneurship that creates cultural capital. The flexibility entailed in street food vending creates diversity in the family's income generating activities, which is important at this time of economic globalization", said Nirathron.

In India such steps are already being taken. In 2004, a comprehensive national policy for street vendors was published with the aim of ensuring legislation and urban planning policies to protect vendors from harassment and provide suitable clean and safe spaces for street trading. Now the challenge for the public authorities and the National Association of Street Vendors (a coalition of trade unions and voluntary organizations), is to ensure that national policy is reflected in local practice.

Christine Evans-Klock, former director of the Subregional Office in Bangkok and head of the ILO's Skills and Employability Department, hopes that the report will also influence policymakers, academics and city administrators in other countries with vibrant street vending traditions to see it as a positive step on the road of economic development. They could be encouraged to "explore the potential of street vending as a legitimate and viable business endeavour and regard urban space allocation as an important policy tool to create employment for their growing labour force," she concluded.

Note 1 - Narumol Nirathron, Fighting Poverty from the Street: A Survey of Street Food Vendors in Bangkok, International Labour Office, Bangkok, 2006.