COVID-19 (Temporary Measures) Bill

Mr Speaker, Sir, let me elaborate on Part 6 of the Bill, which introduces an obligation on property owners to pass on the prescribed property tax rebate received to their tenants in the form of monetary payment or reduction in rentals in a timely manner.

To help businesses affected by the COVID-19 pandemic, the Government introduced the property tax rebate for non-residential properties, as announced in the Budget and the Supplementary Budget. Owners of such properties are granted a property tax rebate of 30%, 60% or 100%, depending on the nature of the property, for 2020. The policy intent of the property tax rebate is to help the business operator affected by the COVID-19 pandemic. Hence, the Government had strongly urged property owners to pass down the rebate to their tenants.

Let me, first, before elaborating on the obligation, highlight or explain how our system of property tax works. Property owners pay property tax for each property tax account. In many cases, one property would be covered under one property tax account. But there are also many other cases with one property but multiple property tax accounts. For example, a retail mall would have multiple property tax accounts because a shop within the mall, like a retail store or restaurant, would be accounted for under a single property tax account. In total, the 2020 property tax rebate will cover about 135,000 property tax accounts, including 33,000 property tax accounts for about 360 retail malls.

The Government fully appreciates the property owners who have or are in the process of passing on the rebate to their tenants, either by making cash payments or by reducing rentals. In some instances, property owners have gone further to reduce rentals by an amount that is greater than the quantum of the rebate. In so doing, they have taken a step further to help their tenants and share the burden during this time of uncertainty.

However, the Government has also received feedback, particularly from tenants, that there are property owners who have not yet passed on the rebate to them. And just to set things in perspective, a 100% property tax rebate will work out to slightly more than one month of rent for most properties. So, the provisions in this Bill ensure that property owners who have not passed on the rebate fully will have to do so. Specifically, the Bill requires a property owner to pass on the full amount of property tax rebate attributable to a rented property to his tenant, in a timely manner. We will require the property owner to pass on the rebate by making a cash payment to his tenant or by reducing or offsetting future rental payments.

Property owners are also prohibited from imposing conditions when passing on the rebate. The property owner must keep records that he has so passed on the benefit and when he has done so. Failure to properly pass on the rebate or to keep a proper record is also an offence. For instance, if a property tax account is for a property wholly rented out to a tenant for the whole of 2020, the property owner should pass on the full sum of the rebate he received as the rebate is entirely attributed to a rented space.

The Bill also provides the property owner or the property owner's tenant with an avenue of redress should there be any dispute as to whether the owner has properly passed on the benefit or whether the provisions apply to the property owner. The owner or his tenant may apply to a Valuation Review Panel, which will adjudicate disputes between the owner and his tenant. Any dispute relating to the transfer of the property tax rebate granted this year must be brought to the Panel by 31 December 2021. The Panel will then determine if the property owner has indeed passed on the rebate fully to his tenants in the required manner by the required timelines. The Panel may make further directions for compliance by the owner. A determination and any further directions of a Valuation Review Panel are appealable to the High Court if they involve questions of law, or mixed law and fact.

Further details of the pass-through of the property tax rebate to tenants will be provided under the subsidiary legislation and on the website of the Inland Revenue Authority of Singapore.

Mr Speaker, Sir, the Government urges all property owners to support their tenants through this difficult time. And with this Bill, we will require all property owners to do their part. Beyond the legal requirements, we call on all stakeholders, be it landlords or tenants, to really come together in the spirit of SG United so that we can work together and overcome the impact of COVID-19 together.

Sir, I stand in support of this Bill. The present COVID-19 crisis is one of epic proportions – the challenge of a generation, perhaps, several generations. The steps we take now will define how future generations of Singaporeans will view us.

For some fellow Singaporeans, this crisis could quite literally translate into a matter of life or death. So far, we have responded robustly, firmly and decisively. To borrow an analogy recently made by the Minister for Law, budgetary measures are the financial equivalent of an urgent blood transfusion. But he also said that just as there is a transfusion, we also need to staunch the flow of blood. Sir, in this regard, the proposed Bill is the analogous bandage that staunches the blood flow. So, at the outset, let me iterate my full support for the Bill while also declaring my interest as a practising lawyer.

This Bill is exceptional, yet timely and responsive. It is exceptional because, as I understand it, the Bill was put together in a matter of days. In addition, the Bill acts retrospectively, something which lawyers normally discourage, given that it departs from one of the main principles underlining the rule of law. Nevertheless, in my view, this is well justified under these extenuating circumstances.

It is also timely and responsive for several key reasons.

First, the Bill offers much needed reprieve – reprieve in the form of certainty that there is a window to breathe such that there is a hope that businesses can be resuscitated when the situation improves.

The core provisions of this part of the Bill can essentially be found in clauses 5(2), 5(3) and 6(2). These provisions impose a moratorium over five kinds of actions: Court and insolvency proceedings, enforcement of judgments and arbitration decisions, the enforcement of certain types of security, the calling on a performance bond pursuant to a construction contract, and the termination of leases of non-residential premises. Collectively, they provide a sturdy mast in choppy waters.

For many of our businesses, the global economic repercussions of COVID-19 and our local circuit breaker measures mean revenues have dwindled to nearly nothing. While these economic circumstances are not due to their own actions, the impact means that businesses essentially have multiple swords hanging over their heads. If these liabilities are allowed to vest and fall due, businesses would be starved of their cash flow and would very possibly be forced out of business. This is not only bad for businesses. It is also bad for Singapore. It means that when the global situation gets better, we would have few businesses left standing to ride the wave of recovery. We need businesses to stand, and this Bill helps us do that.

For event and tourism-related contracts, additional reprieve is provided in clause 7. Many of these contracts involve the placement of deposits, which do not involve small sums of money. Clause 7(2) ensures that these deposits cannot be automatically forfeited, thus allowing contracting parties to look for an alternative arrangement without the fear of financial loss. It may seem like a small measure but for man individuals and beleaguered small and medium-sized businesses that have paid deposits, I believe this will go a long way in alleviating a significant portion of their cash flow concerns.

Second, this Bill allows for a situation of a reduced threat of litigation, insolvency, bankruptcy, landlord-tenant disputes, hire purchase disputes from hanging over struggling businesses over the course of the next few months. This can be seen in part three of the Bill, which modifies various Acts to give temporary relief to financially distressed individuals and businesses.

For instance, clause 20 raises the monetary threshold for bankruptcy applications from $15,000 to $60,000 and increases the time period to satisfy or set aside a statutory demand from the current 21 days to six months. For businesses, clause 21 increases the monetary threshold for insolvency from $10,000 to $100,000 and similarly extends the time period to satisfy or set aside statutory demands to six months. These significant changes will allow management teams to channel their mental energy towards keeping their businesses afloat and viable post-crisis, rather than or instead of them having to think about how to fend off litigation and insolvency actions. Essentially, this Bill allows management to use their mental energy to innovate, ride the storm and survive post-crisis, rather than to having to stave off and fend off insolvency proceedings or bankruptcy proceedings. I think it is a much needed reprieve.

However, Sir, I seek a number of clarifications on the status of legal action and cases already commenced before the Bill comes into force. Here, I am in particular talking about hire purchase vehicles and landlord-tenant disputes – cases and actions arising around those areas.

Third, the Bill sets out amendments to facilitate the conduct of court proceedings using remote communications technology. Clause 28(1) empowers the court to make orders to require an accused person or witness to give evidence in any court proceedings by a live video or live television link. This is to be welcomed.

Nevertheless, Mr Deputy Speaker, I wish to clarify a few points about the Bill.

