COVID-19 (Temporary Measures) (Amendment No 3) Bill

Order for Second Reading read.

7.43 pm

The Minister for National Development (Mr Desmond Lee): Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time."

Madam, I will first set the context for this urgent Bill before going through its key features. I thank Members for your patience this evening.

Our construction industry continues to face significant headwinds due to the COVID-19 pandemic.

While most construction work has resumed since August last year, the inflow of migrant workers who form the main bulk of the workforce has remained constrained due to the global impact of the pandemic.

We have recently tightened our border control measures with a number of countries, including Bangladesh and India, which are our main sources of construction Work Permit holders. While this was necessary to safeguard public health, it has made the shortage of manpower in the sector even more severe.

Compared to pre-COVID-19 levels, the number of construction Work Permit holders has dropped by about 15%, and the number is projected to fall in the months ahead given the on-going COVID-19 situation.

In tandem, construction manpower costs have been rising. Based on MOM's data on construction Work Permit holder salaries, median wages in March this year were 15% to 30% higher compared to pre-COVID-19 levels due to competition for the limited supply of workers within the sector. This has affected both new as well as on-going projects.

We have also implemented various Safe Management Measures to keep workers safe and reduce the risk of COVID-19 transmission. These are important public health precautions, but they also inevitably impact productivity. This, together with the on-going manpower shortage, has, unfortunately, led to project delays.

For example, we had previously shared that more than eight in 10 of on-going HDB BTO projects have been delayed by about six to nine months beyond the Estimated Completion Dates originally indicated to flat owners during project launches. Barring any unforeseen circumstances, we are expecting a further delay of three months, arising from the recent border measures. We are faced with a difficult balancing act – the more we need to tighten border measures for everyone’s safety, the greater the impact will be on construction timelines, on projects and on home buyers.

We had, therefore, intervened significantly since last year to assist the many stakeholders across the value chain that have been affected by rising costs and delays. Let me outline some of these.

For construction firms, we introduced a $1.36 billion Construction Support Package last year to help our contractors bear part of the additional costs they had to incur due to construction delays and Safe Management Measures. We had also assisted firms with Foreign Worker Levy rebates and waivers, as well as wage subsidies via the Jobs Support Scheme or JSS, to relieve some of their burden from manpower costs and help keep local jobs. Under Part 8 of the COVID-19 (Temporary Measures) Act (COTMA), we established a mechanism for firms to seek relief from additional rental costs that are incurred due to construction delays caused by COVID-19. And under Parts 8A and 8B of COTMA, we legislated a universal extension of time of four months and mandated the sharing of non-manpower prolongation costs between project parties.

For developers, we had earlier provided a 12-month extension of the Project Completion Period and Additional Buyer’s Stamp Duty remission timelines for completion, to account for delays due to COVID-19. Part 8C of COTMA will also allow developers whose projects face construction delays to seek relief on the date of delivery of possession.

For home buyers, Part 2 of COTMA prohibits developers from withholding or forfeiting any part of the booking fee paid by home buyers under the Option to Purchase during the relief period, or terminating agreements for sale and purchase of the property because the home buyer was not able to make payment. We also capped the late payment interest and charges under agreements for sale and purchase of property, to protect home buyers. In addition, under Part 8C of COTMA, where the developer has extended the delivery date, home buyers may also seek reimbursement from the developer, up to a specified cap, if they incur certain out-of-pocket expenses due to a delay in delivery of the unit by the developer. For HDB flat buyers, HDB has been progressively updating home buyers who have been affected, on the revised completion dates. For those who are unable to make alternative housing arrangements, HDB has assisted them with Interim Rental Housing flats.

Now, the manpower situation will be further exacerbated by the recent tightening of our border measures with Bangladesh, India and other countries. As both Ministers Lawrence Wong and Gan Kim Yong have explained earlier today, we have to tighten our border controls to better protect Singapore from heightened COVID-19 risks. And we should expect these stringent measures to be in place for some time, given the worsening situation overseas.

In response, we have recently announced more support measures to help the construction industry.

First, we have granted an additional 49-day Extension of Time (EOT) for eligible public sector construction projects, on top of the 122 days or four months of EOT already provided under COTMA last year on a universal basis. This gives contractors more time to complete their projects.

Second, contractors working on eligible public sector projects with an awarded contract sum of up to $100 million will receive 0.1% of their awarded contract sum for every month of delay as payment for non-manpower related qualifying costs under COTMA. There is no need to provide further detailed substantiation for their claims.

Third, we have increased the existing Foreign Worker Levy rebates for Work Permit holders from $90 per worker per month to $250 per worker per month, for the period May to December 2021. Measures such as these will help firms to cope. But the crux of the current problem is limited inflow of workers.

Hence, fourth, we will temporarily allow new PRC construction Work Permit holders to enter Singapore to work first and take their skills certification tests locally, instead of in China. This will allow firms to continue bringing in workers for their projects even though some Chinese Overseas Training Centres had halted operations due to the pandemic.

In addition, we have been proactively working with industry associations and firms to explore other ways to resume the inflow of construction Work Permit holders from other source countries safely. We will continue to work with them on additional measures to help alleviate the tight labour situation.

In January this year, we had also set up a task force, led by BCA and comprising Government agencies, consultants, as well as trade and professional associations representing developers, contractors, quantity surveyors and architects. The task force is studying how to enhance our standard construction procurement contracts in both the public and the private sectors to mitigate the impact of the current pandemic as well as future crises. For example, we have received feedback that contractors have been buffering for risks in their current tender bids for uncertainty, which has resulted in an increase in tender prices for new contracts. This is understandable as they are worried about unanticipated cost increases due to unexpected developments, twists and turns, during the course of the pandemic.

Our new construction contracts ought to enable more equitable risk and cost sharing during pandemic events and crises of this nature. Everyone along the value chain will need to step up and share the burden of uncertainty and help one another get through these challenging times together.

At the same time, there is still a need to provide support for existing construction projects, where parties may not have adequately priced in the unexpected increase in foreign manpower costs. That is why we are introducing the COVID-19 (Temporary Measures) (Amendment No 3) Bill this evening.

The Bill seeks to facilitate sharing of the increase in foreign manpower costs between project parties. This is to ensure that no one single stakeholder group in the construction industry bears a disproportionate share of the burden imposed by COVID-19.

Let me now take Members through the key features of this Bill.

Clause 3 of the Bill introduces a new Part 10A to COTMA. This provides a relief framework that will allow parties, such as contractors, to apply to adjust the contract sum for their projects, to take into account increases in foreign manpower cost due to COVID-19.

The new section 79B defines the scope of the contracts covered by this framework.

First, it will apply to contracts for construction works. These are contracts of longer duration that generally involve structural works and are most likely to be affected by the foreign manpower crunch.

Second, it will apply to construction contracts entered into before 1 October 2020. Parties may not have fully priced in foreign manpower cost increases before this date, as there had been substantial Foreign Worker Levy waivers and rebates provided by the Government up to that point.

And third, it excludes contracts that have been completed or terminated.

The new section 79C sets out the scope of the relief. This specifies the period subject to relief, which will be from 1 October 2020 to 30 September 2021, or any extended date as may be prescribed, to tie in with the current end points of relief periods under Part 2 and Part 8B of the Act. It also makes clear that the purpose of the adjustment is to take into consideration the increasing foreign manpower costs of Work Permit holders incurred due to COVID-19 during the relief period.

Additionally, it states that a party must have made a reasonable attempt to negotiate a contract sum adjustment with the other party, before he can apply for an Assessor to determine the adjustment.

