F&B Industry looks to Government for urgent relief

The Restaurant Association of Singapore (RAS) is asking the Government of Singapore to come to the aid of the F&B industry which is facing mounting challenges in the face of Covid-19.

In a message posted on their Facebook (RAS) said, “For the past weeks, the F&B community has come together in various ways to address the business challenges resulting from COVID-19. In particular, we have actively engaged our business partners, the landlords to provide us with assistance such as rental rebates, to ensure the survival of the F&B industry and to save jobs of Singaporeans.”

“With the latest advisory from government on safe distancing, F&B businesses will comply with the guidelines, undertake our social responsibilities and take the necessary steps for the safety of our diners. Undertaking this commitment to our diners unfortunately also has a downside – the further reduced revenues arising from the reduced seating capacity for restaurants that are fortunate to still see footfall and customers in their outlets. This compounds the impact on an already fragile F&B industry which has already been badly hit.”

F&B industryRAS said that it is deeply concerned with the imminent closure of many restaurant outlets, and that timely cooperation by landlords towards a 100% Gross Turnover (GTO) model would help save many jobs as rental costs would then rise and fall in tandem with tenants’ revenues.

RAS therefore proposes that in order to steer our F&B industry through this COVID-19 pandemic, landlords need to adopt a rental arrangement with a partnership mindset, which is solely based on Gross Turnover (GTO), with no base rent.

“This is an equitable approach as landlords will still get their fair rental in areas where sales are less affected. For businesses which are in dire need of assistance, this will certainly help them ride through this difficult period.”

RAS is also seeking urgent relief from government to defray wage costs which together with variable rentals, would allow businesses to sustain operations through this trying period here and globally resulting in low footfall and the need for reduced seating plans to facilitate adequate social distancing.

Those that responded to RAS’s appeal on its Facebook about F&B industry needing more support, appreciated RAS’s message.

FB user Eileen Png: “Thank you for speaking up Restaurant Association of Singapore Landlord must do your part in fighting this pandemic, where is your CSR?”

Weileen Png: “Thank you for speaking up! Totally support this initiative by Restaurant Association of Singapore.”

Hao Bryen: “We really need support from government to tide us over this current situation. Thank you for being our voice! Restaurant Association of Singapore.”

FB user Joey Lee pointed out that the F&B industry players can’t work from home. “So please keep us in mind with all the policies being implemented and as we move forward in this battle against Covid-19. Leave nobody behind, otherwise, at least do your best not to.”

FB user Marcus KP Soh writing in RAS’s FB said his landlord threatened to sue him and did not reduce his rent at all. He lamented that he incurred huge losses for the months of January and February.

FB user KAi Gwee said (sic):

“1. Tenant and landlord issue
Granted the gov has already announced the 15% property tax rebate to the landlords, but companies have been informed by landlord that the 15% will probably translate to about 1% or 2%. That is not enough. So far, from experience, only Capland has responded with a clear offer of using 1 month security deposit to offset the Mar 20 rent and another 25% off rental for Apr & May 2020. Other landlords has been keeping quiet or instead insist on ramping up marketing initiatives to encourage shoppers to the mall. If the situation worsen, no amount of marketing campaign will help to draw shoppers to the mall. Should the gov mandate a clear instruction to how the landlord should do? Reduced rental for the next 6 months? Or to be fair, based the rental on the tenant’s sales, in that case, then we are REALLY ALL IN IT TOGETHER. There are even hearsay that some landlords are asking for an increase rent for renewal that occurs during this time. If companies cease to exist, so will the jobs for the workers. And if companies cease to exist, so will the dividend for the REITS shareholders. In short, think long term.
2. FW Manpower
Another way for a more direct help to companies will be the reduction of levies for FW. Understandably, the levy is there for a purpose. While many Singaporeans have been retrenched and are looking for jobs, companies cannot start to layoff FW right now just to accommodate hiring Singaporeans. While it is a must for us to take care and hire Singaporeans, we cannot break the trust that we have built up with the FW, who have supported us in jobs when Singaporeans are unwilling to work in. A full reduction is not possible, but how about alternatives like 50% reduction for the next 6 months or a delayed payment to help companies tide over the next 6 months?
3. Enhanced working capital loan
Thumbs up to the gov for improving the working capital loan for SME. While some bigger companies have lamented that amount is not enough, SME are grateful for it. The intention is great, but the problems are with the banks. When asked about the interests, the feedback is that the interest will be higher. But how can that be when the gov is taking a bigger risk? The answer by the bankers are either the rates are controlled by the government or that because there are more companies taking the loan, that is why the rates are higher. Is it true that the rates are controlled by our gov? If yes, then DMP Heng message of asking companies to work with banks to reduce interest rates is questionable. If it is not true, then the gov should take the banks to task about spreading false information. Another possibility is for existing working capital loan to be converted to an interest serving loan for the next 6 to 12 months.”

Written by Ravi Chandran

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