First, the Bill provides a mechanism to manage disputes arising from the application of the Bill. Division four of part two of the Bill contains provisions relating to the appointment of Assessors, the means for applying for an assessment, the powers of an Assessor, as well as provisions relating to costs. While the assessment process is undoubtedly intended to be a fast and efficient one, given the existing universe of contracts and the potential number and complexity of disputes, I would like to ask if the Minister intends to put in place measures to ensure that the panel of Assessors are not overwhelmed and are yet still able to arrive at just decisions in a timely manner. It is no good for anybody if these Assessors are stretched so thin that they are under immense time pressure to assess their cases.

I have a further query on clause 13. Does the Assessors' power to achieve a just and equitable outcome include the power to determine that partial payments be made or that a tenant's security deposit may be used to offset rental arrears. This flexibility may allow for a more just and equitable finding or assessment. For instance, in situations where private landlords themselves do not have deep pockets and need the rent to pay toward a mortgage payment. By this, I mean private landlords who are landlords of commercial premises and they are unable to service their mortgage. Will some flexibility also be accorded to them in the assessment process.

Another clarification. Would the Minister consider putting in place digital measures to make the process as simple and straightforward as possible, such as through the use of an online portal to allow parties to request for assessments, upload documents and even receive determinations for appropriate disputes?

Third, a key point about the Bill is that it merely suspends obligations but does not negate their need to be fulfilled. In short, the Bill is like a dam, which holds back the tide of obligations temporarily. However, once the Bill ceases to have effect and this dam is removed, the combined obligations could be quite harsh. I wish to ask if the Minister is looking into providing guidance, such as asking contracting parties to use this period to negotiate with those they have contracted with, to be able to pay off their liabilities in instalments. Mediation, for example, is one such avenue.

Notwithstanding my questions and suggestions, I stand in support of this Bill. Fundamentally, it is about helping enterprises during this difficult period by addressing their cash flow concerns and freeing them up to think about how to survive and innovate through this crisis. It is a comprehensive and significant Bill and I wish to applaud the Ministry of Law, AGC, relevant public agencies and those consulted during its drafting for investing such an immense amount of effort in such a short amount of time. It really does show the efficiency of our legal partners and the legal system at play in these extenuating circumstances.

Sir, this Bill is a continuation of our efforts to respond robustly, firmly and decisively. I am confident that by passing this Bill, this House would be taking a significant step in ensuring that businesses in Singapore have a much better shot of making it through the crisis. And for that reason, I support the Bill.

Mr Deputy Speaker, thank you for allowing me to speak on this Bill. A few months ago, no one could have imagined the disruptions on personal lives and businesses that we are witnessing due to the COVID-19 pandemic. From personal celebrations or significant events to commercial contracts and commitments, the inability to proceed with plans has had both economic, social and personal consequences. Weddings and festivities have to be postponed indefinitely, tours, vacations and major business events deferred. Businesses have not been able to perform or deliver on their commitments due to factors beyond their control with measures taken by governments around the world, including Singapore, to stem the spread of COVID-19.

As the Minister has said in his speech, the measures, though temporary, are substantial and significant. The Bill seeks to provide temporary relief to individuals and businesses who are unable to fulfill their contractual obligations because of the impact of COVID-19 and related public health measures, which no one could have foreseen or imagined.

My speech today will touch on the temporary measures in the Bill to provide relief from actions for inability to perform scheduled contracts, as outlined in the Schedule of the Bill, caused by COVID-19 on or after 1 February 2020 for contracts entered into before 25 March 2020.

The Bill seeks to provide protection for bookings from forfeiture of deposits. This is fair for businesses as they have collected the deposits and the bookings will still be honoured and event held, albeit when it is feasible to do so. It is already distressing and disappointing for couples to have to postpone their wedding celebrations or individuals having to reschedule significant events for circumstances that are beyond their control. The cost for such events is not small and deposits paid are also not trivial. The same applies for tours or travel that have been paid for. With border controls and traffic restrictions imposed to prevent the spread of COVID-19, it is therefore fair that there should be protection from forfeiture of deposits or payments made in such circumstances while maintaining the sanctity of the contract.

On the delay of rental payments, the Bill seeks to protect individual or industrial tenants from having to pay damages or forfeit deposits, or face lengthy litigation or possible insolvency for inability to pay rent due to the COVID-19 situation, which they have no control over.

I understand and agree that tenants may need relief to minimise impact on their business cash flow due to the severe fall in demand on their business due to COVID-19. This will allow businesses to continue to pay expenses to allow them to operate and most importantly, to keep jobs and to pay their workers. However, on the flipside, the landlord too will be impacted by the delay in payment of rent. Could the Minister share if there will be relief provided for landlords who, due to the inability to collect rent from tenants in such circumstances, are themselves impacted materially and therefore unable to fulfill their other contractual obligations due to the dependency on rental payments. Will there be temporary relief for them as well?

For the tenants who have sought such temporary relief, rent will continue to accrue and remains payable after the six months' temporary relief period. The rental arrears, even if no interest is charged, will not be a small sum. And here, I do have some concerns, because what it means is that the tenants will end up accumulating outstanding rental debt, which still needs to be paid after the relief period. As the Minister had mentioned in his speech, rent is not an insignificant proportion of the cost that businesses are paying. In fact, it is about 30%. So, there will still be a large sum that tenants will have to pay after this period.

Even if the businesses were viable before the impact of COVID, as the COVID situation improves, business will pick up, but it will take some time to rebuild and it would not be easy for the individual or industrial tenants to be able to settle the outstanding rental immediately.

Would it not be better for the Assessor, while still allowing for temporary relief, to determine whether to allow tenants and landlords to renegotiate the terms of the contract that would be more viable and equitable for both parties. This will not only provide temporary relief for tenants but also minimise a situation where the debt accumulated after the relief period is too large to be repaid. If the debt is too large, the landlord may then also be left with the short end of the deal even after having not received rent during the relief period.

I am glad to hear that Minister had indicated that the Assessor will review the moratorium after three months of the relief. So that I hope will also allow them to calibrate the impact of the debt and may be make an assessment at that point in time.

In the same way that the Bill sets out to give temporary relief to the tenants, the Bill also seeks temporary relief and protection for contractors from non-performance of contractual obligation caused by COVID-19.

The contractor will not be liable for liquidated damages, delays and non-supply of goods arising from the COVID-19 event. A contractor’s delay of works or a non-performance for supply of goods, even if it is due to the unexpected consequences of a COVID-19 event will adversely impact individuals or businesses that the works or supply was committed for. Could Minister also share on how individuals and businesses impacted in such circumstances or such situations be supported?

A case in point. We are seeing appeals for renovations works impacted with the latest announcement of the circuit breaker measures that come into effect today. Sellers of HDB flats, for example, have to hand over flats that they currently live in by an agreed date to the new owner for the completion of the sale. But renovation works have and should stop from now, from today to 4 May. This may result in renovations works for the flat that the seller is moving to would not be able to be completed in time and this may leave the seller with no plans to move to when they are required to hand over the current flat. If they do ask for temporary relief of their contractual obligations to the buyer of the flat, this could create a chain effect.

If my interpretation of the Bill is correct, a practical approach for all parties would be to apply for the temporary relief during the circuit breaker period and this would then allow everyone to take the pause without having material impact on all parties involved. I am not sure whether that is the right interpretation but, basically, it would then allow everyone to not have to be impacted if there are delays.

The last point that I like to touch on is the temporary measures concerning the remission of property tax. The Supplementary Budget grants enhanced rebate for the property tax payable for the period of 1 January 2020 to 31 December 2020. With the unexpected impact of the COVID-19 pandemic on the businesses, I am glad that the Bill seeks to make it a legal obligation to ensure that landlords pass on the benefits of the enhanced property tax rebates to tenants, as these rebates were meant for the tenants.

