Rent-Free period to commercial tenants may help businesses stay afloat
Due to the Covid-19 situation, most of the commercial businesses in our country have been affected negatively with some company losing as much as 50% of their revenue. To help these businesses to pull through this difficult time, most of the landlords have offered to provide a rent-free period of 2 weeks to 1 month to the non-essential tenants during the Movement Control Order (MCO) period.
To address these challenges, co-founder of Visata Creative Sdn Bhd Timothy Liew has mentioned that it is essential that all these tenants are receiving rent-free period for their business to stay afloat as the biggest issue for most of the tenant right now is cash flow. “For a long-term commitment as property owner/landlord, they do need to make sure their tenants feel that they are concerned and understand the current situation. This also to ensure that in the long run, property owners will continue to have tenants renting their property,” said Liew.
Furthermore, Liew noted that our government should support small to medium-sized enterprises by requesting the banks to provide loans to their retail business customers and be well-protected by the government. “If you look at the recent survey by SME Malaysia which garnered about 15,000 respondents – 4% of the 22% of SMEs who applied for funds have been rejected. The focus right now should be business continuity and to ensure that the retailers continue to employ their staff,” said Liew. He also suggested an appropriate period for the rebate as some landlords are giving a rent-free period for the whole month of MCO and some others are giving more than a month.
Malaysian Retail Association (MRA) represents 20% or RM22 bil of the country’s retail market, with a membership of more than 150 retail and related companies covering more than 10,000 retail outlets with more than 150,000 staffs. They have stated that 37 companies have provided rent-free period during this critical time. Among landlords who have stepped forward in giving a rent-free period to non-essentials businesses include Sunway Group, which has given rent-free to non-essential retail tenants. The rental exemption is for tenants at Sunway Pyramid, Sunway Giza, Sunway Carnival, Sunway Velocity, Sunway Putra, Sunway Citrine and Sunway Big Box Retail Park.
Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said in a report that the government really needs to assist retail tenants to manage issues with big costs – salary, payment, rental and payment of statutory contributions. The government can mediate with landlords and tenants to bring down rentals. The landlords may be incentivised with a lower tax rate or given tax-free status for income derived from rental for 2020,” as quoted by him. Some retailers had complained that they are requested to carry on with the rental payments despite their business being shut down completely when the MCO took effect. Garry Chua, president of the Malaysia Retail Chain Association mentioned that many businesses have had no income due to the effect of MCO. “Some shopping malls and landlords have announced that they will offer free rental while others have not. They shouldn’t collect rental now because if business collapse there won’t be any except from the ‘big boys’,” said Chua.