This is an important point. Construction projects involve many parties, often in long interlocking contractual value chains, and if one goes down, the entire project may be put at risk. Moreover, many of the developers and contractors in the construction sector have long-term relationships. At the end of the day, all stakeholders are part of the same built environment eco-system and, on a project, all parties seek to deliver on that project. And for this eco-system to thrive and grow, stakeholders need to step up to help one another during these challenging times. We encourage all parties affected by the pandemic to negotiate with each other in good faith, before triggering the adjudicatory process set out in this Bill.

We have, anecdotally, seen such "give and take" in the sector already. For example, some developers we know have given their contractors an extension of time beyond what had been mandated in the existing COTMA for the completion of on-going projects. Some have also provided advanced payments and increased the frequency of progress payments to aid contractors’ cashflow and to keep projects going.

The new Division 2 of the Bill sets out the processes of the relief framework.

Section 79F details how a party can apply for an adjustment to the contract sum. For example, parties who wish to seek relief must apply to the Registrar to appoint an Assessor who can then determine the adjustment.

The new section 79G explains how an Assessor will determine an adjustment. For example, the Assessor must seek to achieve an outcome that is just and equitable in the circumstances of the case.

The Assessor must also consider matters and principles that will be prescribed in the subsidiary legislation. For example, in arriving at a just and equitable decision, the Assessor should take into account all the facts, including the loss suffered or benefit obtained by any contractual party, such as levy rebates. Mdm Deputy Speaker, allow me to say a few words in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] To prevent COVID-19 from spreading and to safeguard public health, the Government has to strengthen border controls. Because of that, the construction industry is facing a very severe foreign manpower shortage. The Government has already put in place various measures to address the manpower shortage and to support construction firms. These include the recent increase in Foreign Worker Levy rebate and further extension of time for eligible public sector construction projects.

At the same time, we are aware that there is a need to provide support for existing construction contracts where parties may not have adequately priced in this unexpected increase in foreign manpower cost for their construction works.

The proposed amendments to the COVID-19 (Temporary Measures) Act aim to allow parties, such as contractors, to apply to adjust the contract sum for their projects in view of the foreign manpower cost increases.

An assessor will examine each case and determine whether the contract sum needs to be increased. However, contractors must first try to negotiate with their clients before applying for this relief. I call upon all parties to negotiate in good faith before triggering this process.

(In English): Madam, I have spoken about many of the measures that the Government has implemented to support our construction industry through this pandemic.

But the reality is that these are just stop-gap measures to try to staunch some of the bleeding. They are not sustainable in the long run. That is why we want to work with the construction industry to press on with on-going efforts to transform the sector and accelerate the pace of change, even as we put in place measures to support the industry during these difficult times.

This latest disruption in inflow of migrant workers has shown how vulnerable the construction industry is, because of our over-reliance on low-cost migrant workers. We must build greater resilience in our sector, create more good, productive local jobs and move decisively away from manpower-intensive construction methods. We have already started this transformation some time back, with the launch of the Construction Industry Transformation Map in 2017.

At MND's Committee of Supply debate in March this year, we had announced a suite of initiatives to partner the industry in accelerating the pace of transformation.

For example, we will adopt a value chain approach to drive transformation through the new Growth and Transformation Scheme. The scheme recognises that the construction industry works through value chains. It will, therefore, support alliances of firms all along the value chain, from developers and consultants to builders and contractors. Each alliance will develop a business plan to achieve ambitious outcomes in productivity and digitalisation. This would be through the use of productive methods of construction, including Design for Manufacturing and Assembly (DfMA), and technology, such as Integrated Digital Delivery, or IDD, as well as efforts to enhance sustainability, workforce development, including the creation of local jobs, business growth and strategic collaboration.

This alliance approach seeks to uplift the entire value chain because, given the heavy interdependencies between different segments of the value chain in construction, it is difficult for any one firm to effect significant transformation entirely on its own. We plan to roll out the Growth and Transformation Scheme with a few alliances first, starting in the second half of this year.

We have also extended the Construction Productivity and Capability Fund, or CPCF, by one year until March 2022, and will maintain the enhanced co-funding support of 80% under the Productivity Innovation Project, or PIP scheme. This will support our industry in its recovery from COVID-19 and help our firms minimise disruptions to their operations by leveraging DfMA and IDD technologies and other innovative, productive processes.

In addition, we will review our foreign manpower levers for the construction sector. As previously announced, we intend to remove the Man-Year-Entitlement (MYE) framework in the near future and replace it with a system that incentivises more productive off-site work. We are also studying the reduction of the construction Dependency Ratio Ceiling, or DRC, to support more manpower-lean construction. We will continue to consult our industry partners before making any major moves.

Mdm Deputy Speaker, let me conclude. This Bill will facilitate more equitable sharing of the increase in foreign manpower costs brought about by COVID-19 amongst parties to existing contracts. Taken together with our other measures, it will help alleviate the significant stresses that the construction industry is currently facing due to the manpower crunch.

But even as we deal with these near-term challenges, we must keep our eyes on the future. We will continue to work with the industry to quicken the pace of transformation. These structural changes will be painful, but they are necessary to ensure that the industry as a whole can emerge more resilient and more productive from this crisis. Mdm Deputy Speaker, I beg to move.

Question proposed.

Mdm Deputy Speaker: Mr Pritam Singh.

8.04 pm

Mr Pritam Singh (Aljunied): Thank you, Mdm Deputy Speaker. The construction sector, like many others, has been hard hit by COVID-19. This Bill seeks to provide relief for businesses undertaking construction works under construction contracts that have been affected by a rise in foreign manpower salary costs. This is a real concern for the sector.

According to some construction bosses, even as the Government has rolled out a number of assistance schemes and levy waiver since the onset of COVID-19, the situation, especially for smaller sub-contractors, has been difficult, disruptive and, for some, even desperate. And some are at the risk of going out-of-business.

Earlier on during Question Time today, I spoke of the difficulty of securing entry passes for their foreign workers for many contractors prior to the latest spike in the COVID-19 cases, resulting in significant operational unpredictability. I asked the Second Minister for Manpower about reimbursement of IPA fees and opening up more non-traditional source countries from where foreign workers can be recruited from as a way to moderate the impact of COVID-19 on businesses in this sector.

Mdm Deputy Speaker, while the Workers' Party is supportive of the assistance this Bill will provide for the construction sector, as of now, its impact on the public is at best unclear and, at worst, could potentially be very significant for some contracting parties.

I note that this Bill will cover contracts to build residential units, including existing contracts to build HDB BTO flats. Can the Minister confirm how any adjustment in the price of HDB contracts with builders would impact home buyers? Would they be at risk of upward price adjustments?

In addition, many public sector projects would also see a hike in construction costs arising from this Bill. In the same vein, I would like to ask the Minister what this would amount to and its impact on the Government's Budget. Separately, has the Ministry considered the impact of the Bill on Town Councils and whether it would be providing assistance to them?

Madam, in my discussions with some Qualified Persons, or QPs, and consultants over the weekend, it was made known to me that a small number of contractors are citing problems with meeting project deadlines because of COVID-19 while, at the same time, tendering aggressively and securing contracts for new projects. Earlier this year, the Minister, at a seminar organised by BCA and REDAS, confirmed that construction contracts for the built environment sector are expected to grow to between $23 billion and $28 billion in 2021 as the sector recovers from the impact of the COVID-19 pandemic. This was up from the $21.3 billion worth of projects awarded in 2020, even as that figure fell by $10 billion owing to the pandemic.

Mdm Deputy Speaker, it would be important to note that the sector comprises construction companies of varying sizes, from big players to small-time subcontractors who could all potentially rely on this Bill for relief. To that end, it would undermine the purpose of this legislation if some companies, particularly larger ones, cite COVID-19 as a reason for higher foreign manpower costs resulting in increased cost for contracting parties or even the public, while at the same time deploying foreign manpower to start on new projects even as their contracts that predate the 1 October 2020 are allowed to proceed slowly, when they may instead be completed forthwith.