Clauses 30 and 31 of the Bill provide the avenue for the tenants to take action against the landlords for failing to do so and how and when it can be enforced.

Mr Deputy Speaker, COVID-19 is unprecedented and no individual, business, society or even country is spared its effect. It is therefore necessary for these significant measures proposed in the Bill to provide temporary relief for individuals and businesses affected by COVID-19 who are unable to perform their contractual obligations while still upholding the right to exercise contractual obligations. The essence of this Bill that Minister has stressed is that everyone needs to come together to take our collective approach and I agree with him on this, the spirit of this approach because given what we are seeing in the impact of COVID-19 on everyone, unless we take a collective approach, it is going to be quite difficult for us to move forward effectively. With that, Mr Deputy Speaker, I support the Bill.

Sir, when MinLaw introduced this Bill on 1 April 2020, it was explained that the Bill seeks to offer temporary relief to businesses and individuals who are unable to fulfil their contractual obligations because of COVID-19.

MinLaw further explained that: “The COVID-19 pandemic, and associated public health measures imposed by governments around the world, has had unprecedented and unforeseeable social and economic impact. There are supply chain disruptions and manpower shortages, among other consequences. In many cases, this has undermined the ability of individuals and businesses to fulfil contractual obligations. It would thus be unfair to hold them strictly liable for their failure to do so.” Minister Shanmugam had also given a more elaborate explanation for the basis of this Bill.

Sir, I agree with the rationale provided for the Bill. It provides some form of temporary relief to people or businesses who are adversely affected by COVID-19. Hence, I support the Bill.

However, there are a few areas which I hope that the Minister can provide some clarification and perhaps the thinking behind the Bill.

First, relief against termination of lease for non-residential property. Clause 5 of the proposed Bill provides that a landlord cannot exercise his right of re-entry or forfeiture under a scheduled contract, being a lease or licence of a non-residential immovable property, and the landlord cannot the exercise any other right that has a similar outcome. Sir, there have been some concerns raised by landlords who are either individuals, small companies or SMEs. They feel that this suspension of their rights under the tenancy agreement would affect their cash flow negatively. The landlords worry that they would have to pay hefty interest or late charges on their loans with their financiers when they cannot collect the rent from the tenant. They also worry that the tenant may after six months, become insolvent, then they, the landlord be left without legal recourse except against the security deposit paid by the tenant.

In the response from MAS to the Bill, MAS stated that the contractual rights of banks are not affected, other than the right to commence legal action for a default on a loan covered under the proposed Bill. Banks’ contractual right to charge fees and interest for non-payment or late payment of loan obligations due is unaffected, meaning to say banks can continue to charge fees and interest for late payment or non-payment of the loan obligations.

Thus, it seems that if the tenant does not pay the rental arrears in full after the six months, the landlords are at greater risk because the Bill exposes them to an eventual law suit by the bank. The bank can go after the landlord, go after the security and they can repossess the property but the landlord cannot claim against the tenant if the tenant becomes insolvent.

The other concern which I have is how does the law ensure that tenants understand that this Bill merely provides the tenant temporary relief from certain legal action? At the end of six months, the tenant would still have to pay the arrears of rental plus applicable interest under the tenancy agreement. But if the tenant is struggling to pay the entire rental for a few months, how realistic is it to expect that the tenant can suddenly at the end of six months magically cough up the entire six months arrears of rental. Will this Bill give struggling tenants a false sense that they can escape their legal obligations?

May I also ask the Minister also explain why are residential properties excluded from this Bill. For example, I have residents who say that they are unable to shift out from their tenanted residential homes because their contractors cannot complete the renovations of the home due to the suspension of activities or the circuit breaker order imposed by the Government. Can a tenant of a residential home in this case seek relief under this Bill?

Next, Sir, is about event contract. Clause 7 of the Bill provides that if an event, for example a wedding or a tourism-related contract, is unable to proceed due to a COVID-19 related event, then the venue provider cannot forfeit the person’s deposit unless the provider obtains a determination from an Assessor that it would be just and equitable to forfeit the whole deposit or a part thereof.

However, the suspension of the rights against forfeiture is for a period of only six months. According to the press, some couples have stated that they are unable to postpone their wedding to another date within the next six months. There is no certainty whether the COVID-19 situation can be resolved by then and whether their wedding can then proceed. The organisation of a wedding or for that matter, a convention, a conference, a concert or a sports event takes many months of planning. This current situation leaves too much uncertainty for all parties. There are guest lists to plan and logistics arrangements to be made. Would it not be better to allow the contracting party to cancel the contract and to just pay for whatever reasonable expenses incurred to date by the venue provider?

May I ask the Minister too – what about contracts for tours or boat cruises booked with travel agencies and air tickets booked with airlines? Would there be a similar prohibition against forfeiture of deposits paid. Can the consumer who booked the tour or the air ticket be allowed to claim relief from forfeiture?

Next is the Assessors. The Bill provides for the appointment of Assessors by the Minister. Under clause 13 of the Bill, the Assessor’s determination is binding on all the parties to the application. There is no appeal from an Assessor’s determination.

These are very wide and discretionary powers given to the Assessors. Lawyers are specifically excluded from the hearing by the Assessors. May I know what if there is clear prejudice by an Assessor. How does MinLaw ensure that the appointed Assessor will always be impartial and make a determination or adjudicates in a fair and equitable manner?

Finally, Sir, remission of property tax. I wish to express my support for clause 29 of the Bill. This clause 29 makes it mandatory for a landlord to pass on the benefit of the property tax remission to the tenant. I think this is far better than moral suasion which the Government has been asking the landlords to act upon. Many tenants that I speak to were very unhappy that they have not seen any benefit being passed on to them. Many of them share that their landlords have been stalling and giving excuses for not passing on the tax remission.

To all the landlords who had already planned to pass on the tax remission to the tenants, my heartfelt thanks for doing your part in helping your tenants survive this difficult period. To the other landlords who are still thinking about it, this Bill makes that decision non-negotiable and this is good for the landlord. The tenant survives, continues to pay the rental to the landlord and the landlord continues to get his steady stream of rental income. So, my thanks to the Minister for making this happen. Sir, I support the Bill.

Mr Deputy Speaker, Sir, I commend MinLaw for expeditiously introducing this emergency Bill to offer further temporary reliefs to businesses and individuals impacted by COVID-19. In particular, this Bill specifically helps those who may be unable to meet their contractual obligations due to COVID-19 as well as the related public health measures imposed in Singapore and around the world.

This legislative measure not only helps provide temporary cash-flow relief to businesses and individuals, it also avoids the problematic situations of damages claims, forfeiture of deposits, costly litigation actions, premature insolvency proceeding, termination of leases; among others. In this very difficult time, the last thing we want is to be embroiled in legal tussles.

With the stepped-up circuit breaker measures being introduced this week and further impact to businesses, these relief measures would now be even more needed.

In many other jurisdictions such as US, UK, Australia and Germany, similar temporary measures have also been implemented in various forms due to COVID-19; such as moratorium on evictions, quasi force majeure. In some jurisdictions, it is by way of Executive Order.

Sir, I will comment on a few aspects of the Bill. Firstly, the relief measures are temporary. The key word in this Bill is that the protection and relief from legal actions in those areas prescribed are temporary in nature. The Bill mentioned the relief tenure as six months in the first instance; which can be extended by the Minister. And there is also sunset clause that the Bill will cease to have effect after one year.

This is an important fundamental feature. We still want to uphold the sanctity of contracts. The Minister has also emphasised in the Second Reading speech that the new laws do not absolve or remove contractual obligations but merely suspend them for a prescribed period so that more time can be given to both contracting parties to work on a resolution.

While clause 5(3) of the Act set out the list of prohibited actions, can I ask the Minister if the Act also prohibit the other party from imposing interest or late penalty fee for non-payment of rents during this relief period?

