Coronavirus: government support measures and risk management arrangements for the hotel industry in Singapore

9 April 2020 | Applicable law: Singapore

This article summarises the measures taken by Singapore government in the Unity Budget in February, Resilience Budget in March and Solidarity Budget in April that are relevant to hotel owners, hotel operators, F&B facilities, travel agents and MICE venue operators.

Singapore Resilience Budget provides enhanced Property Tax Rebate for certain non-residential properties of 100% for the Year 2020

  1. Certain qualifying commercial properties, (including hotels, serviced apartments, restaurants, sports and recreation centers, cinemas and theatres, shops) will pay no Property Tax throughout 2020. This is a significantly enhanced Property Tax Rebate, from the 15%-30% Property Tax Rebate previously provided in the Unity Budget 2020. Lower Property Tax Rebate of 30% (up from 0% in the Unity Budget) is granted to certain other non-residential properties, including industrial premises, offices, warehouses.

Loan repayment and moratorium on security enforcement

  1. With the coronavirus (COVID-19) pandemic rapidly evolving, the Singapore Parliament has moved swiftly to pass the COVID-19 (Temporary Measures) Act 2020 (COVID-19 Act) on 7 April 2020. If the borrower being a small and medium-sized enterprise (SME) is unable to perform a contractual obligation under a loan agreement that is to be performed on or after 1 February 2020 and such inability is to a material extent caused by a COVID-19 event (a subject inability), the bank or financier may not commence legal proceedings against the SME and nor can they take enforcement actions against the security provided by the SME for a prescribed period of 6 months or until the notification for relief is withdrawn by the borrower (whichever is earlier). These measures apply to all loan agreements that are secured against commercial or industrial immovable property or any plant, machinery or fixed asset in Singapore and which are entered into or renewed on or before 24 March 2020.

  2. However, the COVID-19 Act does not affect other contractual rights of the banks or the financiers. For example, a bank may still be entitled to charge fees and interest for non-payment under the loan agreement. SMEs with cash flow issues should hence look to other relief packages (called "MAS and Financial Industry Support Measures" or "Special Financial Relief Programme (SME)"* (SME Measures)* introduced by the Monetary Authority of Singapore (MAS) in collaboration with the financial industry on 31 March 2020. Banks and finance companies are allowed to set their own criteria for what constitutes an "SME" for the purposes of the SME Measures, but subject to the following limits which are prescribed: (i) the annual sales turnover must not exceed S$100,000,000; or (ii) the company's employment size must not exceed 200 workers. These SME Measures apply only to loans from banks and financial institutions regulated by MAS in Singapore, and not from other third party lenders.

  3. Under the SME Measures, SME borrowers with secured term loans may opt-in to: (i) defer payment of principal and pay only interest on their loans up to 31 December 2020; and (ii) extend the loan tenure by up to the corresponding principal deferment period. Based on this mechanism, once the deferral period is over, the loan (including the interest accrued on the loan) will be reamortized and the loan tenure is extended by the corresponding period for which the payment of principal was deferred. For example, if the SME borrower defers the monthly repayment of its loan till 31 December 2020 and opts to extend its loan tenure, the SME will start its monthly repayment again after 31 December 2020 up till the end of the extended loan tenure. However, if the SME defers its repayment of its loan but chooses not to extend its loan tenure, it will have to come to an agreement with the lender on the repayment schedule which may ultimately depend on commercial factors like the size of loan and the quality of the security provided. This approval is intended to be granted expeditiously and there is no need for the SME borrower to demonstrate any impact from COVID-19.

  4. Relief under the SME Measures is subject to: (i) SME borrowers having good credit, with loan repayments that are no more than 90 days past due (as of 6 April 2020, i.e. pre-existing defaults before the COVID-19 outbreak are not covered); and (ii) the lender's own determination of whether the loan is considered as fully secured by the collateral provided, as of the date of application for the relief. For these purposes, banks and financial institutions are likely to consider existing loan-to-value ratios as well as the usual credit assessment criteria. Banks and finance companies also have the discretion to extend relief to partially secured loans based on their own assessments.

Defraying of enhanced cleaning costs of qualifying hotels with suspected or positive COVID-19 cases

  1. The Singapore Tourism Board may cover up to 50% of third-party professional cleaning fees for Singapore-licensed hotels that provided accommodation to suspected and confirmed cases of COVID-19 between 23 January 2020 up to 30 April 2020 (inclusive), following which an assessment will be made if further support is required. This is capped at (i) S$20,000 for each hotel with confirmed COVID-19 cases, and (ii) S$10,000 for each hotel with suspected COVID-19 cases. STB will assess the scale of support on a case-by-case basis.

Enhanced Jobs Support Schemes (JSS)

  1. Under the Solidarity Budget announced on 6 April 2020, the Singapore Government will be providing further enhanced JSS for April to cover 75% of the first SGD4,600 of wages paid to local employees (Singaporean and permanent resident employees). This temporary JSS support scheme applies to all companies in all industries for the month of April only.

  2. Starting from May the wage support scheme will revert to the Resilience Budget levels (25% of gross monthly wages of all local employees, with higher threshold of 75% only for licensed hotels, travel agents, MICE operators, airlines and airport operators, and 50% for licensed F&B venues). The total cap remains unchanged at SGD4,600 of gross monthly wage per local employee. JSS's coverage period remains unchanged – October 2019 until July 2020.

  3. The Solidarity Budget also accelerates the first payout under the wage support scheme – which will now be in April (as opposed to May as previously provided in the Resilience Budget). The additional subsidy under the Solidarity Budget will first be assessed on wages paid in October 2019, and subsequently adjusted based on April 2020 wages. Employers who do not pay wages in April 2020 will not benefit from the temporary enhancement to the jobs support scheme.

Enhanced training support scheme

  1. To encourage tourism companies to innovate, train and upskill their talent during this period, STB has enhanced support under the Training Industry Professionals in Tourism (TIP-iT) program for certified courses and courses for tourism-related skills, by increasing the support to a 90% cost-reimbursement for courses that commence between 1 March 2020 to 31 December 2020.

Temporary Bridging Loan Programme (TBLP)

  1. When launched in March 2020, the TBLP was only available to tourism sector companies. However, from 1 April 2020 all sectors are now eligible to apply for a bridging loan. The programme will be available until 31 March 2021. The maximum loan is S$5 million (with interest rate capped at 5% per annum), across a maximum repayment period of 5 years. Enterprises may request principal repayments to be deferred for 1 year, subject to assessment by the participating financial institutions. Under Solidarity Budget, the Government will provide 90% risk-share on these loans for new applications initiated from 8 April until 31 March 2021.


  1. Hoteliers seeking coverage under their insurance policies for any business interruption losses in revenue attributable to the COVID-19 pandemic, should conduct a thorough and detailed review of the applicable underlying policy, insuring documents, endorsements and exclusions to properly assess whether COVID-19 may trigger an insured event. Specific policy terms vary greatly. We anticipate that one of key issues of debate will lie in the question of whether any losses attributable to COVID-19 in fact amount to "physical" damage or losses to an insured hotel.

  2. Whether or not any insurance claim is eventually filed, it is also good practice for hoteliers to document all necessary information and supporting evidence of losses suffered during the period of interruption that insurers will eventually require to process any claim(s).

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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