Government must act properly and quickly to help coronavirus-hit businesses

As sales at restaurants and other businesses have been slow to recover amid the lingering effects of the pandemic, the burden of their rent payments is becoming larger. It is important to shore up the economy with prompt support measures.

The Economy, Trade and Industry Ministry starts accepting applications for “rent support benefits” from July 14.

The benefits will be up to two-thirds of rent. The ceiling will be ¥6 million in total for small and midsize operators and ¥3 million for one-person businesses. A sharp drop in sales is a condition for the benefits.

Businesses such as small and midsize restaurants and retail stores often lease the spaces in which they operate. With income falling due to the spread of the novel coronavirus, they are struggling to pay their rent, a fixed cost.

In Tokyo, meanwhile, the number of people newly infected with the virus has exceeded 200 on some days, raising fears of a second wave of virus infections.

Many small and midsize establishments are surviving their current plight with virtually interest-free and no-collateral loans provided by government-affiliated financial institutions, but an increasing number of such businesses have been forced to close or go bankrupt. Rent support is becoming more important.

It took more than a month to begin accepting applications for the rent support benefits after the second supplementary budget was enacted. This was because the government was slow to prepare and improve the system and adjust the content of the applications.

In addition to documents proving a decline in sales, applicants for the rent support benefits need to submit a copy of a lease contract and a bankbook with payment records, among other things.

It is worrisome that it is taking even longer to actually receive the rent support benefits after applying for them than it did for the benefits intended to help small and midsize businesses sustain their operations. No concrete date has been set for when the payments of the rent support benefits will be made.

As the applications are accepted only online, consideration needs to be given to business operators who are not familiar with digital procedures. It is hoped that the government will cooperate with local chambers of commerce and industry and other entities to be attentive to each applicant.

The government should strengthen the system to expedite the rent support benefits by involving contractors to whom it entrusts the provision of the benefits to pay them as soon as possible.

It is essential to ensure transparency in the implementation of such measures. In the benefits provided to small and midsize businesses to help them sustain their operations, the high cost of contracting to the private sector and the process of selecting contractors were criticized. For the rent support benefits, it is said that payments to contractors may come to about ¥76 billion.

The government plans to eventually spend only what it deems appropriate after examining labor costs and details of the work, among other factors. Cost reductions must be made thoroughly.

It is also important to take measures to prevent business operators from receiving the benefits illicitly. The government plans to make public the names of firms found to be involved in illicit receipt of the benefits, and will require them to repay the money plus an at least 20% penalty. In egregious cases, it will file criminal complaints. Strict applications of rules will be effective. Hopefully, the rules will be made widely known to strengthen the surveillance.