COVID-19 (Temporary Measures) (Amendment No 2) Bill

Order for Second Reading read.

The Minister of State for National Development (Mr Tan Kiat How) (for the Minister for National Development): Mr Speaker, Sir, on behalf of the Minister for National Development, I beg to move, "That the Bill be now read a second time".

Sir let me first sketch out the context of this Bill before outlining the key amendments.

The Built Environment sector, especially the construction industry has been severely impacted by COVID-19.

Almost all construction work stopped during the circuit breaker period last year. Many companies, particularly our SMEs were hard hit as no work meant there was no progress payment.

Even when works restarted, companies had to adapt to new requirements, such as ensuring our workers attend their rostered routine testing and adhering to safe management measures at the worksites.

In response, the Government has intervened very significantly to support the sector.

Amongst other measures, we introduced a $1.36 billion Construction Support Package, extended waivers and rebates of the Foreign Worker Levy, and provided wage subsidies under the Jobs Support Scheme.

The most recent measures announced last week include the waivers for foreign worker levies for construction Work Permit and S Pass holders during their SHN period of 14 to 21 days upon entry into Singapore, for the period between 1 January 2021 to 30 September 2021.

We have also put in place legislation through the COVID-19 (Temporary Measures) Act to provide temporary relief to businesses and individuals who are unable to perform their contractual obligations due to COVID-19.

This ensured that no one single part of the built environment value chain has to bear a disproportionate share of the burden brought about by the pandemic.

To recap, Part 2 of the Act provides temporary relief from stipulated types of legal actions and also provides firms with a defence against breach of contract and damages due to COVID-19.

Under Part 8, we provided a mechanism for firms to seek relief from additional rental costs that are incurred due to construction delays caused by COVID-19.

Under Part 8A, we legislated for a universal extension of time of four months, or 122 days, for construction contracts.

Under Part 8B, we required the players in the value chain, from builders to contractors to sub-contractors to co-share additional costs for delays also due to COVID-19.

Under Part 8C, developers who face construction delay can seek relief on the date of delivery of possession. We also provided for the co-sharing between developers and purchasers of the out-of-pocket costs incurred by purchasers where developers are not able to deliver the units by the committed delivery date due to delays caused by COVID-19.

We are working closely with industry partners to get the sector to get back on its feet.

I am pleased to share that almost all our construction S Pass and work permit holders have returned to work, although the numbers have decreased by about 15% in January 2021 compared to the year before.

The last infection case for construction S Pass and work permit holders in our dormitories was more than 30 days ago.

Construction activities at the worksites have largely resumed, to approximately 85% of pre-COVID-19 levels.

Construction demand is expected to rebound to some extent in the next few years. The Building Control Authority (BCA) estimates that $23 billion to $28 billion worth of projects will be awarded this year.

However, despite this steady progress, firms in the built environment sector continue to face significant pressures in the near term.

Construction projects have to manage with lower productivity on site due to safe management measures, which are needed to keep our workers and the broader community safe.

Firms face shortages of manpower and labour cost increases as we need to continue to limit the inflow of migrant workers into Singapore for good public health reasons.

BCA and MOH are reviewing the safe management measures at worksites, taking into account the need to balance the risk of on-site transmission and other considerations including the vaccination of our migrant worker population.

We have commenced COVID-19 vaccination for migrant workers. To date, 97% of some 9,000 COVID-19-naïve workers from five largest dormitories have received their first dose of vaccine. A further 30,000 migrant workers across 30 dorms are scheduled to get their first dose in the coming weeks.

The take-up of the vaccination has been encouraging and we aim to make significant progress by the end of the year, in lockstep with the nation’s vaccination programme.

Therefore, Mr Speaker, Sir, while the sector is slowly getting back on its feet, we are not out of the woods yet. It is in this context that I am introducing the COVID-19 (Temporary Measures) (Amendment No 2) Bill.

First, the proposed amendments to the Act will allow us to extend the existing reliefs for the sector provided under Part 2 of the Act. This will have the effect of extending the period for cost-sharing in construction contracts under Part 8B of the Act.

Second, the proposed amendments will also allow us to better administer Part 8C of the Act.

Let me step through these in turn.

First, for construction and supply contracts, we intend to extend the temporary relief measures for a period of six months, to 30 September 2021.

The construction industry has long and complex value chains, with multiple tiers of sub-contracting. Given the cascading chain nature of construction and supply contracts across the multiple tiers, an expiry of the relief could result in a wave of contractual disputes, especially during this time when the sector is still stabilising.