Madam, while it could be unrealistic to expect construction companies to throttle back on bidding for new projects in order to rely on the relief legislated by this Bill, I hope the Minister can acknowledge this point so that Assessors under clause 79(e) can carefully consider applications for relief made by companies holistically across all the projects undertaken and not just for the specific contract for which relief is sought.

In conclusion, Mdm Deputy Speaker, undoubtedly, the construction industry has borne a significant brunt of the COVID-19 restrictions for the past year and I support measures to help them cope. However, rewriting a contract price to one that was not initially agreed to by the parties is a drastic intervention that must be exercised with utmost care.

Mdm Deputy Speaker: Mr Yip Hon Weng.

8.08 pm

Mr Yip Hon Weng (Yio Chu Kang): Mdm Deputy Speaker, the measures proposed show the Government's responsiveness in addressing the challenges facing Singapore during the pandemic. The construction industry has a significant impact on our economy. I will make three points.

First, Mdm Deputy Speaker, we need to continue to help the industry with labour costs. I would like to ask if the current Job Support Scheme (JSS), which is an important lifeline for employers, can be enhanced to help them to tide over this period.

It is good to know that the rebate for each Work Permit holder in the Construction, Marine and Process sectors will go up from $90 to $250 per month. Will the Ministry consider cutting the foreign worker levy? Labour costs have doubled. For example, I am told that the cost of employing a general worker is now $150 per day and a tiler is now $250 per day. With the current labour crunch, one can foresee staff poaching between companies, which would invariably add on to the cost.

Can the Government consider more measures to help contractors to meet their higher overheads? Will there be a further review to assist the industry?

Second is to give contractors more breathing space on their project completion schedule. Currently, workers are subject to many screening measures and movement restrictions. All these measures affect work planning and execution, quite apart from the impact on the workers' morale, many of whom are already stressed. Ultimately, contractors are facing a candle that is burning on both ends. While they are scrambling for workers, they are also facing the rising cost of raw materials, which are going up by 30% to 40%, as the projects drag on.

Third, we hope that the Ministry can get the buy-in of developers and Government agencies, to understand the difficulties faced by the construction companies. Contractors are just as anxious to get their jobs completed, as are the developers and the various Government agencies overseeing public projects.

The closure of travel from the traditional labour markets is like denying water supply to runners taking part in an endurance race in the desert. Government agencies are using the BCA template and agencies are pressing the contractors to meet their deadlines. This is almost oblivious of the dilemma facing the construction industry.

There has to be a coordinated approach to this whole problem, besides just giving financial support to contractors. These agencies managing public projects must also review their contract terms.

In conclusion, Mdm Deputy Speaker, the measures in the Bill will help solve some of these issues facing the construction industry. But we can do more. I stand in support of the Bill.

Mdm Deputy Speaker: Assoc Prof Jamus Lim.

8.11 pm

Assoc Prof Jamus Jerome Lim (Sengkang): Mdm Deputy Speaker, this third suite of proposed amendments to the COVID-19 (Temporary Measures) Act of 2020 is aimed at providing additional flexibility for contracts pertaining to construction works affected by cost escalations resulting from delays and restrictions imposed because of COVID-19 management measures, and allows them to be renegotiated.

I wish to offer just three brief points of intervention. The first two are of a more practical nature about the scope of coverage for this set of amendments and whether there are better ways to design our labour exchange. The third point is of a more fundamental nature about the productivity, or lack thereof, in our construction industry.

First, while I understand that the construction sector has been the most severely affected by the COVID-19 restrictions and that construction projects tend to be the sort where cost projections can be most rapidly invalidated by changing conditions, one is, nevertheless, left to wonder why other sectors with large numbers of non-traditional source (NTS) workers were not included in the scope for contract renegotiation. After all, in operating our Town Councils, we are also aware of the heavy reliance of our contractors on NTS workers in our conservancy operations. Agri-tech and certain process industries also rely relatively heavily on foreign worker inflows.

While I recognise that these are comparatively smaller sectors, it is unclear why these have not been considered for additional support, even if they may be similarly afflicted. It strikes me as more sensible to allow for the coverage of these amendments to apply to all firms that are able to demonstrate harm rather than by economic sector per se.

Second, and relatedly, I am wondering about the current efforts of this Government to ease the reallocation of workers already in Singapore between firms. During the round-up speech on the previous set of amendments to the Bill, Minister of State Tan Kiat How referred to the establishment of a SCAL Construction Manpower Exchange or SCMX, meant to ease the transition of workers from one employer to the next. I fully support this idea; not least because it promotes greater efficiency, but also because it serves to further alleviate the risk of the need to constantly introduce new workers, some of whom may inadvertently harbour the virus even after serving the necessary quarantine protocols, as we have seen demonstrated in recent times.

I wonder if the Ministry would be willing to share an update first on the status of the SCMX thus far.

Ultimately, my concerns are about the success of the SCMX in practice. Employers who subsequently lose contracts may see a competitive reason to send their workers back, rather than avail them to the exchange. Indeed, in the second half of 2020, we lost some 41,500 workers due to expiring permits.

Thus, while they may well save on repatriation costs if they were to relinquish their workers, firms may feel that not releasing their NTS workers could damage their competitors' viability. And the threat of doing so may further favour their own position as incumbents since only they have a guaranteed pool of workers.

While workers may easily request a transfer at the moment as long as they have the employer's agreement between the 40th and 21st day prior to the expiry of their permit, some employers could simply choose to renew the permit first, then subsequently cancel the permit less than three weeks prior to the original end date.

Anecdotally, we have received feedback that such practices are far from uncommon. I am left to wonder if the Ministry has considered how to better refine the system.

My Aljunied GRC colleague, Mr Gerald Giam, had previously suggested to this House that workers should be permitted to request a transfer as early as the 56th day, the same time that the employer is required to renew.

Another suggestion that I am presenting today is to mandate the employers who wish to otherwise send their NTS workers home, to instead release them directly to the exchange. The Ministry can then play the role of match-maker, absorbing workers into a roster. The firm giving up workers will place their repatriation costs into an escrow account to be managed by the Ministry. These funds, net of costs for those workers who wish to be returned home, will be released to the firm if another company subsequently hires the workers. Hiring companies, in lieu of paying for the search, travel and quarantine costs of new workers, can instead be tasked with financing the short-term room and board for in-situ workers.

My third point, Mdm Deputy Speaker, concerns the construction sector in general. It is well-known that for the productivity challenges that we have faced in our economy, the construction sector has been even worse off. While some have objected to this characterisation, most observers, including reports issued by academia, policy-makers and even the industry itself, have recognised how the sector lags in terms of productivity.

The justifications have been varied: from purported low skills of workers, especially related to a large transient foreign worker pool, to inadequate project planning, to inadequate mechanisation.

One common theme runs through these many explanations. And it is simply this: with steady access to a large pool of foreign construction workers, most paid at very low wages, it is unsurprising that firms rationally choose to substitute capital with labour, and skilled workers with unskilled ones. This will go on as long as it is cheaper to bring in two or three low-cost workers to do the job of one higher skilled but undeniably more costly worker.

While one may simply argue that this reflects marginal cost calculations on the part of construction firms, this practice is, ultimately, to the detriment of more than just productivity per se. The challenges – and dare we say additional cost – of managing COVID-19 in the presence of a large low-cost foreign worker workforce reveal that there are additional costs external to each firm that are not fully accounted for when we rely on this labour-intensive model.

