COS SPEECH BY ER DR LEE BEE WAH, MP FOR NEE SOON GRC, AT PARLIAMENT’S BUDGET 2020 COMMITTEE OF SUPPLY DEBATE FOR THE MINISTRY OF NATIONAL DEVELOPMENT
TRANSFORMING THE CONSTRUCTION INDUSTRY
Sir, before I proceed, I would like to declare my interest as a PE and my involvement in property development and construction.
Buy Singapore First
Sir, many contractors told me that they feel discriminated in recent few contract awards. In the LTA Jurong Regional Line Projects, for example, four out of seven contracts were awarded to foreign contractors. Another example, LTA awarded N112 tender to a foreign contractor even though our local contractor submitted the lowest tender. The lowest tenderer is an established home-grown contractor. Why pay $6 million more to a foreign Contractor whose company is registered in the Virgin Islands? We have about 140 A1 local contractors who have all built up very strong capabilities. If we don’t even support our own contractors, who will support them? Can we consistently apply the policy of BUY SINGAPORE FIRST?
Contractors also shared that they always face payment delays and hence causing cash flow problems. Some of the causes are:
1) Variation Orders (VO): The valuation and certification of VOs can drag on for years before they are finally settled.
2) Liquidated Damages (LD): Contractors are imposed LD even before claims for Extension of Time (EOT) and VOs are assessed.
3) Under-certified payment: It could be due to our kiasuism culture. So, the work done on site is often under certified.
While it is commendable that the government has taken a long-term view to reducing Singapore’s reliance on foreign labour, it should place more emphasis on the quotas of those sectors that Singaporeans would like to work in, which are certainly not in construction or shipyard. With emphasis on DFMA and PPVC, we need more< S-Pass workers than ever before as they are more skilful.
Another problem is that Singapore is no longer attractive to some foreign skilled carpenters and tilers. They choose to go to other countries. Perhaps BCA can help to investigate the reasons and implement measures to solve this issue. For example, are they finding it too tedious or too expensive to sit for the Core Trade Skills test? With the current push for DFMA and PPVC, are these tests still relevant?
As the COVID-19 situation continues to evolve, the construction industry is facing the full impact of labour shortage, material delays, threat of site lock down etc, delaying progress of projects.
Can the government do more to help the construction industry? For example, waive the worker’s levy during this difficult period for example? We also believe that some of the government policies can be re-examined. The current crisis could be an opportune time to review and tweak the ABSD regime to make it more equitable and effective as the current regime is not calibrated (to some extent, it’s a one size fits all).
This is not a call for an easing of the cooling measure but an appeal for a temporary relief for the real estate industry to cope with the current situation.
The following 2 changes could be considered:
In anticipation of the high likelihood in project delays, BCA is urging Developers not to penalise Contractors. How is this possible if Developers are bounded by the 5-year ABSD remission deadline, which is very punitive? At the same time, the sale of residential units has slowed down sharply. I hope MND understand the challenges faced by property and construction industry and lend a helping hand. Let’s show the Singapore Together spirit.
Watch the speech here
Watch the response here