Knight Frank appeals government to save all businesses, not just SMEs

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KUALA LUMPUR: The stimulus package worth RM10bil has received much positive feedback, but more initiatives have to be extended to other businesses not covered by the latest set of incentives.

The stimulus package, which was rolled out on April 6, is the third one within two months, designed to mitigate the social and economic impact arising from the virus and the ongoing movement control order (MCO).

Knight Frank Malaysia managing director Sarkunan Subramaniam welcomed such initiatives. However, he raised concerns that the government should focus on the survival of all affected businesses, not only small and medium-sized enterprises (SMEs).

The latest stimulus package is aimed towards supporting SMEs, which contribute 40% to the national economy. According to Sarkunan, the initiatives should be extended to all businesses that are badly affected during this economic downturn.

Additional measures should be extended to those businesses involved in the hospitality, food and beverage, tourism and aviation sectors.

Knight Frank Malaysia applauds the government’s direction of encouraging private property owners to provide at least 30% rental discounts to SMEs during the MCO and three months after it ends by granting these landlords equivalent tax deductions.

However, he pointed out that this creates an issue for landlords having to verify if their tenants are SMEs or not. It is better for this relief to be extended to all businesses since the balance 60% contribution to the national economy is other than SMEs.

The government should to extend it to all tenants as they are also facing challenges in sustaining their businesses amid this unprecedented event, he said.

“All companies, small or big, are important for the country’s economy. No one should be left out,” said Sarkunan.

In the latest announcement by the government, the allocation for the Wage Subsidy Programme (WSP) had been increased by RM7.9bil to RM13.8bil, with the further introduction of a tiered WSP.

“SMEs have a strict definition by SME Corp Malaysia, and companies should check if they are eligible,” he said.

“SMEs have a strict definition by SME Corp Malaysia, and companies should check if they are eligible,” he said.

“We are glad that a clearer scheme has been announced by the government whereby the WSP is to be paid to the employers instead of the employees,” said Sarkunan, adding that it is a great move to alleviate the cash flow of the employers during this critical time.

However, whether the requirement for businesses to still demonstrate that they have a reduction in income of at least 50% was not further clarified. 

As the amount given is not significant comparatively, it is impractical to keep this requirement, as by the time the companies can prove that they are making losses of at least 50%, they are already in bad shape and may be closing down.

According to Sarkunan, the WSP initiative should be opened to all Malaysian companies, but a more precise guideline is needed for this subsidy.

Sarkunan urged the state governments to consider a moratorium on quit rent and assessment for the second half of 2020, which is one of the quickest ways to reduce business costs.

He said that to cushion the economic hit caused by the virus, governments in other countries had rolled out supporting policies to shore up the confidence of businesses.

Sarkunan further cited the government of Singapore, who announced property tax rebates of up to 100% for non-residential properties for the tax payable this year.

While in Jiangsu province, China, the local government had introduced exemption of property tax and urban land use tax for industries severely affected by the epidemic in the first half of 2020.

“We wish the various State Governments could look into this closely and assist organisations in this unprecedented period,” Sarkunan concluded.


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