Moreover, by keeping wages low in this sector, there is limited incentive to rapidly scale up productivity, whether in terms of attaining modern construction skills or adopting appropriate safety-related best practices or acquiring new equipment and machinery. The result could be reduced quality of our constructed buildings – a factor not well captured by the dollars and cents reflected in project costing.

May I suggest then, Madam, that one unexpected implication of increased cost from construction is that it could, ironically, be the catalyst toward finally weaning off our sector from its low-cost, low-skilled foreigner worker model – a move so desperately needed for raising construction productivity. If so, we would do well to carefully monitor the capital-labour deployment in the industry over the next few years and, if proven efficacious for raising productivity, consider implementing measures to support high wages in this sector.

Beyond these points of caution, Mdm Deputy Speaker, I have no objections to the Bill.

Mdm Deputy Speaker: Mr Leong Mun Wai.

8.20 pm

Mr Leong Mun Wai (Non-Constituency Member): Mdm Deputy Speaker, this Bill is to provide financial relief to help our local construction companies or contractors to defray the increased migrant worker cost as a result of the further tightening of our border controls.

We empathise with the difficulties faced by our contractors who have been severely ravaged by the COVID-19 pandemic but there are also other considerations to be made before we can support this Bill.

First and foremost, who is going to pay for the financial relief?

Under the Bill, an independent assessor is appointed to assess the foreign manpower cost increase as a result of the tight migrant worker situation and the assessed cost is to be paid by the property developer, mainly. However, with the surging property market now, the property developer can easily pass on the increased cost to the property buyers, many of whom are Singaporeans. If this happens, we will be imposing another indirect tax on our people who are already suffering under the COVID-19 pandemic.

The way to prevent this is to, first, dampen the bullish sentiment in the property market. Reining in property prices is what we need to do now in order not to exacerbate the social inequality in our country.

In addition, for our people, especially the younger couples planning to start a family who are facing a housing shortage and a long Build-To-Order (BTO) queue at the moment, it would also be good policy to rein in the aggressive property purchases by foreigners.

Hence, a more appropriate solution is to increase the Additional Buyer Stamp Duty (ABSD) to reduce foreigners' demand, dampen the property market and raise revenue to pay for the financial relief for the contractors. In this way, foreigners and property developers who may have to lower prices to retain buying interest will be the ultimate payers.

The Government may also not want the contractors to sit on their laurels after the new measures kick in. The current problem is partly caused by contractors having relied on foreign labour for far too long. So, the relief assistance we give to the contractors must come with commitment from them to accelerate process redesign and automation. The Government can integrate the relief measures into the built environment sector strategy.

This is also a great opportunity to attract some of our Singaporeans to rejoin the construction sector because contractors can now pay higher wages as the wages of migrant workers have shot up significantly. But the Government has so far not taken any initiative to encourage this, as far as I know.

If the Government dares to take the bold move to make a bigger increase in the ABSD, there may even be enough additional fiscal revenue to provide for rental units for our Singaporean couples who are waiting for their BTO flats. In this way, we can also tackle another problem and, that is, maintaining our family formation rate and total fertility rate, preventing a COVID-19 gap in our future population structure, which may become another problem in the future.

Mdm Deputy Speaker, this Bill is a single objective policy. It is defeatist in a sense because we are succumbing to the effect of a migrant worker shortage, inflicting damage to our contractors and then worsening the housing shortage, which directly impact our lives.

However, this need not be the case if we are prepared to bear with short-term inconveniences to shake ourselves off the addictive reliance on foreign labour with the right policies over time.

If we increase the ABSD, restricting the number of migrant workers will not worsen livelihoods that much. Instead, our contractors will have more time to adjust to a new supply chain and may increase employment of our local workers. Our young Singaporean couples get their rental flats and all these, paid by the foreign buyers of our local properties. Mdm Deputy Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Mdm Deputy Speaker, the purpose of this Bill is to provide financial assistance to help local construction companies and contractors pay for the increase in wage costs incurred as a result of the further tightening of foreign workers coming into Singapore. We sympathise with the difficulties faced by our contractors, who have been severely affected by the pandemic, but there are other issues to be considered before we support this Bill.

First, and most importantly, who will pay for this financial relief? According to the Bill, an independent assessor will be appointed to assess the increase in the cost of foreign workers due to the tightening of the foreign labour market, and the assessed cost will be borne by the developers. However, with the current surge in property prices, it will be easy for developers to pass on the increased cost to buyers, many of whom are Singaporeans. If this happens, it will be equivalent to an additional indirect tax.

The way to prevent this from happening is, first of all, to curb optimism in the property market. Curbing property prices is also what we need to do now to avoid exacerbating social inequality. In addition, Singaporeans, especially young couples planning to start a family, are facing a housing shortage. Hence, it is a good policy to control excessive buying from foreigners. Therefore, the appropriate solution is to increase the ABSD to reduce the demand from foreigners, curb the property market and use the collected ABSD to pay for the financial assistance to contractors. In this way, foreigners and property developers will be the ones who, ultimately, foot the bill.

Next, the Government may not want contractors to be just enjoying the cake. The current problem is that contractors have long relied on foreign workers, so we have to urge them to speed up the re-design and automation of their work processes. The Government can incorporate relief measures into its strategy to transform the construction sector. This is also an excellent opportunity to attract some Singaporeans to rejoin the construction industry, as contractors now can pay higher wages to Singaporean workers, considering the substantial increase in foreign workers' wages. However, the Government has not taken any actions to encourage such development.

If the Government boldly increases ABSD, there will be enough additional revenue to provide housing for Singaporean couples waiting for HDB flats, so that we can maintain the pace of family formation and Total Fertility Rate, prevent future population gaps and not leave the next generation with another problem.

Mdm Deputy Speaker, this Bill is a defeatist policy with a single objective, because it casts us in the shadow of foreign labour shortage, which, in turn, causes loss to contractors and then aggravates housing shortage, directly affecting our lives.

However, if we apply the right policies, this may not necessarily be the case. With our proposed increase in ABSD, limiting the number of foreign workers will not worsen our lives. On the contrary, contractors will have more time to adapt to the new supply chain and increase the employment opportunities of local workers. At the same time, young Singaporean couples can be allocated housing, which is paid for by foreigners and property buyers.

(In English): This view is one more opportunity for us to reaffirm our confidence that Singapore can survive and do better with a different economic model. This model will focus on developing and training our well-educated local human resource and strategically bringing down the number of foreign workers over time. We urge the Government to consider our proposal seriously and amend this Bill.

8.32 pm

Mr Louis Ng Kok Kwang (Nee Soon): Madam, this pandemic has been one whiplash after another for our construction sector. The latest whiplash comes from the surge of cases in India. It has forced us to bar entry for all work pass holders from there. This means the industry’s manpower crunch will continue and even worsen.

This Bill allows contractors to adjust the monetary sums of contracts that have not yet been completed. This will help contractors cope with the increased manpower costs.

However, as raised in my previous speech on the COVID-19 (Temporary Measures) (Amendment No 2) Bill, it remains unclear whether yet again allowing modifications of agreed-upon contracts is a lasting solution. Ultimately, we are talking about labour supply problems that may be long run, given that the pandemic shows no signs of abating in many developing countries.

On that, I have three points of clarifications.

My first point is about temporarily allowing workers to get their skills certified here in Singapore. Typically, migrant workers looking to join our construction sector must first enrol in Overseas Testing Centres (OTCs) within their home countries. At these OTCs, they must complete either the Skills Evaluation Certificate (SEC) or Skills Evaluation Certificate (Knowledge) (SEC(K)), which certify that the worker qualifies as Basic-Skilled construction workers.

On 5 May, BCA introduced an exemption. For six months, workers from China can obtain their skills certification in Singapore rather than in their home country. This reduces the bottleneck in China, where some OTCs remain closed, and helps alleviate our labour supply crunch.

