Charles Kong Soo
The Arima Business Association (ABA) is calling on the banking/financial sectors to have a heart and ask that these institutions show compassion during this COVID-19 pandemic that is negatively impacting the country country.
In a release yesterday the association said it supported and commended the initiatives implemented by the Government in what they understood to be uncharted waters.
ABA said “The community and by large the country are eager to return to some sort of normalcy. However, a return to normalcy for the business community will prove challenging.
“Although our nonessential businesses were closed, the recurring expenses for these are similar to that of the average household.
“Key recurring expenses such as those listed below, must be paid regardless if income was earned during the period of closure initiated in March 2020: • Electricity • Water and Sewerage • Telephone rental • Internet • Insurance • Mortgage/Interest • Rent • Security personnel • Security monitoring.
“While it is admirable that the Central Bank has reduced the repo rate from 5 per to 3.5 per cent, we are yet to see these reductions. It would be unreasonable to ask for further reductions without first experiencing effects of an already reduced repo rate.”
The association said it was noteworthy, however, that in some parts of the world, the repo rates ranged between 0 to 0.75 per cent.
ABA said the information received to date suggested that interest rates had not been reduced or not reduced to the level expected and that deferrals offered by financial institutions will cost more in the long run. The association said that they therefore asked all individuals, businesses and households with mortgages and other loans, to contact their bank and enquire about the actual cost of deferrals during this pandemic.
ABA said they encouraged them to write to their bank directly requesting these details so they would be aware of their situation and can initiate effective financial planning to secure their future.
The association said while there was the plea for landlords to show compassion for tenants who had been retrenched, terminated or had their income reduced due to the pandemic, one should be mindful that some landlords incur the above recurring expenses at higher (commercial) rates and they too had obligations to their financial institutions.
ABA said many landlords had complied in reducing their tenant’s monthly rent.
The association asked that the following be considered by those who can effect change during this crisis: • Savings resulting from the lowered repo rate to be directly reflected on Client accounts. • Extending tenure on repayment of mortgages and loans so monthly installments can be reduced after deferrals. • Leniency for persons wishing to access a percentage of their pension/annuities tax free or at least at a significantly reduced tax rate so that they may finance themselves rather than burden the state further. • Rebates from insurance premiums paid by non-essential businesses for workmen compensation, cash in transit, public liability insurances, etc for the period in which their businesses were closed as per the Public Health Ordinance affected on March 2020.