The situation is critical for many Maltese businesses affected by COVID-19, CEO of the Chamber of Small and Medium Enterprises has warned, urging the government to provide more assistance for the uncertain months ahead.
“Our businesses are suffering – the problem is very widespread,” CEO of SMEs Abigail Mamo told Lovin Malta. “Some have already returned their property, some landlords are giving the end of the week as a deadline to vacate their premises or are dealing with legal disputes.”
Malta’s government is set to reveal a new mini-budget with more schemes to aid businesses this Monday.
“If there is one measure that businesses need, it’s a solid rent scheme,” Mamo warned. “This is a make-or-break moment, a do-or-die situation for many.”
A Valletta bar owner previously spoke to Lovin Malta about her financial struggles despite the go-ahead for bars and other businesses to reopen. She said the government’s wage aid scheme was not enough to keep her business afloat, as other costs like rent, utilities and health costs incurred were left to businesses to deal with in order to open again.
The Chamber of SMEs has sent proposals to government for more support to businesses until the economy recuperates.
“The Chamber believes that much stronger aid is necessary until the business starts picking up, we emphasised that we cannot let the usual running costs pile up for businesses because it might mean they can’t reopen their doors when the economy moves forward.”
On the issue of rent, the Chamber had this to say.
The Chamber recommended a rent burden-sharing system, where landlords are incentivised to lower their rent with tax credits, whilst the government subsidies part of the rent and tenants pay a limited amount of share which could be postponed into the next year.
“Any scheme will need to be backdated like the way subsidy scheme the started immodesty after the crisis took place,” she continued.
Some have criticised this proposal in that it may result in artificial price inflation for rent, but by incentivising landlords to decrease their prices, the market would adjust, Mamo said.
“Other countries realised that businesses cannot just reopen without considering the burden of rent and other costs,” Mamo affirmed. “We know 14 EU countries have already taken active measures to tackle the situation.”
Some of the measures adopted in such countries include:
- Reductions of 50% rent and deferrals of the rest to next year
- Ban on ending the contract for those unable to pay rent
- Government aid in % covered depending on the impact of COVID on business
- Part-payment of the month’s rent
- Burden sharing with tenants paying up to 25%
- Obligatory rent reduction
- Reimbursement of full cost through a tax credit
Meanwhile, on the issue of health costs…
The Chamber also urged for investments for the costs incurred to purchase perspex structures, hand sanitiser, air purifiers, protective equipment and other items needs to reopen.
“Malta is lagging behind in providing this support and other EU member states as already mentioned have already leapt ahead. Each day that passes is a day too late.”