Businesses welcome fresh relief measures, but fear 'stopgap' help will come too late

Singapore

THE light at the end of the tunnel just got brighter for struggling businesses, as the government on Friday announced S$1.1 billion of support.

Still, moves such as enhanced Jobs Support Scheme (JSS) wage subsidies will only staunch the bleeding, watchers have told The Business Times.

Some operators also harbour doubts about the start-stop nature of the latest Phase Two (Heightened Alert) or P2HA restrictions, which run until Aug 18 and ban on dine-in services for the third time since Covid-19 hit.

Said Barclays economist Brian Tan: "As generous as these fiscal packages are, they only cover a portion - and not all - of the costs that businesses are incurring... Many businesses will likely remain under substantial pressure, especially as they had already undergone weeks of these tighter measures just recently."

One industry lobby that has been repeatedly calling for more support on Friday lauded "the improved and comprehensive support package".

"Specifically, we look forward to the details to be announced by the Ministry of Law on mandating rental reliefs from landlords," said a spokesperson for the Alliance of Frontline Business Trade Associations, which comprises four trade groups. "This will go a long way towards institutionalising a culture of fair sharing of burden between symbiotic partners."

Kwee Wei-Lin, president of the Singapore Hotel Association (SHA), said: "Being one of the worst hit sectors, SHA and our members are very grateful and relieved by the government's interim financial support."

On its face, the latest package is heftier than the support offered during the earlier P2HA situation in May and June. For instance, gyms and food and beverage (F&B) outlets get enhanced JSS wage support of 60 per cent from July 22 to Aug 18, compared with 50 per cent previously.

The government is also expected to mandate "sharing of rental obligations between the government, landlords and qualifying tenants" - going beyond just encouraging commercial landlords to offer rental support, as it did in the previous P2HA period.

But, despite this, business operators fretted that the aid may not be enough.

Even when gyms are allowed to reopen, they will need a long time to rebuild confidence and win back members of the public, said Singapore Fitness Alliance president Sean Tan.

The SHA's Ms Kwee also noted: "The hotel industry's recovery will depend on more domestic revenue streams such as bigger social events and dining capacity before the return of vaccinated international travellers."

Ritual Gym CEO Brad Robinson noted that the relief is higher than in some of the brand's other markets but "don't come anywhere close to covering our losses".

Indeed, Khoon Goh, head of Asia research at ANZ, said enhanced support "will help to mitigate some of the impact on affected businesses and workers, but it will not completely offset the loss of activity or income".

Some businesses also worry that the support may come too late.

Direct rental waivers are preferable to rebates, said Ang Yuit, vice-president at the Association of Small and Medium Enterprises, who fears delays in disbursements to tenants.

He added that wage support measures may also be ineffective, since they have been paid out quarterly in the past, whereas employees are usually paid at the end of every month.

Meanwhile, concerns remain over the spectre of extended curbs. Kevin Cheong, chairman of the Association of Singapore Attractions, asked: "If this happens again, do we really have sufficient reserves to tide through, even with government support?"

The Health Ministry had earlier said it would review measures in two weeks and "adjust further based on the infection situation at that time".

"A one-month lockdown with the heightened measures should not significantly dampen the economic recovery," said Maybank Kim Eng senior economist Chua Hak Bin, referring to P2HA. "But further extensions to the lockdown may test the limits of some businesses in the F&B, retail, recreation and hospitality sectors."

Still, OCBC chief economist Selena Ling believes that policymakers are open to offering more support should the situation warrant, "given the economic fragilities and the many twists and turns in the Covid pandemic".

Ultimately, while he called the support heartening, Arthur Kiong, chief executive of hotelier Far East Hospitality acknowledged that "these are stopgap measures and we look forward to working on more sustainable solutions" to preserve capabilities.

Along those lines, the Singapore Nightlife Business Association has proposed a "three-ring approach" to crack down on bad apples, support nightspots that pivoted into other services, and revitalise the ailing industry with longer hours and live entertainment and screenings.

Yet the latest measures are not expected to derail Singapore's recovery path - despite the business curbs and the eye-popping size of the bailout.

Ms Ling said a one-month P2HA situation could shave 0.3 percentage point off her full-year forecast for 7 per cent gross domestic product (GDP) growth. She added that the S$1.1 billion support package - about 0.2 per cent of Singapore's GDP - "is relatively calibrated compared to the unprecedented size of aid packages" doled out in 2020.

ANZ's Mr Goh added: "The move back to P2HA for another four weeks will dent economic activity in Q3, though a back-to-back sequential contraction in the GDP growth rate will be avoided as activity should rebound quickly once measures are eased from mid-August." He added that a smaller-than-expected Budget deficit in 2020 has left fiscal headroom for the fresh support measures.

READ MORE: S$1.1b package to aid workers, businesses hit by tighter Covid-19 measures