Relief loans for businesses

In a severe economic downturn, many businesses have to reduce their operating expenses to match the loss of revenue. They have to retrench their workers.

I suggest that they should ask all their workers to take partial no-pay leave, e.g. 30% of the working week. The workers will suffer a reduction in their income, but they can apply to the government for a relief loan for the period of the downturn.

The government should also extend to the business a relief loan to cover their rental, payroll and utility expenses. This relief loan is available for the period of the downturn. It will carry a modest interest rate, e.g. pegged to the rate of inflation.

This allows the businesses to continue as before and keep their workers partially employed. It will cause minimal disruption to the businesses and allow them to be ramp up their activities when the upturn returns.

The relief loans can be managed by the banks and are covered by a 100% government guarantee. A reasonable cap can be set to prevent abuses.

With the 100 guarantee, there is no need for the banks to carry out a strict evaluation of the loans.

However, the bank can extend additional loans to cover other expenses, and that can be on commercial terms and be subject to their evaluation.

There will be some abuses, but the extend will be small and they can be managed at a later date. It is important that the relief loans be available quickly and with only modest first level evaluation.

I believe that this approach will be helpful to protect employment and businesses.

Several countries have adopted this approach in granting assistances to businesses affected by the severe economic downturn.

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Loan relief scheme to cover loss of income

Most countries prefer to give financial assistance to the unemployed as a benefit.

They face the difficulty of managing the abuse.

I prefer to give them a loan to cover the loss of income. They have to repay the loan in the future, with a modest rate of interest. This will tide them over a period of unemployment, but may be capped for 6 to 12 months.

As this is a loan that needs to be paid back, the abuse is reduced somewhat, but not totally.

In the future, a part of the distress loan can be written off or forgiven, but that can be done at a later date, subject to evaluation.

In the case of Singapore, the loan can be charged against the CPF savings or against a property bought with CPF funds.

This loan facility will be available to all workers, regardless of income level. They are available to the higher income workers as well.

The loans can also be extended to the self employed, including professionals, who suffer a loss of income during an economic downturn. The loss of income can be capped at a level that is appropriate to the occupation or trade.

If all income earners have access to a loan to cover the loss of income, there is no need to extend other types of assistance, such as grants to cover utility, rental, mortgage payments and loan repayments. Life can continue as before. There will be minimal need to monitor against abuses in these other relief schemes.

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Stimulus packages face problems

I read about the problems in administering the three stimulus packages introduced by the government to deal with the covid-19 crisis

I quote some examples in this article and suggest a better way to provide the financial assistance that could avoid these problems.

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Job support scheme

In his third stimulus budget for 2020, finance minister Heng SK announced that the government will be providing a grant to cover 75% of the payroll for April 2020, i.e. the month that all non-essential workplaces have to be closed due to the circuit breaker. This grant is given on condition that the employer does not put any of the employees on no pay leave or retrench them.

In a webinar on the economic stimulus, one participant asked the question - if I have 10 workers and I placed 2 of them on no-pay leave (which was already arranged ahead), will it affect the grant for the 8 workers that are still being employed?

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Rebate on property tax

I notify my two tenants that I will be giving them a rebate of 3% of the rental for 2020. This is a small sum but it is all that I am getting from Heng SK's budget.

One of them replied - thank you. this is coffee money. I know him to be a good friend, so I know that he is not laughing at me.

Heng SK gave rebate of 30% of the property tax. As the property tax is 10% of the annual value, it is 3% of the annual value. As the rental is approximately the annual value, this is how I calculated the 3%.

I joined two webinars arranged by a chamber of commerce on the stimulus budgets.

One participant asked the question - how do I distribute the property tax rebate to my tenants? He must be asking a equation that is on the mind of several tens of thousand of owners of commercial properties.

It is really a small sum that the government is giving to the landlords. And they now have to figure out how to distribute it to their tenants. This will be required by law.

I am sure that many tenants will find it to be too small to be of any use. It will probably caused many misunderstanding between the landlords and the tenants.

At the very least, the government should give a rebate of 100% of the property tax for 2020. Even so, this would be less than one months of rental.

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Wisdom of the Crowd - New Issues

1. Are the three stimulus packages helpful to businesses?

2. What do you think about the circuit breaker measures?

Vote in
https://tklcloud.com/Crowd2/vote.aspx

WOTC - Fast spread of covid-19

Wisdom of the Crowd: 62% of the respondents said that the increase in infections is caused by the rapid spreading of the disease now. 21% said that it is due to increased testing. 18% said that more people come forward to be tested.

https://tklcloud.com/Crowd2/chart.aspx?ID=1931

WOTC - How can a company cut expense during a downturn

Wisdom of the Crowd: 71% of the respondents prefer the company to ask the workers to take no pay leave and the govt to provide a loan for the loss of income, if the company has to reduce cost during a downturn. 26% prefer the company to retrench its unproductive workers.

https://tklcloud.com/Crowd2/chart.aspx?ID=1930

Unethical business practice

I want to share an example of unethical business ethics.

