Covid-19: Slow torture for small businesses
By Liang Lei, Alvina Koh, Gwen Lee and Justin Chua
Since the first suspected case of the coronavirus in Singapore was announced on Jan 4, businesses have been hit by the decline in customers, as tourist numbers drop and residents choose to stay home. ILLUSTRATION: LIANG LEI
You hear it often that the small players are the worst hit and have the least help. Class Notes spoke to seven business owners who are straining from the impact of Covid-19 in Singapore.
Ms Olivia Teo, 47, felt the sting of the virus way back in January — before it even got its name — when crowds started to thin at her 60-seat restaurant Old School Delights at the Esplanade.
The crowd that would throng the annual River Hongbao Carnival held nearby was absent. By then, China had over 2,000 Covid-19 cases, while Singapore was about to hit 20.
It got worse the next month when the Esplanade started cancelling performances, emptying the mall of the theatre-going crowd that formed much of the eatery’s customers.
Since the first suspected case of the coronavirus in Singapore was announced on Jan 4, businesses have been hit by the decline in customers, as tourist numbers drop and residents choose to stay home. Some small businesses are struggling to keep their staff or even staying afloat, battered on many fronts – rent, logistics, sales, staffing, and the shock of it all.
By March, there were nights at Old School Delights where there wasn’t a single customer. “It just went free-fall,” Ms Teo said.
The Old School Delights restaurant, run by Ms Olivia Teo and her husband. Photo courtesy of Ms Teo.
At Thoughts Box tuition centre, parents started to pull their children out of classes once talk of the virus spreading around the community gained traction in March.
“We missed out on our best recruitment period, which is after Chinese New Year,” said owner Katty Chen, 32.
Ms Jessie Tey and Mr Jimmy Ong, who run events and sound systems firm LaserBiz Production, have had no sales in the past three months.
No new bookings were coming in by the end of January. Events that were booked for February and March were cancelled by clients who cited fear of community spread of the virus. These were before the state’s injunction to ban gatherings and close entertainment venues in late March, shattering any hope the couple had left of getting hired for a gig.
While most small business owners were feeling the virus’ bite, Mr Koh Chai Soon, 60, was enjoying a spike in footfall at his 39-year-old provision shop Soon Thye Departmental Store.
When the panic buying started setting in before the circuit breaker measures, he said that shoppers who didn’t want to queue at the supermarkets turned to his shop.
“Whatever I have, they also just grab — 10 packets of rice, 20 packets of Maggi mee — they just pay and go,” he said.
And those were just the locals. Foreign workers, who are the main customers of the provision shop located at the Yew Tee industrial estate, came by the lorryloads.
“When they come… they only have half-an-hour or 15 minutes, so everyone wants to buy fast. They will be pushing here and there,” Mr Koh said.
Mr Koh thought himself lucky that no government official swung by then to inspect if the shop was following the one-metre social distancing rules, which he said he tried hard to enforce. “If they did come, I would say I hundred per cent kena, because the crowd was terrible," he said.
The already struggling small businesses were dealt a heavy blow on April 3 when Prime Minister Lee Hsien Loong announced the partial lockdown of the country. By then, the restaurant services sector had already contracted about 16 per cent year-on-year since January, and retail sales fell nearly 7 per cent.
Under the circuit breaker measures, many shops found themselves labelled “non-essential” and had to suspend on-site operations.
About 85 per cent of the workforce was either working from home or not working at all when the lockdown period was extended until June 1.
Offices in the city centre were hollowed out. Without the lunch crowd of office workers, Old School Delight’s Ms Teo and many of the other tenants at Esplanade decided to pack it in for the time being rather than stay open for takeaway.
The restaurant's food stock was split among the staff and the rest donated. Operating revenue fell to zero.
Sales for Dale Wines and Spirits started waning after restaurant and hotel businesses, which constitute 80 per cent of his monthly revenue, were made to shut down during the circuit breaker period.
Although the alcohol distributor started to transit to consumer sales by opening up delivery services to customers directly, these small orders could not make up for the bulk purchases made by restaurants and hotels that would order up to 20 cartons of alcohol each time.