Sir, notwithstanding this new law, we should encourage contracting parties to work amicably and sensibly to resolve the challenges faced and work on joint mitigating measures. In the event of disputes, I understand that the Law Minister have appointed a pool of 100 Assessors to assess and determine disputes in a fair and objective manner; with no recourse for appeal. Parties are also not allowed to engage lawyers. The Assessors are pivotal here. They are a very important neutral party and have the final say in their ruling. Given the powers accorded by this Law, can I ask the Minister who are these Assessors and what are their credentials? How do we choose those Assessors?

Everyone is impacted by COVID-19 one way or another. When one party gets the relief or protection, the other party’s financial or cash flow situation could become more dire because of the non-collection rental from tenants, for example. We could potentially see a chain effect if each party seeks the relief upstream; although the overall impact across the economy would be limited as this relief measures only apply to a specific period of non-performance after 1 February 2020 and does not apply to contracts entered on or after 25 March 2020.

Also, when the rental arrears begin to pile up, the risk of a bigger rental default by the party seeking the relief would also increase six months down the road.

Our economic agencies like ESG may need to consider other assistance measures to help some of these companies including providing financing support schemes for a longer instalment repayment plan, for example.

Sir, on events and tourism-related contracts, the additional relief against forfeiture of the deposits for events and tourism-related contracts; if deem just and equitable, would be welcome by wedding couples. I hope that most hotels would agree to the change of dates when requested; even if they have not done it on a goodwill basis.

I met a constituent at my Meet-the-People Session last week, who runs an event company. He said that such relief measures would actually put his company and him in a difficult spot. Since the COVID-19 outbreak, there were a number of cancellations of events and he still have his overheads to cover. The deposits that he collected are actually meant to be sort of his safety net but he now may not have them anymore. I have advised him to apply for the Self-Employed Person Income Relief Scheme although he said while he is grateful to the Government for this Scheme is helpful is unlikely to get him out of the dire state.

One concern I have is whether this non-forfeiture of deposit will lead to counter actions where service provider now may insist on an upfront payment or price the risk of non-forfeiture of deposit in the fees that they charged. So, we have to be mindful of such counter actions when they come.

Sir, the COVID-19 pandemic has a severe impact on the multi-billion construction sector. The various public health measures, border controls, shortage of manpower and supplies can all lead to delays and cost overruns in construction projects. If these delays resulted in hefty penalties, it could put contractors in a tenuous position.

In Singapore, due to the intense competition in this sector and the tender system, the terms of most construction contracts tend to favour the developers. Most contracts do not have specific clauses that clearly allow a contractor to seek relief. Whether the impact and disruption from COVID-19 constitute a force majeure situation actually remains to be tested and established. Hence, this Bill which provides reliefs from liability of non-performance is most in need under current circumstances to help especially the smaller construction companies cope with the crisis.

Trying to keep up with the servicing of the loans and hire-purchase by banks and finance companies is another stress point companies and self-employed person faced during this period.

Here, I declare my interest that I work in a financial institution.

I detect the careful calibration of the measures here in the Bill, primarily focusing on financing that are backed with security, such as loans secured against property or plant, machinery and other equipment. These asset-back loans tend to be better credit and hence a lower potential loan loss ratio.

Also, there will be follow-on economic ramifications if such assets like machinery and equipment are being seized, as it may result in further disruption to the business ecosystem which works on interdependency.

I hope that the Assessors beside determining the relief could also direct a process to restructure the loan that is to mutual benefit of both parties. I hope there is also prohibition for late payment interest or charges in this Bill.

Sir, in conclusion, this is a necessary measure in this extraordinary times. Kudos to MinLaw, MTI, MOF and the relevant stakeholders for turning this Bill around in such a short time. Sir, I support the Bill.

Mr Deputy Speaker, Sir, the COVID-19 pandemic has sent shocks through economies around the world, including Singapore’s, with an especially severe impact on SMEs, small retailers, including provision shops, mom and pop shops, and food service providers – restaurants, "kopitiams" and hawkers. With the latest circuit breaker measures, their businesses will be hit even harder.

A survey conducted by Chope, an online dining-reservation booking platform, found that 78% of the restaurants involved were not prepared to last longer than six months if the current situation does not improve. Eighty percent are reducing staff to cut costs and about one-third have asked their full-time staff to take compulsory leave.

A few days ago, a Straits Times article reported on how severely retailers in our heartland malls, such as JCube in Jurong East, Lot One in Choa Chu Kang and the Star Vista in Buona Vista have been hit. These shops tend to rely heavily on in-store sales for their revenues and the recent movement restrictions therefore have a heavy impact. Some of these shops have seen a reduction in their sales of up to 90%.

All these business declines have a domino effect and multiplier impact through our entire eco-system. When the revenues for these businesses dry up, their employees' wages dwindle, reducing their ability to spend on goods and services and thus, in turn, affecting other businesses as well. Landlords, lenders and investors are also affected. Landlords would have trouble collecting rentals and consequently, their lenders and investors like banks, finance companies, corporations, shareholders and other individuals would end up with non-performing loans and investments.

I am happy to see the various measures that the Government is rolling out to mitigate the deep impact on our SMEs. SMEs play a very important role in our economy. They account for over 65% of Singapore's employment and contribute almost $200 billion, or 49%, to our economy. We must continue to support them as they will be the future drivers of our growth, especially if they are able to exploit regional and international opportunities.

COVID-19 is an unprecedented crisis for our generation. Without sufficient support, many otherwise flourishing businesses with good foundations might go bust and this will hamper the growth of our economy as a whole. I strongly believe that we will all recover from this pandemic. It is not if, but when. When the crisis is over, it will be a different world and we have to be ready to seize the new opportunities on the horizon. We cannot afford to have a large number of small business owners being embroiled in litigation and insolvency proceedings. They will become a drag on our economic recovery.

This Bill will give SMEs the breathing room to examine the way they do business and revamp. They will not need to worry about fire-fighting and their immediate future. Hopefully, the temporary measures will provide them a reprieve, giving them the space and energy to review how they could change their business models and emerge from the crisis stronger.

I also hope that the bigger players – landlords, banks and finance companies – will continue to see their relationships with SMEs as one of partnership. When the SMEs do well, they will also do well. I hope that this understanding will underpin the future discussions that are needed between landlords and tenants, banks and borrowers, to chart a way forward.

Finally, I would like to ask whether the Government is putting in place any other mechanisms to monitor the situation of smaller businesses so that, if need be, further action can be taken to save viable businesses. Sir, I support the Bill. Thank you.

Mr Deputy Speaker, Sir, I declare my interest as the Chief Executive Officer of a real estate investment trust. I have interests too in businesses that are tenants in malls.

During these very difficult times, the Government has rolled out a suite of measures to minimise the financial impact of COVID-19 on individuals and businesses. I understand and support the intention of these measures, which aim to mitigate the financial stress experienced by businesses, big and small.

I fully support the proposed legislation to ensure that landlords pass down the property tax rebates fully to tenants. This is a move in the right direction and in line with the spirit of collective responsibility to overcome COVID-19. That would be very helpful to tenants, especially the SMEs, micro SMEs and individual proprietors.

This Bill also seeks to protect, amongst others, commercial tenants from court and insolvency proceedings and termination of leases for a period of six months from the commencement of the Act. Understandably, rentals and wages are two of the more significant costs of running an enterprise.  However, I would like to request for the Ministry to take a more comprehensive and long-term view of the impact of these measures on the entire economic value chain.

This Bill whilst easing the cash flow of tenants that choose to defer the rent payment, does not go further to regulate the repayment of the six-month rent and the interest on late payment. In effect, landlords can demand immediate repayment upon the expiry of the rent deferment period. Businesses would not have improved multiple folds to enable the tenants to pay the arrears immediately.

