Small and medium-sized enterprises (SMEs) will get a cash grant to offset their rental costs as part of efforts to help them get back on their feet after the circuit breaker period.
Meanwhile, if SMEs have seen their revenues fall significantly in recent months, then their landlords may be obliged to grant them rental waivers, Deputy Prime Minister Heng Swee Keat said in Parliament yesterday.
The plan is to ensure this through a new Bill that will be introduced in Parliament next week. It aims to grant eligible SME tenants in commercial properties a total of four months of rental relief. This is to be shared equally between the Government and landlords and should help more affected SMEs stay afloat, analysts say.
The new cash grant, which will be disbursed through property owners, will cost about $2 billion in total, said Mr Heng as he unveiled the fourth round of support measures in response to the Covid-19 pandemic.
It will be disbursed by the Inland Revenue Authority of Singapore to property owners from end-July. Landlords are required to pass on the benefit to their SME tenants.
Taken together with the property tax rebate, the Government will offset about two months of rent for eligible SME tenants of commercial properties. The landlords, on their part, will have to chip in with two months’ rental waiver if the SME tenants have seen revenues fall significantly.
The Government will, through the grant, offset about one month’s rent for eligible tenants of industrial and office properties.
SME tenants are those with not more than $100 million in annual turnover, based on corporate tax and individual tax returns for the 2019 assessment year.
“We will also expect landlords to do something, and that will be legislated,” said Mr Heng, who is also Finance Minister.
The new Bill, to be introduced by the Law Minister next week, will also cover provisions on temporary relief from onerous contractual terms such as excessive late payment interest or charges. It will also allow tenants to repay their arrears through instalments, he added.
“The Government does not ordinarily intervene in contracts after they have been entered into. However, in exceptional situations, the Government needs to intervene, through legislation, to safeguard the economic structure for the common good,” Mr Heng said.
Government tenants will also receive more rent relief, he added. Commercial tenants and hawkers will have two more months of rent waived, bringing the total rental waiver to four months for commercial tenants. Stallholders in hawker centres and markets managed by government agencies will get a total of five months of rental waiver.
Industrial, office and agricultural tenants of government agencies will receive one more month of rental waiver, bringing the total to two months of rental waiver.
Mr Heng added that the Government will also ensure that these measures help sub-tenants, many of whom are SMEs.
But Ms Christine Li, Cushman & Wakefield’s head of research for Singapore and South-east Asia, argued that smaller landlords with a larger proportion of SME tenants in their properties may find it hard to support SME tenants.
“The new Bill should not make things too onerous for landlords, as some could have been hit hard themselves due to their tenants not being able to operate and pay rent during the extended circuit breaker period,” said Ms Li.
“It might be wise to stay targeted, rather than making it mandatory to save every business.”
Updated from : The Straits Times, 27 May 2020