At an early date, I bought a temperature gun for $9. It worked well. I immediately placed an order for 3 more guns. The order was accepted.

Two weeks later, the supplier cancelled the order. They claimed - out of stock.

I looked for another supplier and placed an order for 3 pieces at a slightly higher price. The order was accepted.

The same outcome happened. Two weeks later, the supplier cancelled the order claiming - out of stock.

The same equipment are not being offered for 4 to 5 times of the previous price.

I suspect, in both cases, the suppliers found that they could sell their equipment at a higher price. So, the cancelled the order, after accepting it and collecting the money.

The website refunded the money, but it was an unethical business practice.

Why was there a sharp increase in infection since 24 March?

I asked my 100 year old crystal ball - where was there a sharp increase in the number of infections during the past two weeks, since 24 March?

Could it be due to the large number of students who returned home from the UK and the US? Among them, a large number are reported as "imported cases". Could these people be responsible for the increase in infections?

My crystal ball said - but these people were placed under quarantine in the luxury hotels. How could they have spread the virus, when they were under quarantine?

Why then is there a sharp increase?

This is the reply from the crystal ball. Do you believe it?
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Respond in a timely manner

We need to respond in a timely manner. We should not respond too late (i.e. behind the curve). However, we should also avoid responding prematurely, as it may cause panic and disruption.

There is a cost to responding too late. There is also a cost to responding too early.
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Wisdom of the Crowd - New Issues

1. Is it safe for the public to re-use the same face mask for several days?
2. Should Singapore start a factory to make face masks immediately?

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Compare Taiwan and Singapore's approach

Let me compare the different approaches adopted by Taiwan and Singapore.

a) Both form a high level committee to deal with the problem. Singapore has a ministerial task force. Taiwan has the Central Epidemic Command Center. Look at the qualification of the people in the two organizations.

b) Taiwan uses data base technology, artificial intelligence and access to digital data for contact tracing, in spite of privacy laws. Singapore records contract tracing details manually.

c) Taiwan encourages the use of face mask early. Singapore discouraged the use of face mask until recently.

d) Taiwan has a neighborhood warden system to enforce quarantine and deliver meals and assistance to those in need. Where are the residents committee in Singapore doing in this respect?

Read the details about Taiwan's approach here:

https://www.brookings.edu/blog/order-from-chaos/2020/03/19/taiwan-shows-its-mettle-in-coronavirus-crisis-while-the-who-is-mia/

Are the leaders in Taiwan doing a better job?

Give your vote here:
https://tklcloud.com/Feedback/feedback2.aspx?id=2799

WOTC - Low spread of the corona virus in Singapore

Wisdom of the Crowd: 44% of the respondents said that the prompt and early action by the government was the main reason for the low spread of the corona virus in Singapore. 33% said that it was the warm weather.

https://tklcloud.com/Crowd2/chart.aspx?ID=1929

WOTC - Best approach towards the corona virus

Wisdom of the Crowd: The respondents voted the country with the best approach in dealing with the corona virus as follows - Taiwan (43%), China (32%), South Korea (14%), Singapore (11%), Hong Kong (0%).

https://tklcloud.com/Crowd2/chart.aspx?ID=1928

The faulty crystal ball

Earlier, I made a prediction that the global stock markets would make a recovery on 9 April.

I said that I obtained the prediction from my 100 year old crystal ball. Now, it does appear that the crystal ball might be wrong.

I asked my crystal ball again - why did you make a wrong prediction?

Here is the answer:
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Wisdom of the Crowd - New Issues

1. What if the ventilators in your hospital are fully used?
2. Are medical products from China defective?
3. Do we have capable and dedicated ministers?

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https://tklcloud.com/Crowd2/vote.aspx

Naming of roads - Sunrise Estate

In many parts of Singapore, the roads are given names without proper logical structure.

I show below the map of the Sunrise Estate, off Yio Chu Kang Road. The roads are now named as

https://tklcloud.com/Feedback/feedback2.aspx?id=2796

Wisdom of the Crowd - New Issues

1. What if the ventilators in your hospital are fully used?
2. Are medical products from China defective?

Vote in
https://tklcloud.com/Crowd2/vote.aspx

Use scare resources fairly and effectively

Many hospitals around the world are facing this difficult decision. They ICU and ventilators are fully occupied. They have new patients who need ventilators. What should they do?

They have no choice but to turn away the new patients. Sorry, we do not have any bed for you.

In some hospitals, they have to take away the old patients to release the bed and ventilator to a younger patient, who has a better chance of survival. It is a very difficult decision.

Someone has to decide. If you are in charge, how do you decide?

Tough right? Here is my answer.
https://tklcloud.com/Feedback/feedback2.aspx?id=2795