A BUSINESS chamber is seeking rent relief for the smaller tenants of malls and commercial buildings, and proposed that they pay a percentage of sales until their businesses have recovered.
The Philippine Chamber of Commerce and Industry (PCCI) is appealing for relief for micro-, small-, and medium-sized enterprises (MSMEs), which it said are experiencing “insurmountable” financial difficulties during the pandemic.
“Sales have plunged to their worst in decades. There has been a cascade of store closures and job losses,” PCCI President Benedicto V. Yujuico said in a statement Thursday.
“The persistence of low consumer confidence and limited public transportation and mobility is making it difficult for enterprises to recoup their operational costs to be able to pay the rent on top of the utilities and their workers.”
The country’s largest business group is asking for a strategy that would grant the relief measure without eroding lessors’ capital.
“Lessors can give lower rent in exchange for a percentage of sales of their MSME tenants until such time that the situation normalizes and the tenants are able to meet their contractual obligations (fix rental),” Mr. Yujuico said.
This means that lessors would charge a percentage of sales instead of fixed rent until they have determined that the lessee has recovered and is able to pay fixed rent.
The PCCI said that lessors should support tenants that can recover, which it said is preferable to leaving stalls vacants or taking in new tenants “who have not proven themselves.”
Businesses were granted a 30-day grace period on rent payments during the strictest part of the lockdown, known as the general community quarantine, without interest or penalty, with rent arrears amortized over six months after the grace period.
As of 2018, MSMEs account for 99.5% of all businesses, employing 5.7 million people or more than 60% of the workforce.
The PCCI earlier asked the government to prioritize MSMEs for financing. The central bank has eased banking rules, including temporarily reducing the credit risk weighting of loans granted to MSMEs. — Jenina P. Ibanez