The purpose of the Bill is to provide tenants time and space so that their businesses could recover from the COVID-19 situation but the Bill as it stands would only defer the issue further down the road. Hence, to better protect the tenants, the Bill should also legislate the repayment terms upon the expiry of the rent deferment period and the interest charged. The Bill should also give guidance on leases with expiry dates that fall within the deferment period.

The rent deferment measures will provide temporary but essential relief for many businesses. For those which are healthy and viable, the measures will provide a reprieve against the sudden impact of the pandemic. Ideally, they should take this opportunity to urgently restructure and update their operations and business models to become more effective and productive.

My concern is that the temporary rent deferment measures may inadvertently result in some companies over rely on a short-term relief and neglect taking the painful but necessary steps to revamp their operations. Such companies may instead hope for an upturn and postpone figuring out their next move to only six months later. Some businesses were in fact, already unviable before the onset of COVID-19, and had been having difficulties paying their rent. Hence, this measure merely serves to prolong the last breaths of untenable businesses. The cumulative costs of their final months will end up being passed to their landlords.

Lease termination for such unviable tenants will release the affected properties back into the market for other businesses that may want to take advantage of the weaker rental market to set up shop. This is a more organic and sustainable model for the real estate industry. We should not impede the emergence of new start-ups with potential.

As it is, this Bill creates significant uncertainty for landlords. I believe that for landlords to be constructive in their assistance to tenants, landlords need to have clarity of their cash flow and strength of their balance sheet. Rather than working out how to address delays in or non-payment of rent which affect their ability to service mortgage payments, they can plan additional relief for tenants with greater confidence in their financial position. This will be of tangible help to viable businesses.

As Deputy Prime Minister Heng cited in his speech, there are landlords who have given additional rental assistance over and above the property tax rebates to tenants.

It is important to recognise the mismatch in the obligations of tenants and property owners. The landlord's collateral with the bank is the property whereas the tenant's lease collateral is a security deposit of between one and four months. This security deposit is insufficient to ensure that the tenants pay after the six-month rent deferment period, which may be extended to a year. In the worst-case scenario, when the tenants go bust after six months, there is little that the landlords can do to recover their outstanding debts.

In reality, landlords have little legal recourse when a private limited company goes belly-up. In short, the landlord will be left holding on to the bad debt. Smaller landlords who have less resources, including individuals who own shops or strata titled offices, would face challenges meeting their obligations to their banks. They face collapse of their businesses with employees losing their jobs and them losing their properties to the banks.

Hence, in fairness, I appeal to the Ministry for this deferment measure to be implemented for a shorter period such as three months with extension, as determined by the Minister so that risks are more balanced out between landlords and tenants.

At this point, we do not know how many companies will take up the option to defer their lease payments for six months. Rental income is the landlord's main source of cash flow to pay for mortgages and interest. However, if many companies do take up this option, there are significant implications for our banking and financial system.

This may result in landlords breaching covenants, such as interest cover ratio, related to bank loans and other debt instruments, which would result in an event of default where loans will be immediately due. Landlords will also have no further access to credit lines to meet their operational needs. Banks will have higher non-performing loans. While this Bill provides temporary relief to SMEs, this relief is not extended to larger landlords who face the same issue of covenant breach and loans being called by the banks.

As responsible enterprises, landlords would go into a cash preservation and survival mode, with cuts in maintenance expenses, wages and reduce distribution to investors. S-REITs, as institutional landlords and which represent a cornerstone of the Singapore investment landscape would be in a similar situation of financial stress. As an example, SPH REIT had announced a 78.7% year-on-year decline in its distribution per unit despite a 12.2% increase in Income Available for Distribution. They are basically holding back cash in anticipation of worse situation.

More than 200,000 retail investors in S-REIT units valued at more than S$15 billion, are our ordinary man in the street – retirees, employees, homemakers and even students. They have come to depend on S-REIT distributions to supplement their retirement and household income.  The impact of this Bill will cascade down to individual retail investors, who in turn are also consumers. This could lead to sentiments of increased pessimism and caution, dampening domestic consumption and spending and result in even less business for the tenants which the Bill intends to assist.  It is therefore important, that we balance the needs of this group of people even as we help our tenants weather through this difficult time.

We hope the Minister would consider expanding the Temporary Relief from Actions for Inability to Perform Scheduled Contracts to include all real estate companies, excluding residential and for all loan types, to mitigate the potential implications as mentioned above.

In conclusion, we recognise that these are extremely trying times and we fully agree with Minister that more than ever, we need to work together to ride out this challenging period as no one is spared from the impact of COVID-19. We hope that the Minister further consider these implications and strike a balance in mitigating the challenges that all parties are currently facing.

Mr Deputy Speaker, Sir, in this uncertain times, I welcomed the move to offer some certainty and stability to individuals and firms who have been hindered from carrying out contractual obligations, as a result of the COVID-19 outbreak. Plenty has been said and done about help for the vulnerable and low-income. With this Bill, our middle income Singaporeans and above may find some relief as well as employees who are working for them.

Among them are entrepreneurs, small-time business owners, SMEs and sole proprietors. Many of them have to sustain financial obligations, but fear that they may possibly have to fold their businesses or declare bankruptcy. These measures will go a long way in helping to tide them over and keep them afloat during these tough times. The element of fairness is embedded in this Bill as COVID-19 is an unexpected event that affects the ability of businesses and individuals to perform contractual obligations, and there is targeted protection from legal action providing cash flow relief for impacted sectors.

However, this Bill and its enforcement only allows temporary relief from the effects of COVID-19 while still upholding the right to exercise contractual obligations. On the issue of fairness, my speech largely touches on how this bill would help the tenants and customers. However, at the onset I would like to also mention that the other side of the contract – the landlords and the other party in the contractual obligation should also be taken into consideration.

As mentioned previously, by hon Member of Parliament, Mr Chong Kee Hiong, in the case of leases or licences for non-residential property, this Bill ensures no termination of leased licence where non-payment of rent is due to a COVID-19 event. However, the impact on the landlords, for example, in the case of real estate investment trusts or REITs, may also have an impact on retail investors invested in these REITs and thus, Singaporeans will have some exposure in the eventuality that the tenants are not able to pay the rent at the end of the six months or duration stipulated. The negative feedback loop is something to take into consideration for both sides of the contractual obligation.

In addition, we should also ensure that these measures for deferred payment for six months do not lead to a moral hazard or negative externality issues, where tenants who are already facing trouble take the opportunity to delay payments or lead to non-performing bank loans, causing potential issues, in the future, in the banking system. Mr Deputy Speaker, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] Among those undeniably affected are young couples who are looking forward to their wedding and starting a new life together this year. But what should have been a happy event has turned into a stressful and worrying time, because they are scrambling to contact various service providers to discuss the fate of their down payments or instalments.

How will they be protected if they cancel their bookings for their big event? Are the deposits protected under the new legislation only relate to hotel bookings or does it include event companies that are organizing the ceremony? How about companies that provide floral arrangements, bridal cars, videography and photography services? The deposits have been paid but the event will not take place. Can these contractors or companies insist that the contract must be postponed to another date and cannot be cancelled?

I have spoken to some young couples who voiced their concern about this situation. Unsurprisingly, some of them saved a huge amount of money for their wedding only to realize, after all that, financial prudence is key. In fact, for those considering postponement, the venue owners are unable to provide any date for their premises to re-open, and therefore it is difficult to come to any agreement with the other service providers.

Therefore, some couples hope to get back their deposits, but these requests has been rejected. They were instead asked to convert their payment into credit for other events or even look for another couple to take over their wedding package. Hence, moving forward, this Bill will hopefully provide some financial help for them. On that note, we welcome this Bill.