“The volume is there, but the cost of doing business has gone up,” owner Edward Lee, 51, said.
After losing out on the important January recruitment period at Thoughts Box tuition centre, Ms Chen tried to retain her current students by holding virtual classes through the Zoom video-conferencing app.
Despite slashing fees by half, only 30 to 40 per cent of her students stayed on with her online classes.
“Many parents are reluctant… because schools are already doing online learning. Parents think that their children will be staring at the screen for more than 10 hours, so they would rather not have the children join,” Ms Chen said.
Ms Katty Chen, 32, owner of Thoughts Box tuition centre with her students. Photo courtesy of Ms Chen.
Ms Lee Chia Lee, 44, who runs a hairdressing salon in Bugis owned by her brother, was not allowed to work when salons were suspended for three weeks during the circuit breaker.
It wouldn’t have been that difficult for Ms Lee had she not had to leave behind her four children in Johor Bahru to rush back into Singapore before Malaysia closed its borders on March 18.
She recounted how her 10-year-old son cried over a video call when she joked that she wouldn’t be able to come home anymore. “No cannot, I need you,” she recalled her son saying.
Ms Lee Chia Lee (right), 44, hairdresser at MJ01 Hair and Beauty, poses for a picture with one of her customers. Photo courtesy of Ms Lee.
Although Mr Koh, the provision shop owner, didn’t have to close his shop when the circuit breaker measures kicked in, he was worried enough about getting infected to stop work for about a week.
The same day he opened his shop on April 20, around 180,000 foreign workers in the construction sector had received stay-home orders. Customers dropped to a trickle.
On May 1, he was shocked to receive an order through email to close even though he sold rice, noodles, biscuits and bread.
“Maybe they had someone come down to look at the shop and they saw that the majority of my shop is liquor and beer,” he said. With his daughter’s help, he filed an online appeal to resume operations but was rejected, twice.
Now, he only does business through WhatsApp orders from his regular customers who would come down to the shopfront to collect and pay for their purchases.
Mr Koh Chai Soon, 60, behind the counter of Soon Thye Departmental Store, his provision shop of 39 years. Photo courtesy of Mr Koh.
Plenty of assistance packages were announced in the past months over four Budgets, from those helping small and medium-sized enterprises balance books, pay rent and adopt technology, to wider measures propping up needy households and cash-strapped enterprises.
The biggest is the Job Support Scheme (JSS), where the Government foots up to 75 per cent of workers’ salaries.
Although most of the business owners Class Notes spoke to have used this help to pay their staff full wages so far, they have been starting to consider letting go of some of them.
“If I really cannot withstand it, the workers will just have to go right?” Mr Koh said, recalling how he had to let go of some of his workers when the Asian Financial Crisis hit in 1997. For now, he intends to keep the two employees who work on alternate days packing items in the shop for bulk orders for as long as possible.
Mr Lee, the owner of Dale Wines and Spirits, has managed to sustain paying his five workers for the past two months with the JSS co-funding.
“If I don’t recover, it’s either pay-cut or I have to let them go,” Mr Lee said. He added that the company had to spend money on handheld scanners and barcode labels when they pivoted their sales to consumers rather than businesses.
“For the small players, these are expensive costs. Unless you are like NTUC, you can just buy these resources. But for small businesses like ours, anything that adds to the costs is going to affect us,” he said. He added that he did not apply for the Government’s digital transformation grants because he saw no need for the alcohol distribution company to go digital.
Mr Edward Lee, owner of alcohol distributor Dale Wines and Spirits, with his van, which is used for a project with NTUC Fairprice during the circuit breaker period. Photo courtesy of Mr Lee.
Ms Tey and Mr Ong of LaserBiz Production have been continuing to pay for their only employee, a full-time driver who has taken up temporary jobs since they stopped operations, with help from the JSS. That's even as she's trying to keep up with other expenses, including the loan payments for two commercial vehicles the company purchased just three years ago.
