By Francis Kan
SINGAPORE — While grateful for the Budget measures aimed at cushioning the impact of the COVID-19 outbreak, some in Singapore’s beleaguered tourism-related sector fear that even more government support might be needed if the downturn is prolonged.
Real estate consultancy Colliers International noted that if the outbreak lasts between three and six months, room occupancy “could fall by at least 10 to15 percentage points to an occupancy rate of around 65 per cent during the period, if not lower, depending on how long the fallout is.” Meanwhile, the MICE industry looks unlikely to recover this year, with a large number of events having already been cancelled or postponed, it added.
In his Budget speech on Feb 18, Deputy Prime Minister and Finance Minister Heng Swee Keat said that S$4 billion would be set aside this year to support businesses and workers amid the slowdown. Additional measures were also unveiled for the tourism, aviation, retail, food services, and point-to-point transport services sectors, which have been hardest hit by COVID-19.
These measures include a 30 per cent property tax rebate for the accommodation and function-room segments of licensed hotels and serviced apartments, as well as three key Meetings, Incentives, Conferences and Exhibitions (MICE) venues.
Qualifying commercial properties will get a 15 per cent property tax rebate, while Singapore’s two integrated resorts will enjoy a rebate of 10 per cent. The government will also help businesses retain their local workers by offsetting 8 per cent of wages for every local worker employed, for three months, starting end-July.
“The rebates coupled with the job credit scheme will not only help business owners better manage cash flow challenges but could help to preserve jobs that may be otherwise displaced,” said Teo Wee Hwee, Head of Real Estate and Asset Management, KPMG Singapore.
He added that the government could consider enforcing reduced rents as a qualifying condition, to ensure that landlords pass the savings on to the tenants. Some have already done so. CapitaLand Group, for instance, has said that it would be passing on the full savings from the tax rebate to its retailers. It has also said it is considering flexible rent payments and rental rebates to ease retailers’ cashflow, and may review its security deposits.
The moves were generally welcomed by industry players. A Marina Bay Sands spokesperson said that the integrated resort welcomed the new measures and looked forward to studying the initiatives in detail. Meanwhile, Margaret Heng, executive director of Singapore Hotel Association, said that the measures would bring some relief to the hotel industry.
“We are particularly appreciative of the hotel property tax rebate of 30 per cent, the corporate income tax rebate as well as the job support scheme. Hotels have high operating costs and manpower is the largest component, so these measures will help to some extent,” she said.
Not going far enough?
However, some industry players were unsure if these measures would be enough to tide them over if the sector, and the broader economy, falls into an extended slump due to the outbreak.
“We are hopeful that the recovery will take place by May or June. However, these measures may not be enough given the uncertainty over how long the virus will last and if it will lead to a protracted economic downturn,” said Alicia Seah, Director, Public Relations & Communications at travel agency Dynasty Travel. “Thus the government may need to introduce additional relief and support measures to help the tourism sector if the outbreak and the ensuing economic damage worsens.”
In the event that COVID-19 does not abate any time soon, Govinda Singh, Executive Director of Valuation and Advisory Services at Colliers International, said that further wage support to defray labour costs for the hospitality industry would go a long way in protecting jobs. This could take the form of an offset for employers’ CPF contributions.
He added: “The government could perhaps also explore a temporary cut in GST rate for the travel and tourism trade as well to help businesses manage cost.”
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