If firms embroiled in legal disputes are forced to wind up, this could lead to a domino effect where multiple firms along the value chain would wind up successively. This ripple effect could result in further construction delays or uncompleted projects.

Therefore, in consultation with industry partners, we believe that it is prudent to extend this cost-sharing relief under Part 8B for another six months.

Contractors who incur additional cost as a result of COVID-19 would also benefit from this extension.

However, the cost-sharing under Part 8B will still remain at 50% of the qualifying costs and will still be subject to a monthly cap of 0.2% of contract sum per month, and a total 1.8% of the contract sum. That is for construction and supply contracts.

For options to purchase and agreements for the sale and purchase of residential, commercial and industrial properties with developers, including those with HDB, we intend to extend the temporary relief measures under Part 2 for a further period of three months, to 30 June 2021.

This will provide more time for developers and purchasers who are unable to perform any of their contractual obligations to negotiate and reach a compromise.

In particular, in view of the impact of the COVID-19 situation on the economy, it will assist purchasers who require more time to sort out their finances and make their payments.

Clause 2 of the Bill will amend the sunset period under Part 2 of the Act, so that the reliefs under that part can subsist beyond the sunset date of 19 April 2021.

Specifically, we propose to extend the sunset period for another year, until 19 April 2022.

This will allow for the extension of the relief periods for construction and supply contracts, options to purchase, and agreements for the sale and purchase of properties beyond the current sunset date of 19 April 2021.

Next, this Bill also introduces a number of amendments to Part 8C of the Act to facilitate the implementation and the delivery of the relief when it comes into operation in a few months.

We have been working very closely with the relevant agencies and industry stakeholders on the operational details.

We want to ensure that the process of tapping on the relief is efficient for both the purchasers and the developers, given that this will be in effect for a longer period as compared to the other reliefs under the Act.

Let me first briefly recap the Part 8C relief before dealing with the specific amendments.

Part 8C is intended to assist developers who are facing construction delay due to COVID-19 and are unable to meet the committed delivery date of possession to purchasers.

We have been encouraging developers who are unable to meet the date of delivery of possession to first discuss with their purchasers and come to a workable and mutually agreeable arrangement.

For developers who are unable to come to an arrangement and require help, Part 8C will then allow them to extend the date of delivery of possession up to the universal extension of time provided for construction projects which is four months, or 122 days. Should the developer need relief of more than 122 days, they can apply to an assessor for a determination of the length of construction delay that is caused by COVID-19.

And where the developer has extended the date of delivery of possession, purchasers may seek reimbursement from the developer for certain out-of-pocket expenses incurred due to the delay in delivery of the unit, up to a specified cap. This allows for co-sharing of such costs between the developer and the purchaser and if there are any disputes, parties can apply to an assessor for a determination. The assessor will consider the facts of the matter and make a fair and just determination of the cost that the purchaser is entitled to claim from the developer.

Let me now just highlight the key amendments.

Clause 4 amends the Act to provide for the different manners in which the purchaser may claim and obtain reimbursement of qualifying costs. For example, after the amount has been determined, the developer can directly reimburse the purchaser, or the purchaser can offset the amount of reimbursement against any instalment or other payment payable by the purchaser to the developer under the affected agreement. This will provide more options for purchasers and developers to settle between themselves the reimbursement that is due based on what works best for them.

Clause 5 introduces a new provision to empower the Registrar of assessors to, on such terms as a Registrar of assessor thinks just, extend the period within which a person is required under Part 8C to do anything. There may be instances where parties have genuine exceptional circumstances for requiring more time to carry out an action in relation to the relief. And this provision gives the Registrar the flexibility to extend the time for these parties, if the extension is justified.

Clause 6 amends the Act to provide that the Minister is to appoint one or more authorised nominating bodies for the purpose of providing assessors to hear and determine applications. As Part 8C will be operational for a few years until the projects of all qualifying current contracts are completed, we can expect personnel changes amongst the assessors. Allowing the authorised nominating bodies the point assessors who satisfy the requirements prescribed will facilitate a more efficient management of personnel turnover.

Clauses 8 and 9 deal with miscellaneous matters relating to proceedings before an assessor, including subsequent determinations and the confidentiality of information and documents, and the making of regulations under this part.

Sir, let me conclude. The Built Environment sector builds our homes and workplaces, lays our essential infrastructure, like roads and utilities and develops our recreational and green spaces like malls and parks. An impact to the Built Environment sector goes beyond the stakeholders in the value chain and will affect other industries and Singaporeans in one way or another.

