This festival goes back to the Buddhist Ullambana Sutra, which tells of Maudgalyayana, who as a young boy left home to become a disciple of Brahma, and later of Buddha. When he attained enlightenment, he remembered his parents and looked for them. He found his father in heaven, but his mother had been reborn into the Realm of the Hungry Ghosts, a realm of hell. She hadn't respected his wish that she welcome any Buddhist monk, and had instead been greedy with money and kindness.
The description of her ghost is terrifying. Her skin was "like that of a golden pheasant when its feathers have been plucked, her bones were like round stones placed one beside the other. Her head was big as a ball, her neck thin as a thread, and her stomach like a great sea swelling out." Because her throat was too narrow to eat or drink, but her belly so distended, she went terribly hungry. But the rice and water that Maudgalyayana gave her caught fire in her belly. So he pled with the Buddha, who instructed him to gather the Buddhist monks and sacrifice food and drink, on the fifteenth day of the seventh month. Maudgalyayana did so, and his mother was liberated.
Both Chinese Buddhists and Taoists claim that the Ghost Festival originated with their religion, but its roots are probably in Chinese folk religion and antedates both religions.
In the Tang Dynasty, the Buddhist festival Ullambana and the Ghost Festival were mixed and celebrated together. Chinese Buddhists often say that there is a difference between Ullambana and the traditional Chinese Zhongyuan Jie, usually saying people have mixed superstitions (such as burning joss paper items) and delusional thoughts, rather than think that Ullambana is actually a time of happiness. This time of happiness is sometimes used as a reason for the festival to be called as the Chinese Halloween.
For those who maintain these traditional beliefs, all sorts of activities may grind to a halt. People have to be home before midnight of August 1 so ghosts don’t find “empty” houses to enter and occupy.
I witnessed this year’s start here in Chinatown and at about 9 pm you could see how fast streets emptied and shops shut down to get home in time. The ones who stayed started to set up tables with a tablecloth and chopsticks and plates and glasses of wine, beer, a roasted chicken and duck in the middle of it, but no one sitting at it. That’s because it’s reserved ......for the ghosts.
Even here you could see the “kiasuism” of some Singaporeans trying to be the first to start burning the incenses and offerings, because after one year in hell the ghosts are hungry and the ones serving them first will be blessed with the most luck. If you’re late the ghosts might be already full and not taking your offers! But it’s not only food which is offered daily items for spirits to use in the after-life are being burnt as well, paper effigies of homes, maids, money, (paper) fabrics for making cloths and more. In this modern but still superstitious city’s such as Singapore and Hong Kong, people wind down their nightlife, property and car sales usually enter a lull period during the festival, people are also not supposed to get married and many more activities must stop. I overheard someone saying that when they were young, their parents used to tell them not to go to the beach during the "hungry ghosts" festival because they were afraid that they might be captured by ghosts in the water.