SINGAPORE: A newly announced S$4 billion support package has been largely welcomed by businesses as a swift prescription of help amid a novel coronavirus outbreak that is likely to take a toll on an already-fragile Singapore economy.
The special Stabilisation and Support Package, announced by Deputy Prime Minister Heng Swee Keat on Tuesday (Feb 18) during his Budget statement, included two wage support schemes worth S$2.4 billion, rebates for corporate income tax, as well as additional help for five sectors that have borne the brunt of the COVID-19 outbreak.
The Singapore Business Federation (SBF) said Budget 2020 signalled “the Government’s priority to help companies stay afloat and safeguard employment” during a difficult period, with the special package being a “good balance” of broad-based and targeted measures.
The package was well-received by its members, said the Singapore Malay Chamber of Commerce and Industry (SMCCI).
Nearly half of them are in the directly-impacted sectors of retail and food and beverage (F&B) so industry-targeted support will be crucial in ensuring business continuity now. Broad-based wage support measures will also alleviate concerns felt by its manpower-reliant members, the SMCCI added.
Still, some pointed out areas where the measures have fallen short of expectations.
Representatives from the retail and F&B sectors, for instance, said they are not certain whether they will benefit from the rebates in corporate and property taxes.
Smaller firms that lack deep pockets to deal with the virus fallout also fear that help might not reach them in time, said the Association of Small and Medium Enterprises (ASME).
ON CASH FLOW, JOBS
With cash flow being a key concern amid the economic uncertainties, businesses generally welcome the new moves in the Budget that specifically address this aspect.
One of which is a corporate income tax rebate of 25 per cent of tax payable, capped at S$15,000 per company, for the year of assessment 2020.
Under the Enterprise Financing Scheme’s Working Capital Loan, the maximum loan quantum will be doubled to S$600,000, alongside an increase in the Government’s risk-share on these loans to 80 per cent. Both changes, aimed at giving companies easier access to working capital, will last for a year until March 2021.
Tenants and lessees of government-managed properties can also look forward to flexible rental payments such as instalment plans.
All these will help to ease business costs and bolster cash flow, providing a much needed reprieve at a time of declining demand and revenue, said the SBF.
Echoing that, the Singapore Chinese Chamber of Commerce & Industry (SCCCI) said it is looking forward to an “effective implementation process” so that firms can benefit from these measures in a timely manner.
Businesses also lauded the S$2.4 billion financial support for workers’ wages.
Under the new Jobs Support Scheme worth S$1.3 billion, the Government will help employers to offset 8 per cent of the wages of their local employees for three months. This is subject to a monthly wage cap of S$3,600 per worker and payment to employers will be made by end-July.
The existing Wage Credit Scheme, which co-funds wage increases for Singaporean employees earning a gross monthly wage of up to S$4,000, will also be given a S$1.1 billion boost. This monthly wage ceiling will be raised to S$5,000 for qualifying wage increases given in 2019 and 2020.
The Government co-funding levels will also be increased by 5 percentage points to 20 per cent and 15 per cent for 2019 and 2020, respectively.
Mr Vincent Tan, president of the Restaurant Association of Singapore (RAS), said these are “definitely helpful” for employers when it comes to retaining their local workers.
However, small- and medium-sized enterprises (SMEs) may need more help with cash flow sooner rather than later.
“The wage support (under the Jobs Support Scheme) will go some distance to help but we are wondering if 3 months will be adequate as this could turn out to be longer than that,” said ASME’s vice-president of membership and training Ang Yuit.
“Payment will be given at the end of July but many of the SMEs are looking at issues now,” he added, noting that some of these smaller firms have been hit in a big and sudden way.
“Some are looking at a 90 per cent reduction in the daily average turnover now … Having the money come in at July doesn’t alleviate immediate cash flow,” said Mr Ang.
To help SMEs, KPMG Singapore’s head of financial services advisory Chia Tek Yew said banks can consider making their loan application processes “more friendly” by waiving certain conditions, such as personal guarantees from shareholders or directors or profitability track records.
Meanwhile, the corporate tax rebate can help to put cash back into the hands of businesses but it will not benefit those that are not in a tax-paying position.
Singapore Retailers Association’s (SRA) president R Dhinakaran told CNA: “This is only if the company makes money but in the retail sector, many are not making a profit. We won’t benefit from this.”
As for the additional help for adversely affected sectors – ranging from redeployment programmes, rental waivers and property tax rebates – most business representatives and economy watchers lauded them as “timely” gestures that will help soften the blow dealt by the ongoing COVID-19 outbreak.
One of them is SingEx Holdings, which manages the Singapore Expo Convention and Exhibition Centre and its convention wing MAX Atria.
“The Government’s extensive support measures will help our business weather this storm,” said its chief executive Aloysius Arlando, adding that the company is now focusing on strengthening its fundamentals so as to position itself for the eventual recovery.
“Talent is one of our key competitive advantages and we see this as a great opportunity to use the downtime in the MICE industry to expand our existing staff development programme, as well as sustain our infrastructure improvements, which will help position us for a faster, stronger comeback,” he said.
However, business representatives, especially those from the hard-hit retail and F&B sectors, said they were disappointed with the rent-related measures. This as rent accounts for one of their biggest costs.
As part of the special package, Mr Heng announced that stallholders at hawker centres and markets managed by the National Environment Agency will get a full month of rent waiver.
Other government agencies like the Housing and Development Board, will provide a half-month rent waiver to their commercial tenants.
A 15 per cent property tax rebate will also be granted to qualifying commercial properties. In his speech, Mr Heng strongly urged landlords to pass this on to their tenants by reducing rentals.
The rent waivers, according to Mr Tan and Mr Dhinakaran, may not be enough if the outbreak is prolonged.
Both the RAS and SRA had also been appealing to the shopping mall landlords for a temporary cut in rents and are unsure if the latest property tax rebates will nudge landlords to do so.
Mr Tan said: “The property tax rebate isn’t much of a signal to the private developers to do anything about rent. On this part, we are very disappointed.”
Even the Singapore Manufacturing Federation chimed in on this, noting that it wished for a “more structured framework for rental relief which provides for more immediate relief directly to the tenants, rather than through the landlords.”
Amid these concerns, landlords such as property giant CapitaLand said it "will pass on the full savings of the rebate to retailers" operating across its malls. It will also be rolling out additional relief measures to help its tenants tide through this challenging period.
“As Covid-19 has impacted different malls and trade categories by varying degrees, the rental relief will be disbursed to retailers in a targeted manner, based on their individual needs and circumstances,” said CapitaLand Group's Singapore and international president Jason Leow in a media statement.
Over at Mapletree, "a detailed review" is underway and it will do what it can to support tenants with the rebate, said a spokesperson.
Frasers Property Retail said it will work alongside tenants to navigate this challenging retail period "by passing on the full government property tax rebate to qualifying businesses, as well as putting various measures in place".
These measures include providing retailers with the option to operate for shorter hours and offering free parking for shoppers across its malls during selected timings.
ON OTHER SUPPORT NEEDED
Further down the road, Mr Dhinakaran said the Government could contemplate measures such as waiving the foreign worker levy for the services sector.
Such a waiver was included in the relief package during the 2003 severe acute respiratory syndrome outbreak, but was missing this time round.
ASME’s Mr Ang said attention should also be given to other sectors that have felt the trickle-down effects of the COVID-19 outbreak. These include construction firms that are suffering from supply chain disruptions, as well as events companies that have had to bear with booking cancellations.
“Apart from the five industries that are identified, there are more in the downstream that have been affected and are already feeling the slowdown,” he told CNA.
-Additional reporting by Rachel Phua.