While the sector has been severely impacted with the onset of COVID-19, it has shown great resilience to get back on its feet. The Government is committed to partner the industry to ensure that the ecosystem continues to function, construction work continues to progress smoothly and we do not lose important industrial capabilities, even as we transform the sector. This Bill is an important part of this effort to ensure the sector stays on its feet and emerge stronger. With that, Mr Speaker Sir, I beg to move.

Question proposed.

3.20 pm

Mr Kwek Hian Chuan Henry (Kebun Baru): Mr Speaker, I fully support this Bill as it will go far to help our Built Environment sector, in its moment of greatest need. I spoke to a number of players in the industry and they voice appreciation for the Government's COVID-19 related support. These include controlling the pandemic despite all odds, reducing foreign workers levy during the height of COVID-19, pushing forward additional Government support projects, getting banks to provide much-needed support, proceeding to pay for some Government projects, even as constructions were delayed, and to this Bill today pushing for moratorium in legal actions arising from the delay.

The recent announcement to remove foreign workers levy during quarantine is also very welcomed.

Nevertheless, COVID-19 represents a big and complex crises for the industry. Beyond this Bill, it is necessary to arrest the manpower cost surge which has led to a dramatic increase in construction costs. This can be seen in the escalating costs of successful BTO construction tender bids from pre-COVID-19 days to today. The surging of manpower cost is, in turn, largely due to three factors: the cost of Safe Management Measures (SMMs), high attrition of assisting migrant workers and difficulty to safely bring in adequate replacement of migrant workers.

Let me go into the details. First, the cost of SMMs is unavoidable because it is the price of keeping COVID-19 under control.

Second, we are seeing higher worker attrition because many workers want to return home to be there for the family during COVID-19, while some workers went back, but could not return.

And some industry players also worried that after vaccination, some of our workers may leave Singapore and seek what they believe is greener pastures, given the widespread migrant worker shortage in other advanced economies.

Due to this higher natural attrition, a number of migrant workers, especially those in smaller firms, have asked for hefty pay increases in return for staying on. MOM has recently limited the number of workers that companies can poach from one another and this has reduced the pressure. But the real solution is to ensure the safe replacement of sufficient number of migrant workers.

And so that brings me to my third point, the challenge of bringing in replacement workers. The industry faces high quarantine cost of $2,400 per migrant worker, which has not decreased even as we move quarantine from hotels to dedicated non-hotel facilities. Despite the COVID-19 insurance, many firms fear the potential extra medical costs in a range of tens of thousands of dollars should any of the incoming workers suffer from severe COVID-19 symptoms. As such, while large companies working on projects of healthy margins and has the financial muscle and the cash flow to absorb this cost in the short run, we need to urgently resolve the safe replacement to help the rest of the industry along.

After discussing with some industry players, I would like to propose this. Given that a large number of general construction migrant workers come from countries such as India and Bangladesh, is it possible for the Government to work with the Built Environment sector to forward deploy resources in key cities in these countries, given that COVID-19 vaccination is proceeding very slowly in Asia. For example, can we run commercial processing centres in those cities that will give us full operational control to ensure that testing is done by vetted vendors? The workers who have passed the test or who have already acquired immunity can be immediately transported to Singapore safely. And once they arrive in Singapore, they can be immediately get tested and vaccinated during quarantine.

Mr Speaker, Sir, let me conclude. COVID-19 has brought upon an existentialist threat to the Built Environment sector. Decisive and effective Government action has put off the worst outcome for the industry. An extension of the temporary measures today is very much needed to give the Built Environment sector more time to achieve a soft landing.

Moving forward, the Built Environment sector is grappling with surging costs, which means higher construction costs for Singapore, diminishing margins for most part of the industry and increased risk of project delays and chain bankruptcy.

Even as we push for the Built Environment sector to achieve higher manpower productivity in the long run, it is necessary for us to do more to bring an adequate replacement migrant workers in the immediate future. And this will ensure that as much of the recent construction cost surge is transient rather than permanent. With that, I stand in support of the Bill.

Mr Speaker: Ms Sylvia Lim.

3.25 pm

Ms Sylvia Lim (Aljunied): Mr Speaker, I would like to seek some clarifications on this urgent Bill, particularly on Clause 2 and to the amendments to Part 8C of the Act.

First on Clause 2. Clause 2 extends the validity of Parts 1 and 2 of the Act for another year to 19 April next year. These parts were enacted to enable parties to apply for temporary relief from fulfilling contractual obligations affected by the pandemic. The proposed extension is a recognition of the ground reality that there are still many businesses and individuals which continue to suffer adverse impacts from COVID-19.

