PCCI appeals for rent relief MSME lessees
15 October 2020 - As millions of battered micro, small and medium enterprises (MSMEs) across the country are emerging from their worst year, the Philippine Chamber of Commerce and Industry (PCCI), the largest umbrella of business organization in the country, is making an appeal for the grant of relief for stall and/or store lessees, specifically the small ones.
“Sales have plunged to their worst in decades. There has been a cascade of store closures and jobs losses. 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,” PCCI President, Amb. Benedicto V. Yujuico said.
Most of these affected enterprises are MSMEs – the backbone of the local economy. These MSMEs account for about 99% of all businesses and 66% of total employment.
“While we understand all businesses are experiencing financial difficulties, for MSMEs, these difficulties could be insurmountable,” Yujuico added.
PCCI made an appeal to work out a strategy that will provide relief to tenants of malls and commercial buildings that will not negatively affect the capital expenditure of owners/lessors to be able to continue providing service to their tenants.
PCCI proposed that during the recovery period, rent may be based on percentage of the sales of their MSME tenants until such time that the situation normalizes and the tenants are able to meet their contractual obligations (fix rental).
“This will give tenants breathing room to stay open, which will also benefit the owners because an empty mall or center is worse than lower rental income,” Yujuico explained.
PCCI pointed out that supporting the needs of existing MSME tenants who can be viable again makes more sense than having vacant stalls or taking in new tenants and aspiring entrepreneurs who have not proven themselves.
The PCCI has earlier successfully appealed to government to prioritize MSME lenders in government-owned and controlled financing institutions such as the Small Business Corporation and the Philippine Guarantee Corporation. The Bangko Sentral ng Pilipinas meanwhile has eased up banking rules such as temporarily reducing the credit risk weights of loans granted to MSMEs and the assignment of lower risk weight for MSME exposures that are covered by guarantees to encourage lending to MSMEs.
PCCI however said more effort is needed to nurse MSMEs back to health and ensure that jobs are protected.
“To be effective in alleviating the difficulties of our small enterprises and to sustain their recovery in the medium and long terms, we need a whole of society approach. It is in this regard that we are appealing to mall owners and commercial building landlords under the Bayanihan spirit as embodied by the Bayanihan to Heal as One Act,” Yujuico said.