The Star Biz
by Roger Tan
MALAYSIA should enact a law similar to the one proposed by the Singapore government to offer temporary relief to businesses, in particular SMEs and individuals who are unable to perform their contractual obligations because of the movement control order (MCO) brought about by the Covid-19 pandemic.
On April 1, the Singapore Ministry of Law announced that it intended to introduce the Covid-19 (Temporary Measures) Bill this week.
The Bill will have a retrospective effect and cover contractual obligations that are to be performed on or after Feb 1,2020 and contracts that were entered into or renewed before March 25,2020.
According to its statement, Feb 1 was used as the approximate date when the impact of Covid-19 started to be significantly felt in Singapore’s economy.
These measures will be in place for a prescribed period, which will be six months from the commencement of the new law, expected to come into force this month itself, and may be further extended for up to a year from the commencement of the new law.
In other words, the non-performing party’s liabilities will be suspended and non-enforceable during the prescribed period.
Contracts covered by the Bill are:
> Non-residential leases and licences in that if the commercial tenants or licensees are unable to pay rent for February and/or March, they may seek relief;
> Construction and supply contracts in that the contractors will not have to pay damages for late delivery or non-performance of contractual obligations;
> Contracts for the provision of goods and services (eg, venue, catering) for events (eg, the cancellation of weddings, business meetings) and for visitors to Singapore, domestic tourists or outbound tourists, or promotion of tourism (eg, the cancellation of cruises, hotel accommodation bookings), for example, there shall be no forfeiture of booking fees or deposits; and
> Certain loan facilities granted by a bank or a finance company to SMEs with turnover of not more than S$100mil in the latest financial year.