I note that the Government has decided, however, not to extend Part 3, which provides for temporary relief for financially distressed individuals and entities. To recap, Part 3 had among other things, raised the threshold for individual bankruptcy and corporate winding up from a debt of $15,000, to $60,000 and $100,000 respectively. It had also increased the time period to pay from three weeks from demand to six months. This Bill confirms that the provisions of Part 3 will end on 19 April this year as scheduled. Yet today, we still see individuals and businesses who are drastically affected by the COVID-19 restrictions from earning income to pay their bills. These include our residents who used to run excursion and catering businesses, who have so far been unable to pivot to other business models.

As we inch towards economic recovery, COVID-19 support programmes are being scaled down or stopped. However, economic recovery has been uneven across sectors. On this note, it will be most useful for the Government to explain why it decided that there was no need to extend Part 3 of the Act to give individuals and businesses continued breathing space from insolvency proceedings.

Next, I move to the amendments to Part 8C of the Act. Part 8C deals with the extension of the delivery date of property under sale and purchase agreements. The rationale for Part 8C remains sound. It enables developers, HDB and JTC to have more time to complete construction projects delayed by the pandemic. It also enables purchasers of units to claim additional costs incurred by the delays such as the cost of alternative accommodation.

Part 8C was enacted into law by Parliament in November last year under the COVID-19 (Temporary Measures) (Amendment No 3) Bill. From what I understand, Part C has not come into operation yet and I believe earlier the Minister of State did say it would be operational in a few months' time. I wonder why this is so since the amendments in November last year were brought to the House on a Certificate of Urgency. In comparison, the amendments relating to TraceTogether were brought to Parliament only in February this year and are already in force.

In addition, could the Minister explain why the amendments to Part 8C are being made even before the provisions become operational? I recall that at the November sitting, the Minister had assured Members that those provisions were drafted after wide consultations with the industry and were supported by the industry associations.

Next, I wish to make two observations about clause 8 of the Bill. I particularly welcome the new Section 39 OA, which provides for subsequent determination by an assessor based on new information. This is an important avenue to correct any injustice caused by an original determination, which was later proved to be unwise. Clause 8 also introduces a new section 39 OB which provides that parties coming for an assessment cannot be represented an advocate and solicitor unless special permission is given. Such a "no-lawyers-allowed" clause is not novel and is present in other legislation that aimed to provide low cost and less formal dispute resolution mechanisms. Despite the good intention behind this no-lawyers-allowed rule, I wish to point out that experience has shown that this can inadvertently lead to unfairness.

Residents who have gone through such hearings have highlighted to me that parties who are corporations have the advantage of sending their legally trained employees to represent the corporate entity, thus somewhat circumventing the no-lawyers-allowed rule. This has happened in the Employment Claims Tribunal and before the Financial Industry Dispute Resolution Centre or FIDReC. Corporate employers and financial institutions send their in-house counsel, who are not considered advocates and solicitors, while the employee or bank customer has to appear in his own capacity. This imbalance of knowledge and power has the potential to lead to an unjust outcome.

For this Bill, it is foreseeable that developers, HDB and JTC will send legally trained employees to present their cases in front of assessors, while the purchaser has to prepare his own case. I would like to ask if the assessors are alive to this risk of unfairness and how to address it.

Mr Speaker: Mr Louis Ng.

3.30 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, our construction sector has been suffering for the past year. Labour supply has been constrained, and cashflow has been tight. Some construction firms have already gone under, and the struggle is real for those still clinging on.

This Bill helps them. Those who have to pay will have more time to pay. Those who need to deliver will have more time to deliver. I thank MND for looking out for both sides.

Sir, I have two points of clarification for this Bill.

My first point is about what factors that went into deciding on this extension. Can Minister clarify what factors were considered before granting the initial four-month extension in November and now this six-month extension?

The construction sector does indeed need help. But a strong economic recovery must also be built on the rock-solid foundation of contractual obligations. One year after the start of the pandemic, we are granting a second extension of contract deadlines that is even longer than the first extension.

While I support these amendments, can I ask if MND has also studied the impacts to the companies the construction firms has been granted relief from? Are these companies also clinging on and will they go under due to these reliefs granted to the construction firms?

We have said that during this relief period, parties are encouraged to negotiate and resolve their difference in an amicable and mutually beneficial manner. Can I ask Minister what percentage of parties were able to resolve their difference in an amicable and mutually beneficial manner?

Further, I hope that MND can help shed light on a few questions.

