By Francis Kan
While much attention has been focused on Budget support measures for the hard-hit travel and tourism-related sectors, businesses leaders said that enterprises outside these industries may also need assistance as the fallout from COVID-19 spreads to the broader economy.
“It's coming fast and furious, and hitting all the frontline industries like tourism, hospitality and F&B, but other sectors are also starting to feel the impact of the economic slowdown,” said Kurt Wee, President of The Association of Small and Medium Enterprises (ASME).
SMEs, which make up 99 per cent of businesses here, are likely to bear the brunt of any economic fallout, as they struggle with a drop in demand and the resulting strain on cash flow, he added.
Singapore Business Federation Chairman S.S. Teo agreed, saying in a statement that the business chamber would have liked for the government to address the knock-on effects of COVID-19 on other industries.
Support for SMEs
Measures targeted at SMEs in the S$4 billion Stabilisation and Support Package unveiled by Deputy Prime Minister Heng Swee Keat on Tuesday include a Jobs Support Scheme that subsidises the wages of local workers, while all tax-paying companies will receive a 25% corporate income tax rebate for 2020, capped at S$15,000 per company.
The Enterprise Financing Scheme’s Working Capital Loan will double its maximum loan quantum to S$600,000, giving easier access to working capital, and tenants and lessees of government-managed properties can also request for more flexible rental payments.
In the longer term, an Enterprise Grow Package will help businesses adopt digital solutions, and support their internationalisation efforts. An Enterprise Transform Package was also launched to groom business leaders of promising SMEs.
Fears of knock-on effects
While business leaders welcomed the measures, they said more might be needed.
Manufacturers and logistics players are already being affected due to disruptions to their supply chains. Hubei province at the centre of the coronavirus outbreak is one of China’s major manufacturing hubs. At a press conference earlier this month, Enterprise Singapore chairman Peter Ong said that it has been “very difficult” to ship goods in and out of China.
Singapore-based contract manufacturing firm Watson EP Industries, which has factory in Dongguan in Guangdong province, may consider shifting some production back to Singapore if the situation does not improve soon, group executive director Joyce Seow said.
Other sectors, from HR outsourcing firms to construction companies could also be impacted by supply chain disruptions, noted Wee.
Companies not yet feeling affected are also bracing for impact. Edy Tan, CEO of environmental services firm Chye Thiam Maintenance, said that while his business is being buoyed in the short term by increased demand for cleaning services, things could quickly go south if the economy enters a more protracted slowdown.
“In the long run if demand falls and more businesses are affected, they may re-look… our contracts, and we may have to do some cost-cutting,” he said.
Gaps to be addressed
Wee said businesses had hoped for more help to address costs and cash flow issues in the short-term. “We're in the eye of the storm right now. So businesses were hoping for a bit more to help to alleviate their cost and liquidity pressure, preferably a six-month long package to help them through this.”
He proposed that the government work closely with financial institutions to put into place a moratorium on loan repayments for an initial period of six months.
Chia Tek Yew, Head of Financial Services Advisory, KPMG Singapore said banks could look at waiving certain conditions such as personal guarantees from shareholders or directors, or profitability track records to make the loan application process more friendly.
Given that the success of measures lie in their implementation, SBF also urged the government to “simplify access to these schemes, which are a much-needed boost in these difficult times, so companies can easily leverage them”.