Delivered in Parliament on 14 September 2021
Mr Speaker, it is clear that whenever there are some form of Safe Management Measures (SMM) related restrictions imposed on our dining and retail businesses, whether it is a complete ban such as during the Circuit Breaker or with fewer restrictions like those imposed under our recent Phase 2 Heightened Alert in May-June and again in August, many F&B or retail businesses would suffer a drop in business.
Under today’s Bill, the Government is introducing the new Rental Waiver Framework which will require all private commercial landlords to provide 2 weeks of rental waiver to qualifying tenants. This is being implemented to assist small and medium enterprises (SMEs) during the recent two rounds of Phase 2 (Heightened Alert).
Under the Rental Waiver Framework, eligible tenants will receive a total of about 1.5 months of rental support, of which a month’s rental support comes from the Government’s Rental Support Scheme announced earlier.
Under this Framework, once the Bill is passed, eligible tenants can expect to receive a notice of rental waiver and declaration form distributed along with their second Rental Support Scheme payout in October. Tenants who wish to claim the rental waiver must among other requirements show that they have suffered a drop of at least 20% in their income for the two Phase 2 Heightened Alert periods in May-June and August 2021 as compared to Phase 3 period between December 2020 and May 2021.
Procedurally, tenants will be required to send a copy of their notice, completed declaration form and supporting documents to their immediate landlord via email or registered post with 28 days. The supporting documents includes the profit and loss accounts of a tenant evidencing the drop in income.
Mr Speaker, I have a question regarding the evidence required to show the drop in income. I am concerned whether the requirement of Profit and Loss statement may be a little too onerous for some of the small businesses especially those who may not have inhouse accounting or finance department or staff. To seek external help for a claim of a half month rental waiver may not be cost effective to many micro businesses. I would therefore like to seek clarification with the minister as to how stringent is this documentary requirement to evidence the drop in income and whether it is restricted to the businesses’ profit and loss statements properly drawn up, or the ministry will be open to alternative evidence of showing the drop in business income compared to previous months.
Separately, I am also concerned with the shortness of time given for submission of such financial statements. I would like to ask the minister whether there can be more flexibility with this time limit of 28 days.
Next, I also wonder whether this Act in question could have been drafted to provide for the Rental Waiver Framework to apply generally in future whenever there are changes in SMM like the onset of Circuit Breaker, Phase 2, or Phase 2 HA with restrictions on dining-in and other operating conditions on retailers or businesses. We may not need to have a further amendment bill to provide for a specific date in the future when another Phase 2 Heightened Alert is called. Perhaps this can be looked into in future, if necessary.
Mr Speaker, still on the topic of rental, according to property company, CBRE’s comments on Q2 2021 URA statistics, some higher categories or grades of office buildings have seen positive take ups or upward revision of rentals while other categories or grades of property face falling rents and slower take up. They observed (and I quote) that “the office leasing market performances in Q2 was a tale of two halves; leasing momentum gathered pace as business sentiment improved and more staff were allowed to return to the office” [1](unquote). They noted that this was then affected by Phase 2 Heightened Alert in May and June leading to work from home becoming default again. They also reported that retail rental markets were affected by Phase 2 Heightened Alert in this last quarter.
CBRE noted that select retailers were snapping up choice locations in the second quarter. Would such consolidation by so-called select retailers or even bigger players reduce available space of choice for smaller retailers, and cause their rentals to remain elevated with weaker revenues due to prevailing safe distancing measures? If that is the case, I hope the Government will see how they can better support the SMEs and smaller retailers and businesses, prevent any undue speculation and ensure the playing field is still level. My concern is that the SMEs especially the micro SMEs may still face business pressure and lower sales arising from SMM measures and challenges of Covid-19 generally and may struggle more with their business rentals as compared to other more established or bigger businesses.
Mr Speaker, aside from the concerns I have raised, I support the Bill.
[1] CBRE’s comments on Q2 2021 URA statistics