First, can MND share what factors it considered in determining this particular course of action? Second, can MND share whether it will consider future extensions of the same nature and, if so, what factors it will consider before making such decisions?

Sir, I think no one in this House disagrees that we want to help our businesses survive. But we should also be concerned about the unintended side-effects of our decisions.

Singapore has always had a reputation as a business-friendly country. With this Bill, we might risk that reputation by again intervening with how contracts play out. It remains unclear whether there will be a third, a fourth and then, a fifth extension. I hope the Government will articulate a long-term plan for our construction sector that clarifies these doubts.

That brings me to my next point. My second point is about how MND and the rest of Government can help the construction sector bounce back on its feet.

This crisis is an opportunity for our construction firms to become more nimble. More than ever, they need to embrace automation, upskilling and other productivity-related initiatives. But such processes take time to implement. In the short run, our construction industry needs workers to fulfill the projects it has already committed to based on pre-pandemic labour conditions.

Therefore, I hope that MND works with other Government Ministries to create a temporary scheme, where employers can more easily rehire Work Permit and S Pass workers who have been repatriated to their countries in the past year.

MND has taken some steps in this direction by allowing workers that have previously obtained the necessary Skills Evaluation Certificate (Knowledge) test (SEC(K) test) qualifications in a particular trade to return and work in the same trade in Singapore, without retaking the test.

The unfortunate reality of COVID-19 is that many companies have shut down. During the painful months of circuit breaker and dorm lockdowns, many experienced workers did not manage to find new employers and were often repatriated rather than circulated back into our economy. These were workers with experience living and working here. They know the expectations, they know the environment. It is more efficient to rehire them than to roll the dice with new workers. But there is no easy way for companies to find and hire these workers.

MND and other Ministries should work together to reduce the obstacles to rehiring such workers.

We can also provide more help for companies to hire workers who want to remain in Singapore but whose company has decided to terminate their contracts and send them back to their home country. A temporary scheme to reconnect employers with such workers will be much appreciated by workers and employers, and it will help our economy.

Sir, notwithstanding my clarifications, I stand in support of this Bill.

3.35 pm

Mr Don Wee (Chua Chu Kang): Mr Speaker, I declare my interest as I have many corporate clients in the construction industry. In Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] COVID-19 has dealt a severe blow to our construction industry. Most construction projects have been delayed. In addition to developers and their employees, related suppliers, contractors and the blue-collar construction workers, even building owners, buyers, sellers and tenants have been affected. Many Singaporeans who anticipated their new HDB flats have had to delay moving into their new homes. The COVID-19 (Temporary Measures) Bill seeks to provide viable and reasonable solutions for all affected stakeholders.

I would like to ask the Minister, if HDB is the developer and a flat applicant is not able to move into his new home because his flat’s construction has been delayed beyond the legal completion date and he needs to rent a place elsewhere or pay the buyer of his old residence damages as he continues to stay there, is HDB liable for these extra rental and compensation costs?

Clause 3 of the Bill provides that the developer may only further extend the delivery date after the developer has already extended the original delivery date by a total of 122 days. I would like to ask how did MND derive 122 days? This 122-day duration is longer than the three months' circuit breaker period.

As for the assessors appointed by the Government, would the Ministry provide details about them, such as their backgrounds and professional credentials and how does the Ministry determine that they are independent?

Most main contractors will issue a bankers' guarantee to the developer in order to perform contractual obligations. Since the developers are allowed under the law to delay the projects, these developers should not file claims and lawsuits against sub-contractors downstream. Doing so will only heap additional burdens upon troubled SMEs. Can MND work with relevant commerce chambers and associations, and the Monetary Authority of Singapore (MAS) to inform the industry and banks here?

One way to prevent similar delays from happening in the future is to reduce reliance on foreign labour and supplies coming from overseas by improving productivity and upscaling domestic manufacturing capabilities to produce more Precast Concrete Building Components. I believe the Government is already working on these changes.

To prepare myself for the debate on this Bill, I had a chat with a successful "TowKay" (business owner), to understand more about the construction industry. I jokingly asked Mr Lee, "You are already so wealthy, despite the on-going challenges. Why are you still going after every tender and cent?" His reply was, "I have many mouths to feed."

Indeed, like our Government, many local construction owners have a strong sense of responsibility to take care of their employees, many of whom are sole breadwinners. According to the Labour Market Report, as of December 2020, there were about 116,300 Singaporeans and 288,700 foreigners working in the construction industry. I believe the Government will work with the industry and address the concerns so that our country’s infrastructure development will not be compromised. Notwithstanding my queries above, I support this Bill.