The husband and wife have yet to hear back from their application for the self-employed person income relief scheme that provides $9,000 cash payouts over three months. Mr Ong has since taken up part-time delivery jobs to cope with daily expenses.
Mr Jimmy Ong (bottom right), owner of Laserbiz Production, adjusting the light projections for a show. Photo courtesy of Mr Ong.
For Ms Chen, the benefits from the JSS were more limited, since some of her staff are freelance tutors not covered under the scheme. She said one tutor had applied for the freelancers’ financial assistance scheme when it was first announced but has not heard back since then.
One big cost item for small businesses with physical spaces is rent.
The Government has been providing increasingly generous rental and property tax waivers for business owners since February. After the latest update, it will subsidize, through landlords, up to two months of rental waivers for small and medium-sized enterprises, and up to five months for tenants of Government properties.
Were they getting it?
Mr Lee was given a 10 per cent discount off the rental from his landlord for his wine warehouses. He said he was also given leeway to pay up slowly.
Mr Koh said that his landlord, JTC Corporation, provided a 50 per cent rebate on his shophouse rent for three months. Previously, he had been paying about $5,000 every month for rent and maintenance services.
Ms Teo’s rent for April and May were completely waived by the Esplanade management.
Ms Lee’s rental contract at Bugis Cube for her hairdresser salon was slated to end in May. After Covid-19 struck, Ms Lee asked the landlord for a cheaper rate, a request the landlord is still deliberating on.
Ms Chen is in a trickier situation. She was offered $500 off the $2,000 rent for the Bukit Batok branch of her tuition centre, consisting of a $200 property tax rebate and a $300 top-up from the landlord. For the Woodlands branch, she was given a $135 discount off the $1,800 rent.
Although the government paid for one month’s worth of rent, Ms Chen said that her Woodlands landlord divided the waiver over 12 months, which he was legally allowed to do. It means she would not be able to enjoy the full benefit of the rent waiver if she chooses not to extend her contract when it expires at the end of the year, she said.
Class Notes also spoke to Ms Wong Lai Mooi, 49, who runs Meiya Jewellery and Trading, providing jewellery alteration and design services at Lucky Plaza. Business had already been slow before the virus but she and her partner usually manage to get by. Their biggest cost is rent.
She receives updates from her landlord, Far East Organisation, through the mail. Her most recent letter from the developer was regarding a $50 penalty for late rental payment for April, which now totals around $4,150. Lucky Plaza tenants with private landlords have it much better, so she’s been told. Some even forgo the rent.
She was only vaguely aware of her entitlements to some policies. She knows she was entitled to SIRS and had received her payout on May 28. She was puzzled, though, as her landlord did not explain why she had a penalty for late payment.
"The government said we could defer payment for half a year mah," she quipped, referring to the recently passed Covid-19 law, which offers at least six months of relief for virus-stricken businesses who cannot fulfil contract obligations, including rent.
"But our contract ends in August, so we have to see how," she said, adding that her main concern is when she can re-open her business and discuss these issues with her landlord.
With the partial lifting of measures on June 2, business owners are hardly optimistic, having been weighed down by financial woes since the start of the year.
Mr Koh is worried business at his provision shop will fall if the foreign workers staying nearby are rehoused after the outbreak in Singapore boils over, though it remains unclear for now. It wouldn’t matter much for Mr Koh anyway, since he has decided to retire by the end of the year.
Ms Teo, the co-owner of Old School Delights, said her husband has started toying with the idea of selling packaged food since dining-in will stay banned when the circuit breaker is lifted in June.
“He feels that maybe given time, and doing some revamping or redirecting... it may work,” she said.
Mr Lee, who owns Dale Wines and Spirits, doesn’t expect the liquor trade to recover anytime soon and said most of his clients are considering scaling down their businesses.
Ms Lee, the hairdresser, said her brother and her might be forced to close the salon if she’s unable to negotiate for cheaper rent.
“I am worried, but there is nothing I can do,” Ms Lee said. “I can’t bear to part with this business just yet but when I have to due to circumstances, I will have to let go.”