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State governments urged to give moratorium on quit rent and assessment

PETALING JAYA (April 8): State governments should consider a moratorium on quit rent and assessment for the second half of 2020 as this is one of the quickest ways to reduce business costs in light of the COVID-19 outbreak and Movement Control Order (MCO) in Malaysia, says Knight Frank Malaysia. 

Citing policy examples of other countries to shore up business confidence, Knight Frank Malaysia managing director Sarkunan Subramaniam said the Singapore government has 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 has 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 said in a media statement today.

Meanwhile, the government should focus on the survival of all affected businesses, not only small and medium enterprises (SMEs), he added.

On April 6, Prime Minister Tan Sri Muhyiddin Yassin rolled out an additional stimulus package worth some RM10 billion aimed at supporting struggling SMEs (which contributes 40% to the national economy) affected by the COVID-19 outbreak and the implementation of the Movement Control order (MCO).

“The initiatives under the stimulus package should be extended to all businesses that are badly affected during this economic slump and additional measures should be extended to the businesses involved in the hospitality, food and beverage, tourism and aviation sectors.

"With the exception of those categorised as ‘essential services’, all other business activities have literally slowed or grind to a halt during this month-long MCO, which may be further extended should the number of infected cases continue to rise daily," he said.

Although under the stimulus package, SMEs operating at premises owned by government-linked companies (GLCs) could enjoy rent exemptions or discounts, he noted that the quantum of discounts or rental exemption for these SMEs are unclear at this moment.

The government has also encouraged 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, this creates an issue for landlords having to verify if their tenants are SMEs or not.

"SMEs have a strict definition by SME Corp Malaysia, and companies should check if they are eligible.

"It is better for this relief to be extended to all businesses since the balance 60% contribution to the national economy is not from SMEs.

“We regret that this initiative is purely for SME tenants only and urged the government to extend it to all tenants as they are also facing challenges in sustaining their businesses amid this unprecedented event. All companies, small or big, are important for the country’s economy, no one should be left out,” Sarkunan said.

With regards to the Wage Subsidy Programme (WSP) which was increased by RM7.9 billion to RM13.8 billion in the latest stimulus package with an addition of a tiered claim, Sarkunan said it requires further clarification.

“Whether the requirement for businesses to still demonstrate that they have a reduction in income of at least 50% was not further clarified. In fact, 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 a bad shape and may be closing down," he commented.

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