3.39 pm

Mr Vikram Nair (Sembawang): Mr Speaker, I declare my interest as a lawyer who advises on construction law and has clients in the construction sector.

I generally support this Bill. This Bill extends many of the interim relief measures that were provided to the construction sector to deal with COVID-19 for a further six months.

The construction sector has been hard hit. The freezing of borders and shutdowns in various countries have meant delays in supplies arriving from overseas. Locally, manpower constraints have been acute as it has been difficult to get workers from abroad, while workers located in Singapore have been prevented from working or delayed from working both by the general lockdown and safety measures as well as dormitory specific constraints. Labour costs have also risen as employers compete with each other for the limited available manpower.

Against hits backdrop, the Government’s interventions have provided an important lifeline for those in the construction sector. Extensions of time have been given for performance of obligations, which is vital because liquidated damages may kick in otherwise. The rights to call performance bonds have been limited, and effectively, the legislation has prevented parties from penalising counterparties who cannot perform because of COVID-19.

Generally, I think this is a well thought through Bill that tries to carefully share the burden of the losses arising from COVID-19. Absent legislation, I think it is likely to fall on the smaller players down the value chain.

I do have a few clarifications to ask the Minister of State.

One group that will suffer from delays in construction is the ultimate purchaser. To cushion the blow for these purchasers, there are provisions here permitting them to make claims against the developers for a portion of any additional rental expenses they may incur as a result of having to find alternative accommodation during the period of delay. Is the Minister of State able to share any data on how many purchasers have used this provision and what is the overall financial impact of these payments on developers would be?

Second, the aim of the legislation is to share the costs and losses across the value chain. I am interested to know how effectively this is being done in practice?

Third, while extensions of time are being given for project completion, payment is the lifeline of the construction sector and work is still expected to continue during this period. Is the Government aware of companies in hardship because they are expected to continue to work but are unable to receive payments in the meantime as a result of this legislation? This will typically apply to the main contractors and others who may be sandwiched. So, what will happen is the subcontractors who are below them, may be able to get extensions of time from delivering against their obligations; which means that the work the contractor higher up has to do to receive his payment, will not be complete. But this contractor higher up the value chain may have to pay other sub-contractors who had done their work.

I am just curious whether any larger contractors or contractors at the middle of the value chain have been facing hardship and may face further hardship as a result of this.

My suggestion to deal with this would be for developers and main contractors in turn to take a more reasonable approach in making payments to contractors lower down the value chain for partial completion of work, even if this means entire milestones may not have been completed as required under the contract. If this is not done voluntarily, then, further legislative intervention may be necessary to address this issue – otherwise, it is the parties in the middle of the value chain that may crack under pressure. Notwithstanding the points above, I support the Bill.

Mr Speaker: Minister of State Tan Kiat How.

3.43 pm

Mr Tan Kiat How: Mr Speaker, Sir, I thank the Members for their comments and support of the Bill. They have raised a number of issues and let me address them.

Mr Louis Ng asked about the impacts of the reliefs and our considerations for extension. Firstly, I have laid out some of the considerations in my Second Reading speech earlier and want to assure the Member that we recognise that the relief measures are interventions into private contracts. The sanctity of contract is fundamental for Singapore and a key aspect of the rule of law. Hence, this is not a decision we take lightly.

In this exceptional circumstance, we need to intervene to safeguard and preserve the capacity of our Built Environment sector, by supporting the entire value chain.

The industry has also consistently provided feedback to us that the on-going moratorium on legal proceedings during the current COVID-19 pandemic has proven very useful in helping the sector focus on staying on its feet.

Mr Ng also asked about the percentage of parties that have been able to resolve their differences amicably and in a beneficial manner.

For construction and supply contracts, there have been about 1,100 notifications for relief filed as of 19 March 2021. Of those, only about 118, or about 10%, eventually applied for an assessor’s determination. This suggests to us that the majority were able to come to some satisfactory compromise on their own about contractual obligations affected by COVID-19.

The relief provided under this Act, provides a framework for conversations to happen so that firms can amicably settle their differences and move the projects forward if they can do so.

Ms Sylvia Lim asked about Part 3 of the Act. To clarify to the Member, while the sunset period for Part 3 ends on 19 April 2021, nonetheless, the measures relating to insolvency in Part 3 had already lapsed in October 2020 as the prescribed period was from 20 April 2020 to 19 October 2020. These are exceptional measures that temporarily suspended creditors' rights to provide breathing room for financially distressed debtors to negotiate with creditors and pursue next steps, including for personal bankruptcy, the individual voluntary arrangement and debt repayment scheme; for corporate insolvency, out-of-court work-about schemes of arrangement, judicial management and simplified Insolvency Programme; for sole proprietorships and partnerships, the Sole Proprietor and Partnership scheme.