(In English) Mr Deputy Speaker, I would also like to ask about events slated in the later part of the year, particularly in the year end. There are always plenty of events in the festive period. Most of them are regular annual offerings, whether it is for Christmas, for travel, for the school holidays, and so on. Because this is the peak period for events, venues and services often have to be booked far in advance, sometimes as early as the first half of the year. However, the new regulations only apply to contracts entered into before 25 March.

May I ask the Minister or Ministers what is the advice for event organisers going forward? Is it wise to start committing resources to future events or should everyone put all plans on hold until there is significant improvement in the virus situation? Would it be responsible of service providers, for example, an event venue, to market their services and accept deposits without clear knowledge of whether it would be legal to host the event on the stipulated date? Can the Government consider protection to contracts for such events, especially those that are being held annually?

Even before stricter measures were imposed, many businesses and individuals had voluntarily cancelled or postponed the events at the expense of their own pockets. Some couples were about to cancel their wedding venue bookings and opted for a smaller venue for more intimate gathering or even tapped on live streaming. Some events do cancel their bookings of physical space in favour of a digital or virtual concept. So people have adapted in advance. I wonder if the Government will consider making some concessions for them, should they make an appeal. After all, they opted for the difficult choice of cancellation out of goodwill for the fellow Singaporeans when postponement was not an option before this Bill came out.

How many disputed contracts does the body of Assessors expect to see to and how long would applicants have to wait for their turn? Are there any other qualifying factors such as the scale of the event and contracted amount involved? Finally, during these times, I believe many businesses will have to take loans. Will their inability to fulfill contractual obligations count against their credit ratings and future ability to take on other contracts, in particular for SMEs?

Next, on ensuring commercial landlords pass property tax rebates to tenants. I am relieved to note that it is now mandated by law for commercial landlords to pass property tax rebates on to tenants and in a timely manner. This is necessary because there has been feedback about landlords not doing so and many Members of the House have mentioned this earlier. The benefit may be passed on a single method or combination of methods, including but not limited to payment of money by lump sum or way of instalments or an offset against rent or licence fee payable by tenant.

For payments and other methods, what sort of documentation will suffice as a form of reference and evidence within this Bill? Would it have to be a formal contract or would a payslip do? What also is the longest period of instalment that can be made? Is there a minimum sum of rebate? So, those are few questions asked. I am concerned that without specifications, landlords may circumvent this with a token sum or long drawn out instalment period that serves little practical purpose to help the tenant. I also note that the fine of $5,000 on property owners guilty of the offence is quite low and the deterrent effect may be too insignificant.

Indeed, section 29 states that IRAS gives property tax remission to certain landlords. It also obliges those landlords to pass on the benefit of remission to tenants. In practice, this is usually about 12% of annual rent. So if a landlord fails to do this, it is an offence. However, we can have a situation where in early March, a landlord, out of sympathy for its tenants, reduces their rent, say, by 30%. The landlord will get his property tax remission but he must pass it on to his standards. So, his tenants get double benefit and the landlord, having acted generously earlier, gets none.

The question is, must this landlord still pass the benefit of the property tax remission to his tenants – section 29 states he must – or is this something which he can dispute under section 30 of the Bill?

My next point is on the bankruptcy limits. The revised limits of bankruptcy applied to individuals and businesses are timely and should help them during the six-month period. However, individuals and businesses must be reminded that the section 5 temporary relief is only a moratorium. After the prescribed period, the whole sum that was unpaid will become due. I think we need to reiterate this point to those that are utilising this deferment period within this Bill.

Businesses should use the prescribed time to work out longer-term adjustments with their landlords. Otherwise, they may face the risk of ballooning debt once the prescribed period is over. Businesses should utilise all other assistance – salary subsidies that have been given out in the Budget, but this moratorium would be a meaningful supplement, nonetheless.

In concluding, I wish to take this opportunity to call for more support and empathy for the middle-income Singaporeans and also Permanent Residents or PRs, who have contributed significantly to our national reserves. If there will be a further package or new relief schemes, please let them be eligible for more help. Some are still reeling from the effects of a weakened economy previously and now, with COVID-19, there are people who have been jobless or intermittently jobless for more than a year while struggling to sustain financial and family obligations on their savings. I understand that there is always help available to those in need on a case-by-case basis but they should not be made to go through a significant amount of red tape to receive it.

The Unity, Solidarity and Resilience Budget that has been released by Deputy Prime Minister Heng today actually shows a wide range of help for various groups. But I think over time, if the virus outbreak worsens, they are definitely going to need help. It is a grave time for everyone, but the Bill addresses many pressing concerns and will restore some confidence. Sir, I support the Bill.

Sir, I stand in support of the Bill. The number of COVID-19 cases worldwide has exceeded a million. Locally, cases have succeeded 1,000. While the fight continues to limit the number of cases, it is important that the economic and practical impacts of the pandemic be addressed. This current Bill drafted under considerable pressure and sought to be passed on an expedited basis goes a long way towards addressing that. I have five points to make on the Bill.

My first point is on the deferment period for the rent repayment for commercial tenants. Sir, I received the most feedback about this first point. People support this but hope that additional measures will be introduced. Clause 5 of the Bill provides a moratorium for the termination of a lease or licence of property for non-payment of rent for the prescribed period of six months. This will apply to non-residential properties. While this is intended to create some breathing space for commercial tenants, rent will still accrue and will be payable at the end of the six-month period.

Many are appreciative that we are proposing this but some do not feel much relief from this protection. One of my residents who is a shop owner shared her concerns with me. Her current monthly rental is $8,000 and she told me that at the end of six months, she would have accumulated $48,000 in rent. Even if she has some relief from paying the rent for these six months, it is unlikely that her business will have fully recovered by that time and she is unlikely to be able to pay off this $48,000 in six months' time. She told me that she might as well wind up her business now.

I can understand her concerns. We need to remember that not only do tenants face the very real risk or possibility of winding up, landlords also faced significant risks if tenants are unable to pay at the end of six months and have no choice but to wind up. The Straits times has already reported that retail sales have dipped by up to 8.6% in February alone, at the start of this crisis, before further measures have been taken. With the circuit breaker measures requiring all non-essential businesses to stop operations, commercial tenants are likely to be hit harder than ever.

As Minister Vivian noted in his media interview, Singapore took four months to pass the SARS outbreak and six months to recover from its economic impact. He then said that, "This problem and its aftermath, the economic aftermath, is going to last at least a year". Our relief efforts need to take into account the reality that it will not be business as usual after six months.

Will the Minister consider an extended period for repayment of rent accrued in these six months? Can we allow tenants to repay this outstanding amount via monthly instalments spread out over a period of time? This would increase the chances of repayment to landlords and of businesses surviving.

This has already been done in Germany. The German government similarly passed a Bill to mitigate the consequences of the COVID-19 pandemic. Under the German Bill, landlords may not terminate lease agreements solely on the grounds that a tenant failed to pay its rent during the period from 1 April 2020 to 30 June 2020. Tenants will have until 30 June 2022 to pay back the rental arrears accrued during this period.

Can we consider a similar measure in Singapore, which would benefit both landlords and tenants?

My second clarification relates to the transfer of benefit of property tax remittance from landlords to tenants.

Clause 29(1) requires a landlord to pass the benefit of any profit tax remission related to COVID-19 on to the tenant. It is not clear from the Bill that tenants will be required to pass on this property tax remissions to sub-tenants and sub-licensees. A significant group that may fall through this gap is users of co-working spaces that lease or licence the space from co-working companies as sub-tenants and sub-licensees. The Business Times reported in September 2019 that co-working spaces take up 3.7 million square feet of Singapore's commercial space and it is one of the top six occupier sectors.