Can the Minister clarify what is the usual passing rate of the SEC and SEC(K) tests in each country’s OTCs? For areas where the passing rate is usually quite high, can the Government consider introducing similar temporary exemptions from other source countries? For instance, there remain OTCs that are closed in Myanmar and Thailand. This can help to temporarily alleviate the supply crunch without compromising on the skill requirements we have set.

My second point is about expanding the list of source countries which we debated earlier. We have always restricted the list of countries from which each industry can hire Work Pass holders. For the construction sector, the list is Malaysia, China, India, Bangladesh, Sri Lanka, Myanmar, Philippines, Thailand, Hong Kong, Macau, Taiwan and South Korea.

Can the Government explain the basis for restricting this list of source countries? Can the Government also consider expanding the list of source countries? There are likely other countries where migrant workers with basic skills can be found. Indeed, times like this highlight the risks of over-relying on a limited number of source countries.

Let me clarify that expanding the list of source countries can align with our goal of moving the industry towards increased productivity. With a more diverse supply pool, it might become easier to find higher skilled workers. We then could move towards raising our skills requirements for what counts as Basic Skilled or Higher Skilled, as well as tapering off the number of lower skilled migrant workers in the sector.

My third point is about the impact on Government expenses. Will this Bill result in the Government ending up spending more on construction projects than previously expected, as contract sums get adjusted upwards?

While I understand that the final impact will have to be quantified by Assessors, who will have to look at applications on a case-by-case basis, has the Government at least estimated the range of increased costs that it will have to bear as a result of potential contract adjustments?

It is likely that, at any given time, the Government is the largest spender on construction contracts in Singapore. We must help the construction sector but we must also find the balance and guard against the possibility that all of our yet-to-complete projects see ballooning costs as a result of this legislative amendment. Madam, notwithstanding my clarifications, I stand in support of this Bill.

8.37 pm

Prof Hoon Hian Teck (Nominated Member): Mdm Deputy Speaker, I wish to make a broader point that goes beyond the focus on the construction industry that is covered by this Bill.

In confronting the new challenges facing our country with the new clusters of community cases in recent weeks, it is important that we and members of the public avoid false dichotomies. In particular, we must avoid the false dichotomy that in formulating policy, we have to choose between one of only two options: either close borders to save lives or open borders to save the economy. The presumption is that we should prioritise human well-being at some cost to the economy, so that keeping the borders open is tantamount to choosing to place the economy above human lives.

In reality, closing the borders also imposes costs on human well-being, a point I think that has been made by several people, but let us think about that.

Stricter border controls that make it more difficult to obtain the help of foreign domestic workers to take care of our elderly citizens, for example, reduce our senior citizens' well-being. Restricting the entry of foreign workers from certain countries with high incidence of COVID-19 infections would delay the completion of many construction projects, including BTO flats. This would have an impact on plans for starting a family for many people. Companies that have a high reliance on foreign workers might go out of business which would cause citizen workers their jobs as well. The loss of jobs means not only a loss of income but also imposes costs on the well-being of the retrenched workers and their family members.

Increasing the quarantine period from 14 days to 21 days for international travellers except for those from a few countries with lower infection rates, provides some degree of safety for our citizens. However, even then, the economy will not benefit fully from international economic integration as it did during the pre-COVID-19 days.

Instead of thinking about binary choices, like whether to keep borders closed or open, our policy has to adapt to unforeseen circumstances that the evolving pandemic presents to us by improving trade-offs. The COVID-19 pandemic has presented Singapore with two important trade-offs.

The first trade-off is between the saving of jobs and protection from the virus. The circuit breaker introduced last year shut down non-essential businesses in order to limit the spread of the virus. The adoption of measures like safe distancing and the mandatory wearing of masks helped to reduce the crucial parameter known as the reproduction rate – the parameter that gives the number of people an infectious person will infect over the whole course of their disease in a fully susceptible population. Those measures help to improve the trade-off so that, for a given level of protection of health, more business activity could resume.

The second trade-off is between international economic integration and national control of the pandemic. When the number of community cases is successfully brought down, opening up our borders risks importing cases of infected persons.

While testing and imposing quarantine orders on foreigners help to reduce the risk of community spread caused by imported cases, implementing travel bubbles requires both countries to have effective national control of the pandemic.

Restricting entry of foreign workers from countries with a high incidence of COVID-19 infections and turning to alternative sources with lower infection rates seek to undo the adverse shift in trade-off to some degree. Source countries might also impose travel restrictions on their own citizens travelling to Singapore, which require Singapore-based firms to look elsewhere for workers. So, turning to alternative sources of foreign workers has business consequences as wage costs might increase, which this Bill seeks to address.

Mdm Deputy Speaker, we need to recognise that as an outward-oriented economy, even while there is effort suggested by Members of the House to raise the productivity of the construction sector and make it less labour-intensive, that is something that will take time. So, there are inevitable costs that will have to be borne with the spike of new cases in several parts of the world even as we seek to achieve what we regard as an optimal trade-off.

The enactment of this Bill reflects our effort to adapt to unforeseen circumstances that this evolving pandemic will continue to present to us. In view of this, I support the Bill.

8.42 pm

Mr Kwek Hian Chuan Henry (Kebun Baru): Mdm Deputy Speaker, I am in full support of the measures announced today, given the dire situation facing the built sector.

Our built sector is facing intense pressure on three fronts.

One, the number of construction workers in the built sector continues to shrink. Even before the recent halt to new incoming migrant workers from the Indian subcontinent, many construction companies saw their workforce reduced by 15% to 30% due to higher than usual attrition.

Among projects, there are uneven manpower availability among different layers of contractors. Post-COVID-19 projects, given higher margin, are able to marshal more manpower resources. Pre-COVID-19 projects are languishing as everybody is worried about the viability of these projects. And because of the labour shortage, we are seeing some workers asking for daily wages of more than $250.

The majority in the construction industry, I must say, understand the need for the recent curbs on new inflow of migrant workers. Nevertheless, the reality is that the manpower shortage will only get worse in the coming months.

Two, the industry is experiencing a surge in construction materials pricing. For example, the price of iron ore has shot up more than 27% since the end of last year.

Three, construction companies are facing financing difficulties. As of now, the strongest companies – those with a good number of post-COVID-19 projects, high margins and sizeable reserves – are able to get adequate financing. However, most companies are struggling to get financing from banks. Based on industry feedback, a number of them, I was told, are resorting to tapping on financing companies and are paying financing costs of around 10%.

In view of these three sets of challenges, MND’s recent announcements are very much welcomed by the industry.

First, the sharing of the extra manpower costs from project delays as well as the manpower levy rebate of $250 are extremely helpful to the financial sustainability of the industry.

Second, increasing the length of time for projects will help because, for some projects, they can wait out the current spike in material cost, as well as the sizeable manpower shortage.

Three, easing of restrictions on Chinese workers is helpful. However, I do want to caution that beyond the large Chinese construction companies, many local construction companies may not have the links to recruit sufficient Chinese manpower given the current shortage of construction workers in China. And the salaries of Chinese workers in the construction sector are two to three times more expensive than those from the Indian subcontinent.

And it is not easy to persuade Chinese workers to do the full range of jobs, even if we can persuade them to come to Singapore.

Beyond the measures announced today, I hope that MND can continue to pre-empt this unfolding industry crisis. We have to plan for the worst. For example, it may not be possible for us to bring in migrant workers from the Indian subcontinent for many months, or even beyond a year's time. And even if we want to diversify the source of migrant workers from the rest of developing Asia, it is also very difficult to predict whether those countries will see a surge in infection that we see in India. We must also plan the possibility of another circuit breaker, should community spread become more prevalent in Singapore.

