San Juan assn head: ‘Businesses need relief from landlords, taxes’

San Juan Business Association president Vivek Charran said the Prime Minister and Finance Minister "touched the right notes" at Wednesday's post-Cabinet media briefing on covid19 relief measures, but businesses still need relief from rent and taxes.

He told Newsday, in a telephone interview, he noted the themes of business and job preservation spoken about by the Prime Minister, and the efforts to have as much liquidity in the economy by having low interest rates. Charran said the ministers spoke about asking banks to roll back rates on credit cards, though it was not specified whether it was corporate or personal credit cards. Charran said the cost of borrowing will be cheaper and businesses will have more access.

"But businesses should always be careful about how much debt they avail themselves to. Accessing more debt to pay more debt is a scary thing."

He stressed that strategic management of resources was very important and deferred debt was still a debt, and the actual amount will not decrease.

"If it is deferred, you may actually find you have to make more instalments or the time will carry on longer."

He said what the state of the business environment will be post-covid19 is unknown, and it is also not known when the numbers and incomes will return to normal, therefore businesses should exercise caution. He added that if businesses can pay debts, they should and not take on deferrals unless absolutely necessary.

Charran said he was pleased that the Prime Minister did not call for a total shutdown of the country, and the small money businesses will be making can go towards the satisfaction of immediate debt, which, for most people, would be salaries.

He pointed out, however, that there was no mention of relief in terms of commercial insurance which companies have to pay on a monthly basis. He also said the Prime Minister has asked for landlords to be understanding of their tenants but he questioned what malls were doing for their commercial tenants.

"A lot of tenants are saying they are going to go into arrears with rent. Will the landlords carry this forward while we go further into the pandemic?"

He said the Prime Minister predicted the number of cases would peak about April/May and people will tend to stay home out of an abundance of caution.

"How long is that going to happen and how exposed are businesses in malls going to be to the landlord."

He suggested that if landlords would come out and say they will reduce rent and work with tenants through this period it will assist in the scenario. He said that otherwise, tenants will be facing an enormous debt from rent after the pandemic. He cautioned there could be a lot of foreclosures and closure of businesses and small and medium-sized businesses were especially vulnerable.

He said the other big wage bill is salaries and while job preservation is important it will come at a cost to businesses.

"While we are committed to handling that cost we can only utilise what monies we have."

He also said that commercial taxes, namely the Green Fund and the business levy, is calculated on gross income and from March into May this income will be especially bad with the covid19 downturn. He suggested that Government could look at some relief in taxes such as a moratorium and added that this will also help with cash flows and liquidity.