Can the Minister clarify whether the benefits from property tax remissions will have to be passed on to sub-tenants and sub-licensees.

My third point is a recommendation to alleviate the rental burden on tenants. While larger landlords like CapitaLand and Mapletree have announced rent alleviation for their tenants, many other landlords have not. If the economic impact proves to be extremely dire and further remedial measures are needed, will the Minister consider looking into mandating a degree or rent abatement for the tenants?

I understand that landlords are not exempt from the effects of the pandemic. However, some are more financially capable of weathering the crisis than others, and measures are required to ensure that economic impact is equally distributed. Rent abatement measures, if necessary, can be calibrated. It can be targeted at larger landlords who are in a better position to shoulder some of the economic losses and smaller tenants who have greater need for such relief.

My fourth point relates to assistance to freelancers from contractual obligation, in particular, obligations under long-term vehicle leases. Clause 5 of the Bill will help individuals who are unable to meet their obligation under a hire purchase agreement for commercial vehicles for the prescribed period of six months. Commercial vehicles are defined under the Schedule of the Bill. However, the definition of commercial vehicles does not appear to extend to freelancers, such as property and insurance agents, who leased their vehicles for business-related activities.

This concern was raised to me by a resident who is a property consultant who uses a car for property viewing and business-related activities. Her car is on a long-term lease. Her business has been affected by the pandemic but it is not feasible for her to cancel her long-term lease as she would need the car to recover from this downturn. She has requested that the vehicle leasing company defer her monthly lease payments for a few months until her cash flow has stabilised. However, she was informed by the company that as the Government did not announce any measures relating to vehicle leases for freelancers like herself, the company did not know how to help her and was not obliged to do so either.

Freelancers like this resident need all the help they can get right now. Can the Minister share if there are plans to provide some relief for freelancers from their business contracts, including obligations under long-term vehicle leases.

My final clarification has to do with factual witnesses giving evidence through remote communication technology in Court proceedings. Clause 28(2)(b)(ii) provides that parties' consent must be given for a factual witness to give evidence through remote communication technology. In contrast, consent of parties is not a prerequisite for expert witnesses to give evidence through remote communication technology under 28(2)(b)(i).

I can appreciate that a possible reason is that it is more important for the Court to be able to see the body language of factual witnesses in person as opposed to independent expert witnesses. Body language may not come across fully through remote communication technology. Having said that, there are a number of cases that would involve overseas witnesses and there is no telling how long border restrictions will be in place.

Lawyers have expressed to me the concern that trial timelines will be unnecessarily prolonged and the backlog of cases may result if parties unreasonably withhold consent to the use of remote communication technology for factual witnesses.

Can the Minister clarify if the Court would have oversight over the reasonableness of a party withholding consent to the use of remote communication technology for factual witnesses in appropriate cases? If so, can the Minister share how the oversight will be exercised?

Sir, I understand the Government is doing its best to extend assistance to as many Singaporeans as possible. I like to thank the Government for all its efforts and hope my recommendations can be considered. Sir, I stand in support of the Bill.

Mr Deputy Speaker, Sir, I like to first declare my interest as a lawyer in private practice who has been approached to provide advice on this Bill in draft before it was introduced in this House today.

I rise in support of the Bill. I join hon Members who spoke before me to commend officers from MinLaw, MND, MOH, the Attorney-General's Chambers and top practitioners from private practice for working together and coming up with this Bill so quickly in nine days. This is an excellent example of the spirit of SG United in action.

As mentioned by the hon Minister for Law, the introduction of this Bill on a Certificate of Urgency is precipitated by the most serious crisis our country has faced since Independence. It is worth repeating that the focus of this Bill is to ensure the economic survival of contracting parties affected by the COVID-19 event, particularly the individuals and small-and-medium enterprises. I agree, therefore, that the current circumstances are exceptional to justify intervention into the hallowed principle of sanctity of private contracts and the rule against retrospective application of laws. The hon Minister shared a precedent in the form of the Frustrated Contracts Act which was put into effect in February 1959 but applied to all contracts, even those entered into before the commencement date of the statute. Coincidentally, the subject matter of the Frustrated Contracts Act also deals with intervening unanticipated events affecting contractual obligations.

I would like to raise six points in my speech, most of which deal with statutory interpretation and, therefore, likely to be quite dry and only interest the lawyers in this House. To make up, I will end with the suggestion application on what could, perhaps, be considered in future. Hopefully, that will interest more Members.

First, categorisation of scheduled contracts. I agree with the drafting approach in this Bill of providing relief to scheduled contracts described in the schedule. This promotes certainty. The other option would be to just have provisions of general application. This would cause major confusion.

I am glad to note that, under clause 18 of the Bill, it is proposed that the Minister be given powers to amend or add to the schedule. Given the uncertainties we face, this makes eminent sense. I would like to ask the hon Minister what are the guiding principles upon which he would exercise this discretion that is proposed to be vested in him.

Next, the wording in clause 5(1)(a) of the Bill. Clause 5, in my personal view, is the critical provision in this Bill, as it stipulates three conditions pursuant to which temporary relief from contractual consequences may be obtained. I seek clarification on the phrase “unable to perform an obligation”. This is one of the primary triggers to get temporary relief. Is the word "obligation" referring to a contractual obligation or is it in relation to an obligation in general having regard to the purpose of the contract?

Let me illustrate by way of an example. Let us deal with a contract dealing with a wedding dinner in a hotel. The bride and groom’s obligation would be a payment obligation in which it may not be affected by a COVID-19 event as they would have set aside money for their wedding. Read literally, they may not get relief if the obligation that they have is only a payment obligation. But that would be onerous. I understand the intention is to give relief to the bride and groom in such a parlous situation.

Given the wording that is used in statute, I seek a clarification as to whether the obligation referred to in the clause is wider than the contractual obligation and should be referenced against the purpose of the contract that is objectively known to contracting parties.

I also would like to ask whether the clause is intended to apply on a mutual basis.

Again, to illustrate, staying on the example, say, for example, if the hotel’s workers are all serving quarantine orders and, therefore, they are unable to proceed with the wedding dinner. Can the hotel also take advantage of the clause? If I am right, based on the definition of scheduled contracts in the Schedule, any company, not just SMEs, may use the measures in this Bill in relation to scheduled contracts, save for the finance-related contracts. May I please clarify whether this is, indeed, the intention? If so, may I please ask why the hotels, which are naturally big boys, need to be protected under this Bill?

Next, I turn to clause 5(1)(b) of the Bill which deals with the second condition – “inability to a material extent caused by a COVID-19 event”.  I wish to clarify the meaning of this phrase. I anticipate that Assessors appointed under the Act, once passed, will spend a lot of time on the meaning of this phrase. In law, we have concepts, such as “causa causans” which is the immediate cause or the last link, or “causa sine qua non”, which is the cause that contributes to the loss even though it is not direct.

I would like to ask whether these concepts are meant to be triggered here. Or is the intent to provide relief even where there are more than one reason leading to a party being unable to perform an obligation in contract so long as the COVID-19 event is an important or significant reason.

I now turn to clause 6 of the Bill. I support the intention behind the clause which is to prevent the owner or developer under a contract to call on a performance bond in relation to a “subject inability”, which is defined as the inability to a material extent caused by a COVID-19 event. What is not clear is when this obligation is triggered.

Under clause 5 of the Bill, it is stated that that the temporary relief kicks in upon satisfaction of three conditions, which include a notification under clause 5(c) to the other party. This notification requirement is not specifically stated in the clause.

