According to a survey conducted by his office, with 1,196 respondents comprising different community-centred small businesses, a further 51.3% of them did not receive any waiver at all from their landlords.
“The government’s special tax rental reduction scheme is not really helpful for most tenants.
“The given amount and duration are also insignificant compared with the toxic combination of high operating costs (rental and labour) and falling sales plus lower revenues,” Santiago said in a statement.
“The scheme works at the mercy of the landlords, who themselves also experienced losses and have other financial commitments.”
On Jan 18, Prime Minister Muhyiddin Yassin announced that the ‘special tax deduction’ for companies that provide at least a 30% reduction in rental for SME tenants would be extended to June 30 under the Permai package.
The survey also found that “a staggering 81%” of the businesses said they would have exhausted their savings in the next three months and would be forced to close shop.
He also pointed out that 60.2% of the respondents have seen their loan applications rejected by financial institutions.
Santiago, an economist by training, said this was logical because small businesses have bad credit scores and poor evidence of strong cash flow as they are still suffering from a revenue drop and have yet to recover from the ripple effects of the continued movement control orders (MCOs) and the drop in demand.
“All of these examples indicate that despite the government’s proposed economic stimulus packages totalling RM340 billion, the most vulnerable business communities are still falling through the cracks,” he said.
Santiago repeated his call for a Rental Relief Fund during a meeting at the finance ministry yesterday.
The meeting was chaired by deputy finance minister Mohd Shahar Abdullah and attended by the heads of the seven finance ministry agencies, Bank Negara Malaysia and business association leaders.
Apart from a 70% subsidy of existing rent capped at RM7,000, Santiago also proposed that the current subsidy period be extended for another two months until October.
To be eligible, businesses would have to be community-based or operate in the informal sector, and they should also have recorded an annual drop in revenue of more than 40%.
Among the target groups are hawkers, restaurants, coffeeshops, barbershops, pharmacies and community retail shops.
They would have to apply through local governments and provide their business licence and income tax declaration on rental, and proof of an annual revenue drop. Santiago also said it was key that the rental reliefs be paid directly to the landlords.
“Since more than half of our economic activities and demands are domestically driven, the government is in a conducive position to plot out a bold economic recovery plan and allocate more funds to sustain community-based businesses,” he said.
“With an allocation of RM1.7 billion for rental relief, we can save more than 59,000 businesses and 590,000 jobs.
“Therefore, it’s imminent that a special committee on Rental Relief Fund is set-up between the ministry and small businesses without delay, to synergise the existing schemes and work out a dynamic rollout mechanism.”