Fortitude Budget Simplified: Landlords to Receive Cash Grants That Must Be Used for Rental Waiver

By
George Yang
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Businesses in Singapore have been hit so bad that last month, over 8,000 businesses closed down.

That’s even when the authorities have come in with three support packages so far.

The solution is of course to reopen everything, but that wouldn’t be safe, so the whole idea is to open safely while keeping businesses that are affected afloat (if possible).

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So how are the authorities helping those businesses that are affected by the safe reopening?

As usual, it would be in three 3 Cs: Cashflow, Cost and Credit

Cashflow: JSS Hulkified

Lest you’re not aware, Jobs Support Scheme is a system whereby the Government would pay 25% to 75% of every Singaporean’s salary per month, of the first $4,600 per employee, for 9 months.

Most companies will receive 25% for the months, but it will be 75% for two months (April and May).

In the Fortitude Budget, the number of months would be increased to 10 months instead. Also, businesses that can’t open on Phase One (e.g. gyms or retail shops) will receive 75% until they can reopen, or until August 2020, whenever is earlier.

Also, notice that it’s between 25% to 75%?

That’s because different industries would receive different amount—in the Fortitude Budget, they will be making some adjustments and increase the percentage for some industry.

This is some examples:

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  • Aerospace sector including those in Maintenance, Repair, and Operations, will now receive 75% wage support
  • Retail, and marine and offshore sectors will now receive 50% wage support

Payouts are given in April, May, July and October.

Image: Facebook (Ministry of Finance (Singapore))

All these enhancements would cost the Government $2.9 billion, and that means the whole JSS now cost $23.5 billion across the entire 10 months.

But it’s the next scheme that has been in the headlines for months.

Cost: Battle Between Landlords vs Tenants

Scroll through Facebook and you’d see lots of small businesses complaining about nasty landlords.

Ah Gong is now stepping in.

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For a start, they will be legislating these new rules—in other words, they will become laws.

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The authorities will be giving cash grants to landlords, which must be used to offset rental costs by tenants.

Reader Bao: Why not just give it to tenants? My very reliable source tells me that all landlords are evil—

Next week, a new Bill (e.g. proposal that’ll become a law) will mandate that landlords must provide the rental waiver to SME tenants which have suffered a significant revenue drop in the past few months.

The amount in this cash grant will be different across sectors, but agak agak, it will be about one month rental for office / industrial and two months’ rental for retail. In total, Ah Gong is giving landlords about $2 billion.

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So, agak agak again, SME tenants should receive about 2 to 4 months of rental wavier—from both property tax rebate (about 1 month) and the rental wavier announced today.

In other words, if you’re a retail shop, you most probably have free rent for up to five months; not bad if you can still stay open.

image: imgflip.com

For businesses that rent from the Government or Government-managed properties (e.g. NEA hawker centres), they’ll automatically have two more months of wavier for businesses like hawkers or retailers, and one month for office or industrial.

Image: Facebook (Ministry of Finance (Singapore))

For the cost section, there would also be two new changes: foreigner worker levy wavier and rebate will be extended for two months for businesses that cannot reopen on Phase One, and the planned increase to increase CPF rates for senior workers will take place from 1 January 2022 instead of 1 January 2021.

And finally, credit.

Credit: Government to Match Private Investments

Do you know a whopping $4.5 billion have been loaned to businesses in Singapore so far?

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One of the reasons is that it’s become a tad easier to borrow money; the Government is taking 90% of the risk so banks are more willing to lend businesses money.

This will continue, but Ah Gong is doing more, this time by matching any private investments of any business.

Image: Facebook (Ministry of Finance (Singapore))

A total of $285 million will be used for this. So if anyone wants to invest in Goody Feed for $1 and get 20% of Goody Feed Pte Ltd shares, Ah Gong will match it with $1.

Reader Bao: Okay, so this whole Fortitude Budget is hulkifying the schemes that are already in place for businesses?

Yes, but more of extending—and it’s more for businesses that can’t reopen in Circuit Breaker.

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Reader Bao: Somehow, there’s no more plot twist in the Budgets

This, I’d have to agree.

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George Yang
Email: yang.george@goodyfeed.com