PCCI pushes rent relief for MSME tenants in malls

MANILA, Philippines — The country’s biggest business group has urged malls and commercial building owners to give rent relief to micro, small and medium enterprises (MSME) battered by the pandemic.

In a statement yesterday, the Philippine Chamber of Commerce and Industry (PCCI) said there is a way to strike a balance in providing relief to MSME tenants of malls and commercial buildings without negatively affecting the capital expenditure of owners or lessors to continue their service.

“An example could be for rent to be based on a percentage of sales until such time that the situation normalizes and tenants are able to meet their contractual obligations (fix rental), as assessed by mall/stall owners/landlords,” the PCCI said.

MSMEs serve as the backbone of the economy as they account for 99 percent of the country’s total registered businesses and 66 percent of employment.

“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 said.

“While we understand all businesses are experiencing financial difficulties, for MSMEs, these difficulties could be insurmountable,” it said further.

The PCCI sees providing rental relief to MSME tenants as a way to help these businesses become viable again.

The group said assisting MSME tenants is better than having vacant stalls or taking the risk with new tenants or aspiring entrepreneurs who still lack experience.

Earlier, the PCCI urged and successfully got the government financing institutions to prioritize lending to MSMEs.

The Bangko Sentral ng Pilipinas has also eased banking rules by 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 the sector.

While these are welcome developments, the PCCI said much more must be done to get MSMEs back in shape and protect the jobs of their employees.

“To be effective in alleviating the difficulties of our small enterprises and to sustain their recovery in the medium and long term, we need a whole of society approach.  It is in this regard that we are appealing to mall owners and commercial building landlords,” the PCCI said.