May I please ask whether this notification requirement has to be fulfilled before the obligation under clause 6 is triggered? If so, would there not be situations where the owners or developers may act to call on bonds before being notified? Now, this is not necessarily an unusual situation because the party that is unable to perform the obligation is not the party to the performance bond because that is between the employer and the bank. It seems to me, however, if that happens, such acts may thwart the legislative intention behind the Bill. It may well be unconscionable conduct on the part of the owner or developer which ordinarily provides grounds to restrain payment under the bond. I would welcome clarification from the hon Minister on this point.

Next, I go to the reference to arbitration under clause 5(3)(b) of the Bill. As mentioned by the hon Minister, as part of the temporary relief measures, it is contemplated that defaulting parties cannot be subject of Court proceedings as well as arbitration. May I please ask why is there a need to circumscribe arbitration to only that which is governed by the Arbitration Act instead of stating arbitration seated in Singapore?

In my personal view, arbitration seated in Singapore would be more consonant with the equivalent provision that deals with "Court" proceedings under clause 5(3)(a) of the Bill, which, taken together with the Interpretation Act, would mean "Courts of competent jurisdiction in Singapore".

Also, we should note that categories of scheduled contracts are not closed. Should the Minister extend the schedule to cover trading contracts, for example, there could be international companies involved which means that these companies could possibly commence international arbitration which is governed by the International Arbitration Act (IAA), thereby escaping this provision. Also parties to domestic arbitration may have opted into the IAA regime, thereby, again possibly escaping this provision.

My final point, Sir, is in relation to an area not specifically covered in this Bill. This Bill contains provisions for holding of general meetings of companies and Court proceedings using remote communication technology. I read a Guardian article dated 31 March 2020 in which it was stated that the UK Ministry of Justice is looking at temporarily relaxing the rules on two witnesses required under the Wills Act as UK self-isolates. I appreciate that the two-witness rule in Singapore is put in to guard against fraud. In this day and age when we have Singpass for a whole host of digital services, this fraud issue could be contained to some extent.

In the event the COVID-19 event extends to a longer period of time – and, Mr Deputy Speaker, Sir, I am touching wood at this point in time – I recommend that the Minister for Law consider looking into digitising Wills. This should also apply to LPAs, too. In the meantime, I note that for this four-week period where generally all persons are to work from home, there is a carve-out in the Government measures that allows lawyers to provide drafting and execution of Will services as they constitute essential services. This is eminently sensible.

Notwithstanding my comments, I support the Bill.

Please allow me to declare my interest as Chairman of Sakae Holdings, President of the Singapore Manufacturing Federation (SMF), Vice-Chairman of the Singapore Business Federation (SBF) and Vice-President of the Singapore National Employers Federation (SNEF).

Since COVID-19 first became a major concern in Singapore, life has been riddled with much uncertainty. As the COVID-19 situation worsened over the last couple of months, people concerned with events, for example, have been brought on many different roller coasters. Is the event cancelled? No, the event is not cancelled but will be limited to less than 40 people. A few days later, the event was reduced to 10 persons, with distancing measures and, a few days later, the event was postponed or moved to virtual means. But I must commend my fellow Singaporeans for being understanding and reasonable to bear with such uncertainty. It is definitely not ideal for legal instruments not to be clear.

Over the last few weeks, Trade Association and Chambers (TACs), including the Singapore manufacturing Federation (SMF) have arranged for lawyers to give informative talks to our members on matters such as for "Fall, Merger and Frustration". It must have been frustrating for many, forgive the pun, that relief or threat of legal action depends on what is worded in the contract when the totally egalitarian COVID-19 virus does not discriminate between a super large organisation and a one-man show.

This Bill now moves to bring a certain degree of clarity and uniformity in this unprecedented times is indeed welcomed by many in the business community. It is also opportune to add that by moving decisively and quickly in introducing this Bill, MinLaw is once again demonstrating its commendable foresight and dynamism. It is also creative thinking at its innovative best to use the law in such a manner to bring relief to the people and the community.

While we are mired in extraordinary times and it is imperative that we work and live together as a community. It is only if we go to the extra mile and practice consideration for one another that we have a higher chance that larger swaths of our societal fabric will be able to tide through this circumstances. I believe that many businesses know this concept inherently, but lack a framework or a former channel to practise some form of legal leniency and yet still, protect business interest. Hence, I rise in support of the Bill and commend the Whole-of-Government approach to COVID-19.

Targeted protection from legal action is cited as one of the main objectives for the Bill. I believe this is crucial as the cash flow exposure for contractual obligations that they are now unable to fulfil weigh heavily on the minds of many business owners. Under this Bill, five broad categories of contracts are identified and I stand by the decision to prioritise relief measures to address conflicts arising from these five areas.

Everyone is well aware of the cash flow crisis that operators in the tourism, events and F&B sectors are facing with the collapse in demand and issues to supply chain disruptions. That, under this Bill, it is now an offence to terminate a lease, repossess premises and/or start insolvency proceedings against a tenant service to create a buffer period, allowing them hope of a platform from which to rebuild their business when life returns to normalcy.

The other objective of the Bill is the reciprocal corresponding assurance that contractual obligations are still enforceable, that its rights are not extinguished, just temporarily placed on hold. If I may I humbly suggest there should also be discussions on the expected payment schedule after the period of suspension, since it will be unlikely, for example, that a tenant will be able to pay six months of suspended rental immediately. This is essential as this gives reassurance to the parties to whom payment is due, that there is a recourse for recovery of due fees in the future while not placing the pay in yet another difficult position.

With this assurance, I hope parties are able to come to agreement in a cordial and amicable manner with the passage of this Bill. Once again, in light of the current situation, we are stronger if we seek to find solutions together. In the event of future dispute after the Bill ceases effect, I would like to reiterate the points which is measured earlier in February in response to the reading of the Singapore convention on Mediation Bill.

Mediation should be an avenue considered by all parties to resolve any arising disputes. With mediation, the options for settlement are wider in scope than the monetary compensation available through arbitration or litigation, and parties have a chance to negotiate settlement options without prejudice to their legal rights and in a non-pressure cooker atmosphere. Let us work together to ensure business continuity amist these uncertain times.

This Bill also provide for alternative meeting arrangements to be recognised legally, to be compliant with the safe distancing regulations that came into force on 27 March 2020. New regulations to put greater distance between co-workers to minimise the spread of COVID-19 have spurred more businesses to adopt a whole suite of digital solutions from video conferencing, workflow management to online ordering and inventory management.

Now that the Supplementary Budget 2020 has provided for expanded pre-approved digital solutions to the digital project management system and other grants to support businesses in the required adoptions in response to COVID-19, I call on businesses to please explore the programmes available and I am sure the implementation of these solutions will prove to provide long-term value for companies rather than just short-term solutions.

Mr Deputy Speaker, Sir, while my speech has lauded and supported the intent of the spirit of this Bill, please allow me some time in closing to raise a few concerns. These concerns pertain more to the operational aspect of the Bill rather than the provisions of the Bill itself. In the first instance, with nearly 200,000 SMEs in Singapore, the volume of contracts signed is indeed voluminous.

While not all contracts are expected to be in dispute, it is imperative that the Ministry carefully put in place measures to select and appoint the right Assessors given that there is no appeal mechanism provided for. Such Assessors must also be careful to understand and avoid conflicts of interests and buyers whether perceived, potential or actual. Such Assessors should also have been placed teleconferencing capabilities to avoid any face-to-face interactions with those raising disputes. Finally, can the Ministry clarify such Assessors will be covered by some form of Indemnity insurance?

Mr Deputy Speaker, Sir, notwithstanding the concerns that have been raised above, I would like to state that this whole-of-Government effort to address the wide-ranging effects of our economic crisis is herculean and it is deeply appreciated by business owners and investors in Singapore. Once again, Mr Deputy Speaker, Sir, I rise in support of this Bill.