Over the past few weeks, I have been working with the built sector to come up with some proposals that can form our contingency plan, should the situation deteriorate significantly. Let me elaborate.

One, we can introduce more short-term measures to better utilise our existing workers in the sector. For example, we can temporarily increase the allowable age for migrant workers to stay in Singapore from 50 to 55 years old, and to potentially up to 60 years old with regular medical reviews. There are many different kinds of jobs, some are not as strenuous as others. Let us trust that our companies can strike the right balance, as we increase the age in the short run.

Another possibility is to get the construction companies and safety community to explore urgent and temporary measures to increase the allowable man-hours. Based on industry feedback, the work intensity in many sites have reduced due to increased delays in material arrival and decreased subcontractor productivity. For selected work sites, can workers be given the option of working during their off-days, if it is clear that they have more rest during the normal days, due to decreased work intensity? Of course, these proposals must be carefully considered and implemented, but we are in a crisis and we need to explore all options.

Two, we must urgently explore new sources of manpower. Many of us agree that the situation in India is extremely dire and it could take a while to sort out. But we must diversify and explore other countries, knowing fully well that we cannot predict which sources will eventually come through for us.

As such, could the Government consider new sources of migrant construction workers, such as Cambodia, Laos, even the Riau Islands in Indonesia?

Beyond the new sources, we must also ensure that migrant workers are free of COVID-19 when they come to Singapore. Therefore, is it possible for the Government to work with the built sector to set up and operate processing and quarantine centres in these countries? This will ensure that testing is done by trusted vendors, perhaps even using our own test kits. The facilities and cleanliness operations are managed by our stringent standards. Workers can use dedicated transport, operated by us, to come to Singapore. And upon arrival, we can test again and vaccinate the workers immediately, while they undergo further quarantine. It will take us a while to get this going and some of these sources, even after we invest time and effort, may not work out. Therefore, I hope that our Government can actively pursue various options as quickly as possible.

Three, should the labour shortage continue, we can consider postponing new infrastructure projects, at least the big ones, or at least the construction phase of these new projects. Of course, the planning part of the project can go through, but we must reduce construction demand when we have a vastly reduced manpower supply, or the excess demand will lead to unnecessary cost surge.

Four, if the industry condition worsens, the industry hopes that the Government can provide added support with larger levy rebates.

Five, we can prepare for a different implementation of circuit breakers for the built sector. The conditions are different this time. COVID-19 in the dormitories is still largely contained, there is a successful segregation between the construction sector from the rest of Singapore, and we are able to do more frequent and extensive testing in the construction sector.

As such, the industry hopes that the Government can allow as much work to continue, even during a circuit breaker, by ensuring that the construction sites remain as air-tight as possible. A new contingency plan for circuit breaker could include measures, such as:

(a) Main contractors, builders to have teams permanently onsite with workers who are also lodging in the dormitories onsite;

(b) Main contractor workers to have no in-person contact with sub-contractor workers;

(c) Subcontractor workers may enter a site for a maximum of three days a week only;

(d) Subcontractor workers should not be allowed to lodge onsite;

(e) All non-essential roles to be fully working from home; and

(f) Permitting TLQ (Temporary Living Quarters) again for larger projects.

A lot of hard work will be required to come up with a revised circuit breaker plan that is tailor-fitted to the present circumstances. I hope that we can start preparing for it.

Six, monitoring the credit flow to the built sector very carefully. The Government has done more than its fair share for the built sector. Nevertheless, Government support will not be sufficient unless the banks and financial institutions do their part to provide sufficient credit.

Seven, consider a further extension to developers on ABSD. Currently, developers have up to five years from the start of the project to the handover to the buyers. Beyond that, they have to pay ABSD. The Government has already provided a six-month extension, but MOF can consider further extensions, if necessary. Relieving pressure on the developers will allow them to do more to share the financial pain of the building contractors.

Lastly, I would like to suggest that MND and BCA bring on additional staff, or to outsource some of the coordination work. In my interactions with MND and BCA staff, I note that many of them are trying their best to help the industry. But there is just so much more coordination work ahead. As such, I hope we can beef up the staffing level at the MND family level, just as we have done so decisively at MOM.

Mdm Deputy Speaker, let me now conclude. COVID-19 has brought upon an existential threat to the built sector. Decisive and effective Government action has put off the worst outcome for the industry and the additional measures announced are very much needed. Should the situation confronting the built sector continue to worsen, I hope the Government can actively consider some of the proposals that are mentioned today. With that, I stand in full support of the Bill.

Mdm Deputy Speaker: Minister for National Development.

8.52 pm

Mr Desmond Lee: Mdm Deputy Speaker, I thank all the Members for their comments, their ideas, both to tackle the immediate situation that is confronting our construction sector and the impact on home buyers, but also the suggestions that Members have made in regard to the mid- and long-term future of construction here in Singapore. Let me address the issues raised.

Mr Louis Ng was concerned about public sector expenditure and about fiscal prudence. The pandemic has, indeed, driven up manpower costs for contractors. So, we need to share some of this burden. But in doing so, I agree with him that agencies will need to maintain fiscal discipline. When adjudicating claims, the Assessors will take into consideration the amount of support that has already been provided, such as foreign worker levy rebates and other forms of support, in determining what a just and equitable outcome of manpower cost-sharing should be.

Mr Yip Hon Weng spoke about the need to engage developers and contractors to better understand their difficulties and not just press them to complete their projects as if it was business as usual. And he had given some examples he heard anecdotally about the agencies using a template to press contractors. I seek the Member's support to provide specific details so that we can look into these concerns that have been raised. Based on what we know so far, the only template our agencies had been circulating to contractors is one with regard to prolongation cost submissions. In fact, the agencies are pressing the contractors to submit their claims for prolongation costs, because these agencies want to lean forward to help these firms cope with the non-manpower related cost increases in these projects. So, perhaps, for us to check the facts.

But I do agree with the Member that we need to adopt an even stronger collaborative posture during this crisis. As I have said during the opening speech, at this time in the sector, where there are many interlocking relationships of many stakeholders, if one goes down, the entire project is in peril, and we all have to lean forward and help one another. This applies to both Government agencies as well as private developers.

In fact, when the crisis started last year and construction work had to be shut down for some months, we formed a working group comprising Government agencies and trade associations like SCAL and REDAS. At the start, we met every day digitally, then on a weekly basis; and now, we still meet once a month to better understand the situation on the ground, the dynamic situation, as it evolves, to flag issues up and to work together to resolve them practically.

We have also asked Government agencies to lean forward to help contractors through this difficult period. Several agencies have gone above and beyond our previously announced measures to help contractors, such as granting even more extensions for contractors to complete their projects.

Notwithstanding this, we are looking at ways to simplify the process for public sector projects, similar to what we have done for the non-manpower prolongation cost claims, as well as the additional extensions of time, where direct disbursements and extensions were given respectively, without the need for extensive or prolonged negotiation.

Mr Henry Kwek suggested extending the Additional Buyer’s Stamp Duty (ABSD) remission timeline for developers, to relieve pressure on them, too. We had earlier provided a 12-month extension of the PCP and ABSD remission timeline for commencement and completion and a six-month extension to the remission timeline for sale, to account for delays due to COVID-19.

We will continue to monitor the impact of the COVID-19 pandemic on various stakeholders, including developers, and take further steps as necessary.

Mr Louis Ng referred to BCA’s recently announced scheme to temporarily allow new China construction Work Permit holders to enter Singapore to work first, and then, take their skills certification test locally, instead of in China. He asked if the Government could consider introducing similar temporary exemptions for other countries.