Such exceptional measures should be carefully monitored because the measures also affect creditors and therefore, flow of credit to other businesses.

There has been no significant increase in number of personal bankruptcy and corporate insolvency applications, comparing the figures for applications pre-COVID-19 and the post lapse of Part 3 measures in October 2020. We have been monitoring the situation and we will continue to monitor it.

Mr Henry Kwek and Mr Louis Ng brought up the immediate challenge of manpower shortage faced by the industry. And I agree with both Mr Henry Kwek and Mr Louis Ng that beyond the temporary relief measures, it is important to address this situation.

To alleviate the current labour shortage in the construction industry, we are working closely with MOM and MOH to progressively increase the number of incoming workers, but in a safe way to minimise the risk of COVID-19 transmission in our dormitories and into our wider community.

I thank Mr Kwek for his suggestion to set up commercial processing facilities overseas to enable testing. Indeed, there are many operational challenges that we need to overcome to ensure reliable testing overseas. But we are actively in discussion with industry partners, including the Singapore Contractors Association Limited, or SCAL, and we are looking at how we can enable and establish better upstream processes to enhance pre-departure testing for workers in source countries.

I also agree with Mr Ng that there is value to retain experienced workers in Singapore as much as possible.

However, as Mr Kwek has pointed out, there are also workers who want to go back to their families and there are indeed workers who went home and could not return or would not like to return.

But however, we are trying to keep as many of our workers in Singapore here in Singapore. In this regard, SCAL, with the support of MOM and BCA, has set up a Manpower Exchange, or SCMX for short, to facilitate a change of employer for construction workers, for workers whose contracts with their existing employers have either expired or terminated. This will help us retain the experienced workers who want to remain in Singapore.

On Mr Ng's suggestion to facilitate the re-hiring of workers who have returned to their home countries and want to come back to Singapore to work, we are very pleased to have them back in Singapore. And employers know who they are and have applied for them to re-enter into Singapore.

However, the constraint is not this. The constraint now and the challenge we are facing is how to allow these workers to come back, to re-enter Singapore in sufficient numbers to meet the industry's manpower needs, while minimising COVID-19 importation risks, so as to safeguard public health. We are working closely with MOM and MOH on these aspects.

Mr Vikram Nair rightly pointed out that cashflow is the lifeline of the construction industry. BCA monitors the progress payments in the industry closely and receives frequent feedback from key developers and contractors. This is also why we need to extend the reliefs under the Act so firms do not get engaged in long-drawn litigations at this point in time.

During the circuit breaker period, most works were suspended and contractors received no progress payments. What we did to facilitate the cashflow was for Government agencies – and some private developers have also followed suit – to provide advance payment to help contractors tide through this challenging period. For public sector projects, we have provided at least $665 million of advance payment in total. The Government has also provided financial support, including waivers and rebates of the foreign worker levy, and subsidies for Rostered Routine Testing, or RRT for short.

Mr Vikram Nair also asked about co-sharing of additional costs for delays due to COVID-19 under Part 8B and how easy it is for such prolongation costs to be shared.

To facilitate such claims, BCA and SCAL have jointly developed a claims template and detailed guidelines, which are available on BCA's website.

In addition, BCA has also been working with SCAL and other Trade Associations and Chambers, to streamline the claims process. This includes introducing an accepted method to estimate the delays to projects due to COVID-19. We will continue to work with the various stakeholders, including SCAL and other Government agencies to expedite the claims process.

Lastly, under Part 8B, contractors can also seek recourse for cost-sharing amounts that are due but not paid, through the existing adjudication mechanism under the Security of Payment Act, or SOPA, which the industry is very familiar with.

Mr Don Wee suggested that we inform the industry and banks on extension of period where developers are prevented from calling on the performance bonds of contractors. Mr Wee may be pleased to know that the provisions for deferment of call of performance bonds is already provided for in the Act. MND and BCA have been in close contact with the industry and we have updated the industry on extension of arrangement under the Act, including through a press release.

Mr Don Wee also brought up the impact on the construction industry and it has affected home-buyers whose premises under construction have been delayed and who have to make alternative arrangements. And Mr Vikram Nair has also asked about the extent to which these purchasers have been affected.

The number of purchasers seeking reimbursement after Part 8C comes into operation in a few months will depend on the number of projects delayed and whether developers need and choose to tap on this relief. It is in the interest of developers for projects to be completed in a timely manner without having to tap on the relief.

