SINGAPORE - Business assets such as machinery and hire-purchase cars will be protected from repossession under the Covid-19 (Temporary Measures) Bill passed in Parliament on Tuesday (April 7).
Loans undertaken using such assets as collateral will also be shielded from forfeiture if small and medium-enterprises (SMEs) are unable to repay their instalments due to the coronavirus pandemic.
An SME will also be protected from court action or the appointment of a receiver as a result.
Law and Home Affairs Minister K. Shanmugam told Parliament on Tuesday that he was contacted by various individuals, including tour bus owners and drivers whose vehicles have been repossessed by financial companies.
"For those who have lost their vehicles, many families' lives (and) well-being are at stake, where the driver or owner of the bus is the sole breadwinner," he said.
"So the aim of the Bill is to help them retain their business and their vehicles, where it makes sense to do so."
Commercial vehicles cannot be repossessed under measures in the Act if relief is granted, said Mr Shanmugam.
However, if financial companies believe they can justify the repossession, they can state their position to a Law Ministry-appointed assessor who will make a "just and equitable" decision, he added.
The outstanding value of hire-purchase agreements related to motor vehicles at the end of last year is estimated to be have been about $2 billion, said Mr Shanmugam.
Ms Joan Pereira (Tanjong Pagar GRC) said the laws will give SMEs breathing room to revamp their businesses instead of worrying about their immediate future.
She expressed hope that bigger players such as landlords, banks and finance companies will continue to see their relationships with SMEs as a partnership.
"When the SMEs do well, they will also do well. I hope this understanding will underpin the future discussions that are needed between landlords and tenants, banks and borrowers, to chart a way forward," said Ms Pereira.
Mr Zainal Sapari (Pasir Ris-Punggol GRC) asked if the Act will apply to buyers of services, such as security or cleaning, which may impose liquidated damages from any shortfall in standards due to manpower shortage.
Mr Shanmugam said in response that the new laws are not intended to be a general intervention to all contracts, but added that the Ministry of Law is prepared to include those contracts under the Act if the labour MP is able to make a persuasive case that they have been affected significantly by Covid-19.