To provide some context, BCA had earlier consulted the industry on possible measures to help alleviate the manpower crunch in the construction sector. SCAL, the contractors association, had suggested exercising flexibility on the skills entry requirements, in particular for PRC Work Permit holders, as they are highly skilled in key trades, such as carpentry and structural works, as compared to workers from other countries. Taking this feedback onboard, BCA worked with MOM to roll out this temporary flexibility to help facilitate the entry of PRC Work Permit holders.

BCA will discuss with the industry to assess if this approach can be extended to workers from other approved source countries and examine carefully this proposal.

Mr Louis Ng and Mr Henry Kwek asked whether the Government can consider new sources from which to recruit construction Work Permit holders.

We are prepared to consider various options to alleviate the current manpower crunch facing the whole sector. But we must consider the COVID-19 situation in these countries, as well as the construction industry’s demand for workers from such sources. Adding more sources may not necessarily be the solution, as the pandemic seems to be worsening globally.

Regarding Mr Henry Kwek’s suggestion to set up forward operating bases, BCA is actively in discussion with trade associations and industry partners who are exploring upstream ways to ensure the health and safety of the foreign workers that they recruit, while meeting Singapore’s more stringent public health stance.

In addition, Mr Kwek suggested increasing the allowable age for foreign workers from 50 to 55, and to 60 with regular medical reviews. He also asked whether workers can be allowed to work longer if they can have more rest due to the decreased work intensity during weekdays.

To clarify, MOM already allows existing Work Permit holders to renew their work permits with their current employers up to the age of 60. For workers above the age of 50 who wish to change employers but are unable to do so due to the age limit, MOM will assess appeals on a case-by-case basis.

As for working longer hours, it is important for workers to get sufficient rest for their well-being and their safety. And that is why the Employment Act stipulates that the normal hours of work should not exceed 44 hours per week. In addition, employers must not make their employees work for more than 12 hours a day, including overtime, with a limit of 72 hours of overtime in a month. Extending working hours beyond this could lead to fatigue and compromise workers’ safety. Moreover, we all know they have been through an extremely difficult time last year and, still, they are subject to stringent safe management measures.

Mr Kwek also suggested postponing the construction phase of new projects, given the reduced supply of manpower. This is, indeed, something we are looking into for public sector projects. But we need to calibrate this carefully. We need to deliver homes and infrastructure, such as public transport. And we also want to ensure that there is a pipeline of work for our construction sector, so that we retain capacity during this crisis.

Mr Kwek also rightly pointed out that we need to prepare for potential further restrictions on construction works, given the fluidity of the current COVID-19 situation. I would like to reassure the Member that BCA is working with the relevant agencies on contingencies and drawer plans. I also thank the Member for acknowledging the hard work put in by our officers in helping the industry through this crisis. It has been a difficult time for them and also for the sector as a whole. We will certainly continue to support and encourage our officers as they persevere with these efforts.

I will take this opportunity to address the query by the Leader of the Opposition about the impact of the COTMA amendment Bill on BTO prices.

It is important to set into context. The Bill relates to construction contracts before October 2020; so existing contracts. And those BTOs that have already been sold are already sold. The prices will not change. Likewise, for new BTO contracts, we do not price HDB BTOs to recover construction costs or land costs. Certainly, it will cost more as a whole but this is not a factor in determining the price that we set for BTO prices.

In any event, in order to manage the overall tender prices for both public and private sectors, I had mentioned earlier in my speech that the agencies are working with the private sector to work on both public and private construction procurement projects going forward. Because what we have seen during this crisis is that contractors are buffering up for uncertainty because they do not know what twists and turns there are in the road ahead, as many of them had found to their detriment in the last year. And, therefore, tender prices, as a whole, for both the public and private sectors, we see an increase.

With such a contract in place, if we can reach an agreement, it will enable contractors to be assured that uncertainty will be cost-shared between the client and the contractor. And we hope that will then provide more assurance to contractors as they bid for new contracts, whether it is a BTO project, whether it is a public sector infrastructure project or whether it is a private sector project.

So, all in, to put in clauses in our standard contracts to enable there to be some fair cost-sharing for uncertainty. I speak broadly. The details will follow as the agencies and our partners reach precise language.

Mr Yip Hon Weng asked the Government to consider more measures to help contractors, such as enhancing the Jobs Support Scheme for the sector, further reducing the foreign worker levy and providing additional time for project completion.

As I have mentioned earlier, we have already intervened significantly and put together a suite of support measures to help the construction industry to cope with the challenges brought about by the COVID-19 pandemic. We will monitor the impact and review if additional support is required as the situation evolves. BCA will also continue to engage industry stakeholders on their concerns, including on availability of credit that Mr Henry Kwek mentioned.

But all of these are short-term stop-gap measures – foreign worker levy rebates, cost-sharing, grants. These are all measures to help stop the bleed, as I said. Fundamentally, as I have said repeatedly, both here in this House and also in other settings, we need to work closely with the industry to continue our multi-year effort to transform the sector to become more productive, to grow good local jobs, to reduce overall reliance on low-skilled foreign manpower, for longer term resilience and sustainability.

And in that regard, I would, in a way, like to thank both Assoc Prof Jamus Lim and Mr Leong Mun Wai for supporting the efforts that we have been undertaking since 2017 to push for a holistic transformation of the construction sector, from end-to-end. Assoc Prof Jamus Lim emphasised that by raising the cost of foreign workers, that, in his view, will push employers and contractors to spend more on capital investments to be more productive. Well, we agree with him to an extent but, actually, go a lot further than that.

If you look at the Industry Transformation Map (ITM) for the construction sector, both 1.0 and 2.0, since 2017, where we brought developers, contractors, consultants, academics and unionists all together to work on, it is not just the price or the availability of foreign manpower, but ensuring that we digitalise the whole sector, that we put in significant investments in technology, that we fund, grant, support and train our sector, in order to design for manufacturing and assembly, that is, bring into Singapore, into our construction sector, a whole new way of construction that is far more productive, that involves advance precast that can be done off-site.

And I would ask both Members, Assoc Prof Jamus Lim as well as Mr Leong Mun Wai, to look at and read our ITM and tell us whether they fully support it.

In fact, during the Committee of Supply (COS) this year, both Minister of State Tan Kiat How and myself took pains to explain again our efforts to transform the sector and create good local jobs for our graduates, for our diploma holders and our ITE certificate holders, in order to push the sector forward.

Mr Leong's point that the Government makes no effort to push productivity in the construction sector, that we do not create local jobs or create opportunities for Singaporeans, befuddles me. I was just exchanging notes with Minister of State Tan Kiat How because, during COS, that was really the gist of what we were saying. And if the Member would read and re-read Minister of State Tan Kiat How's speech, he gave example after example of Singaporeans who were describing their journey into the construction sector, seeing how the sector has evolved, how technology has created a niche for them, enabled them to build more productively. Old timers who have seen how construction has moved from 2D to 3D using automation; and young entrants, being very excited that the construction sector is becoming far more high-tech, digitalised, connected, interconnected, multi-disciplinary. All this work is happening at great speed but we are pushing hard.

And about productivity, Assoc Prof Jamus Lim felt that productivity in the sector had not improved despite efforts. As a result of the efforts over the many years, both regulatory efforts, for example, when we pushed up the buildability score, builders have to meet with certain buildability score before they are allowed to build GLS sites with preconditions of productivity and methods of construction before you can develop the land. All these efforts, including the grants in the Construction Productivity and Capability Fund (CPCF), the new Growth and Transformation Scheme, our PIP scheme – all these are a suite of measures. Regulatory, land-sale related, skills upgrading, grants, grants for individuals, grants for firms and, now, grants for the whole alliance of the value chain.