Currently, based on updates from developers for projects expected to be completed in 2021, most are still on track to meet their respective dates of delivery of possession.

We have also been encouraging developers who are unable to meet the date of delivery to first discuss with their purchasers and come to a workable and mutually agreeable arrangement, as this may result in a better outcome for both parties.

Let me assure Members that even as we provide relief to developers, we recognise that purchasers face challenges on their end as well, and we have structured Part 8C accordingly.

Under Part 8C, developers who face construction delays due to COVID-19 and require relief may serve a notice for an extension of the delivery date by up to four months, or 122 days, which is aligned with the period in Part 8A.

Mr Don Wee asked why four months, why 122 days. This was also shared during the Second Reading of the COTMA Bill. It is because construction work stopped for approximately two months due to the circuit breaker period, and works were further delayed by at least another two months as all dormitories were only cleared in early August 2020. Therefore, adding two months together, two plus two, that is four months and 122 days.

Should a developer need further relief for the delivery date to be extended by more than 122 days, they can apply for an assessor's determination on the length of construction delay, that is, to a material extent, caused by COVID-19.

Mr Don Wee also asked about whether this relief will be applied to developments where HDB is the developer. I would like to share with Mr Wee that for HDB flats, purchasers can similarly claim up to 70% of the prescribed LD formula, which will be aligned with that of the formula stated in the Housing Developers Rules for private residential properties. This allows for co-sharing of such costs between the developer and purchaser. And if there is any dispute over reimbursement, both parties can seek an assessor's determination.

To also to reply Mr Don Wee's query regarding the assessors, similar to Part 2, the assessors making the determinations under Part 8C will be professionals with qualifications and working experience in the relevant fields, such as law, accountancy, finance, or building and construction. There will be mechanisms put in place to ensure that assessors declare any conflict of interest upfront.

Ms Sylvia Lim asked why Part 8C is not in operation yet and why amendments to Part 8C are being made at this juncture.

There are many urgent Parts to the amendment that we moved in November last year, including Part 8, Part 8A and Part 8B and we have made sure that those Parts are in operation as quickly as we can.

For Part 8C, we have been in active discussion over the last few months with the industry and partners that will run and operationalise the relief framework. And we are making amendments now as we incorporate their feedback in preparation for the operationalisation. We aim to streamline the process and help it be implemented more smoothly and more efficiently, given that it will be in effect for a longer period of time as compared to other reliefs under the Act.

Ms Lim will be pleased to know that the relief will apply to all affected agreements for the sale and purchase of housing, commercial and industrial property that meet the criteria stated in the Act, regardless of when Part 8C comes into operation. Hence, developers will be able to tap on it after it comes into operation in a few months and purchasers will be able to seek reimbursement then.

Ms Lim also asked how we will address the issue of fairness, given that legal representation will be not be allowed as a default under the assessor framework and she spoke in support of it. As with other Parts of the Act, the assessor mechanism is designed to provide for a quick and effective practical solution to disputes. The overarching role of the assessor is to make a decision that is just and fair in the circumstances and they have the power to ask for the appropriate information and documents from both parties, including information or documents not sought for by either party to achieve this.

Ms Lim raised the concern that a company may be represented by a legally trained employee.

In the first instance, we hope to minimise the need for developers and purchases to even require an assessor's determination and we will lay out clearly the qualifying costs that purchasers will be able to seek reimbursement for to make the process more efficient and easy for everyone. The Member will also know that in the ordinary case, if the matter were to go to Court, the company would have a right to legal representation.

Therefore, we have taken the position that for assessments, companies cannot be represented by lawyers. But there is a difference if you say that no one who is legally trained should come before an assessor. What if the individual purchaser himself is legally trained? The point is that the assessment framework weeks to give relief on very simple facts when there would otherwise be no relief. So, simple process, simple facts. In the first instance, we hope to minimise the need for them to come before an assessor to seek determination.

Mr Speaker, in conclusion, the amendments before the House today seek to provide continued support to the Built Environment sector to ride out the lingering impact of the pandemic. I thank Members and the industry stakeholders for their strong support for these measures and to continue to support the sector for staying on its feet.

Mr Speaker: Clarifications, if any? Alright.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Tan Kiat How].

Bill considered in Committee; reported without amendment; read a Third time and passed.

Mr Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.20 pm.

Sitting accordingly suspended

at 4.00 pm until 4.20 pm.

Sitting resumed at 4.20 pm.

[Mr Speaker in the Chair]