New rental relief measures not a silver bullet for struggling businesses, says Shanmugam

SINGAPORE — The new rental relief framework is no silver bullet in helping businesses survive the coronavirus outbreak, and some may still see their shutters close even with the extra help, Law Minister K Shanmugam said.

The new amendments to the Covid-19 (Temporary Measures) Act, which were passed into law on Friday (June 5), include a rental relief framework that will compel landlords to waive up to two months of base rent for eligible small- and medium-sized enterprises (SMEs) that have suffered significant losses due to Covid-19.

Speaking in Parliament, Mr Shanmugam said it is still uncertain how long the pandemic will last and it is unlikely that businesses will bounce back in the near future. This is because safe distancing regulations have not been completely lifted even as Singapore exits the circuit breaker that restricted the movement of people and non-essential business activities.

“It is not as if we are asking (the businesses) to get on a cruise liner and everyone is going to be saved… So it will only be the very fit, viable businesses that will survive this period even with the relief we are giving,” Mr Shanmugam, who is also Home Affairs Minister, said.

He was responding to Ms Jessica Tan, Member of Parliament (MP) for East Coast Group Representation Constituency (GRC), who raised concerns about whether the rental relief measures will unnecessarily prolong the exit of unsustainable businesses at the cost of landlords' and taxpayers’ monies.

In response, Mr Shanmugam said that it is only fair for the Government to provide relief during the two months when it imposed rules for the circuit breaker. 

And while the authorities were mindful that the new relief measures cannot become a crutch for these businesses, he said that the priority was still to provide a lifeline to these SMEs — many of which have been severely impacted by the coronavirus outbreak.

Mr Shanmugam said this is also the reason that the authorities have decided to further intervene and provide added support with the new Bill, which was fast-tracked in Parliament by a Certificate of Urgency.

CONCERNS OVER SMALL LANDLORDS

Mr Christopher De Souza, MP for Holland-Bukit Timah GRC, asked if the eligibility requirements under the framework can be flexible as smaller private landlords may also find themselves financially squeezed during this period.

To this, Mr Shanmugam said that such landlords can appeal to a panel of assessors who will take into consideration the annual value of the landlord’s properties and whether his rental income forms a substantial part of his total income when deciding if he should provide the full rental waiver.

Mr Murali Pillai, MP for Bukit Batok, asked whether the Government is taking any steps to ensure that those who are eligible for the relief are aware that they can take advantage of the new support measures.

Mr Shanmugam said he believes businesses that require the relief would be “very aware” of the legislation as they have been waiting for such measures to pass.

“I will be very surprised if anyone who qualifies is at this point in time not aware that they are going to get some benefit.”

That being said, Mr Shanmugam added that the authorities are doing their best to get the message out.

The Inland Revenue Authority of Singapore will also notify all property owners who have eligible tenants and, in turn, they would have to notify their tenants as well as sub-tenants, he said.