Letter of the week: SMEs closed during circuit breaker period need more help

The Singapore skyline, seen on Jan 9, 2019. PHOTO: ST FILE

In times of a crisis such as the Covid-19 pandemic, small and medium-sized enterprises (SMEs), like lower-income households, are disproportionately affected. Lacking any real bargaining power against landlords, or the reserves of large corporations, they are in a vulnerable position.

The Government's measures have been helpful but insufficient for SMEs. The burden of the economic fallout is disproportionately borne by SMEs, and further state intervention is necessary to apportion the burden equitably between companies, landlords and the state, in a manner that reflects the resources each has.

First, rental costs have always been a huge burden for SMEs, and they become even more devastating when SMEs have to completely stop business for two months as part of the circuit breaker measures.

While the bigger landlords have provided support, those out of the spotlight have not taken the cue from them. From my experience, leaving SMEs at the mercy of the landlord's discretion to share the burden has resulted in landlords who obey the rules and do the bare minimum of passing on property tax rebates when provided for by the Inland Revenue Authority of Singapore.

This is a case of too little, too late for most SMEs. The Covid-19 (Temporary Measures) Bill, which allows for postponement of rental obligations for six months, does not address the loss of revenue.

The Government should consider legislating rental annulments for businesses that are forced to stop business during the circuit breaker period. At the very least, both tenants and landlords should share the burden in a way that is beyond what is covered by the property tax rebate, rather than letting it fall squarely on tenants.

Second, the Jobs Support Scheme (JSS) paying out 75 per cent of wages during the circuit breaker period provides some relief, but SMEs still have to pay the remaining 25 per cent despite not being able to operate. Post-circuit breaker, there will be many other business-to-consumer (B2C) firms which will be affected by the chronic drop in consumer sentiment. The Government could consider extending the 50 per cent JSS wage support for the next seven months to other B2C sectors beyond the food service industry.

While we are all trying to weather the same storm, we are in boats of different sizes and reserves. For us to get through this together, smaller boats will need help from larger boats to prevent a glut of sampans sinking to the bottom.

Aileen Seah Aining

Join ST's Telegram channel here and get the latest breaking news delivered to you.