The principles were outlined and explained in a report, published on Tuesday (April 28), by economists Yeoh Lam Keong, Manu Bhaskaran, Donald Low and Tan Kim Song.
Predicting that global growth for 2020 will probably still be negative, the report puts that “only state support can avert the collapse of the private sector”. It explains that our fiscal resources be used to mitigate the impacts of such a crisis, to maintain business and consumer confidence, national productive capacity, and individual livelihoods.
In looking at the Solidarity and Resilience budgets, the economists urge that multi-month payroll assistance be considered.
They write that there is an “urgent need for extra support measures for SMEs at the operational level, focusing on payroll costs, rental costs, and credit provision”.
“We suggest 75% payroll support as long as the circuit breaker measures are in place, 50% payroll support for the first three months after, and 25% for the subsequent three months. This provides the respite needed for firms to find their feet.
“Much stronger support is also needed for rental costs — a huge burden for many SMEs and local businesses. Postponing rental obligations for six months, only for firms that have no reserves, is insufficient to avert widespread closures.”
According to the economists, the most vulnerable are the group of micro enterprises, with a turnover lower than $1 million. “To this end, we suggest a quick and easily approved immediate line of government credit to all SMEs of up to $1 million (or a maximum of one year’s operational cost, whichever is lower), at zero interest rate. At the end of the year, when these companies file their taxes, losses up to a maximum of $100,000 can be offset against the loan.”
They also write that to take better care of the poor the Government should give out “$500-$600 per month for all WIS and Silver Support Scheme (SSS) recipients. The WIS should also be extended to members of the gig economy. These expanded cash transfers are clearly superior to the utility or service and conservancy charge rebates that have been favoured by past administrations in addressing previous crises, since cash is fungible whereas rebates are not”.
The full report can be found here. /TISG