All these are efforts to transform our sector. But because the construction sector is a long value chain, it does take time, it does take resolve and no one firm can do it on its own.

As for Mr Leong Mun Wai's sense that there are no efforts to bring Singaporeans into this sector, apart from asking him to read Minister of State Tan Kiat How's speech outlining those efforts, precisely those efforts, just a few months ago, I would also share that we have a BCA Industry Scholarship year after year. We award to Singaporeans in ITE, Polytechnic and University, scholarships for young, bright, energetic, Singaporeans who want to venture into this sector, into architecture, into building, into M&E, into the digital space for construction. We pay the bulk of the scholarship, more than 80% of their studies. The industry pays up to 20%. And they are bonded to the Singapore firm in order for Singaporeans to be injected into these firms and to grow with these firms.

And so, all these are efforts that are publicised, these are efforts that are known that we talk about in this House. I would invite Mr Leong Mun Wai to come and have a chat with us so we can tell him a bit more about these efforts and we hope he will support them wholeheartedly in growing a strong local core in our construction sector.

But that is multi-year work. It involves changing mindsets, it involves changing the way firms work, the way firms work with other firms, it involves the Government.

But I think that, at the crux of it today, this Bill, essentially, is about this crisis that we are facing. So, yes, in the mid to long term, we will put in a lot of effort, as we have done over the last few years, to transform our construction sector end-to-end. But in the meantime, what is this House asked to decide at the end of this night? And that is our sector, construction firms, Singapore firms, construction firms which are faced with a severe manpower crunch, asked to deliver projects, that notwithstanding all the support the Government has given on various fronts that I have articulated, they are short of workers. What we are saying is that because the costs have increased beyond their expectation at the point in time when they bidded for these contracts, should we or should we not pass legislation to facilitate the sharing of these additional costs? A framework which nudges dialogue and discussion but, beyond which, we put in an adjudicatory framework to ensure that costs are fairly shared.

These are abnormal times calling for superhuman efforts to keep Singapore going. This is so, even in the construction sector, but especially in this sector, which is so interwoven, which touches Singaporeans' lives on almost every front: building of your homes, building of your roads, building of your public transport, building of the facilities, including the medical facilities that are so critical in the fight against COVID-19.

And so, I ask Mr Leong Mun Wai, because I seem to get the sense from him that he does not support this Bill, does not support bearing some of the burden that Singapore contractors are suffering under, does not support bringing in foreign workers in order to help the sector cope during this period. Because I recall him saying, "Do not bring in foreign workers. Let the contractors take this time during this crisis to learn how to live with less foreign workers." I hope I was mistaken but perhaps the Member could confirm: does he support this Bill? Does he support the need to help the whole sector during this time? Does he support the need to alleviate the suffering and pain that the construction sector is under, which will then have knock-on effects on home buyers, property buyers and companies and businesses who are waiting for their properties? So, that is critical.

And he makes a number of other points and I am tussling over whether to spend more of this evening, during the Second Reading to address them. But he talks about cooling the property market by increasing the ABSD and then taking that money to pay for the cost increases and then using the money also to fund more HDB rental flats.

I wanted to address them but I think it may be better if the Member raises a Motion, puts up his ideas, sets out his sums as to how much more ABSD he wants to raise. Is it for Singaporeans? Is it for PRs? Is it for foreigners? And how much does he think it will yield? And how much will it go in addressing all the strategies that he has set out in his speech earlier?

Finally, in response to the Leader of the Opposition, I just wanted to clarify whether he supports bringing in foreign workers at this time, bringing in more workers, in order to keep the flow of manpower to the construction sector going? Because he spoke to many contractors who were concerned about the current situation. And does he then support bringing in more foreign workers or does he want to freeze the growth of foreign workers into Singapore?

Madam, I would like to say that I agree with Prof Hoon Hian Teck. He made a good speech. He said that our approach has to be adaptive and strike a balance between two imperatives: saving lives and protecting livelihoods. That is a truism.

But, indeed, these are complex, dynamic and fast-changing trade-offs that we have had to consider in managing this pandemic. Minister Lawrence Wong explained how the Multi-Ministerial Task Force has sought to steer us through all of this uncertainty in his Ministerial Statement earlier today.

Unlike some other countries, Singapore needs to preserve jobs and capabilities by staying connected to the world. We will continue to carefully monitor the economic situation as well as the global health situation and make adjustments as necessary.

Mdm Deputy Speaker, in conclusion, the amendments before the House today are an important part of our overall support package for our construction sector in view of the manpower crunch brought about by the pandemic. I thank Members and all our industry stakeholders for their strong support for these measures.

Mdm Deputy Speaker: Leader of the Opposition.

9.16 pm

Mr Pritam Singh: Mdm Deputy Speaker, I rise to respond to the Minister's question about whether I support bringing in more foreign workers for the constructor sector.

Earlier on in my speech and earlier on in the day, during Parliamentary Question Time, I spoke of opening up more non-traditional source countries to recruit foreign workers and I even raised the example of Vietnam because the infection rate there is very low compared to many other ASEAN countries; although, in the last few days, I understand, the numbers are going up. Still, the rise in terms of absolute numbers remains comparatively small. So, that should give an indication about where I stand on the situation affecting some of these companies.

My communication has been with the small contractors – those with three, four or five foreign workers. And when you lose one or two foreign workers, you cannot execute a project. So, for these particular individuals, it is a dire situation. And, so, it would be grossly unfair then to suddenly pull the rug from under their feet and say, no, we have to stop foreign workers from coming in right now.

But overall, I heard what the Minister said about the ITMs, in particular, the construction ITMs, the longer project, I would say, to wean the sector to be more manpower-lean. And I believe, at some point, the Government will have to present its report card on what its progress has been. I think that will be helpful also for members of the public to make an assessment as to whether the measures, the amount of money put into the ITMs, specifically the construction ITM, to improve productivity has borne fruit. I hope I have answered the Minister's questions.

Mdm Deputy Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai: Thank you, Mdm Deputy Speaker. I would like to thank the Minister for enlightening me on all the progress in getting Singaporeans back into the construction industry. I must apologise that I should read the ITMs more from now on. But I hope the Minister understands that, as an NCMP, I do not have a lot of resources. Every day, there are about 50 to 100 pages of materials from Parliament coming into the portal.

But I have a few questions. I am very happy because I hear that Singaporeans are going into the construction industry. But what the Minister has said just now is about those like managers with scholarships and all that. How about the general construction workers? For example, how many Singaporeans have come in again to be just a general worker, like substituting those permit workers? Because I believe that when we raise the wages, some of these Singaporeans will come in.

I always find it very uncomfortable and I always find it very pitiful to see very strong Singaporeans queuing up at the F&B outlets to collect the food for delivery. I always wonder: such a strong, able-bodied Singaporean, why is he not doing other work?

So, this is one question. How many Singaporeans have actually come back as a general construction worker? Of course, I would expect Singaporeans to be able to be trained for doing work like bricklaying and all that —

Mdm Deputy Speaker: Mr Leong, could you just ask the clarifications, please?

Mr Leong Mun Wai: Okay, okay. Yes, thank you. The other thing is that when we give all this assistance to the construction companies, do we actually tie the companies down for future improvements in their processes and automation, and also employing our local workers? This is the second question.

The third question is, if the answers to both the first and the two questions are along the line that is positive, then I would agree that I will support of the Bill and the Government can act according to its discretion to bring in the foreign workers.

Mdm Deputy Speaker: Leader.

The Second Minister for National Development and Leader of the House (Ms Indranee Rajah): Mdm Deputy Speaker, I just wanted to clarify something that the hon Member said, just for my own understanding. Is the hon Member saying that all our Singaporean delivery persons should become construction workers? I was just trying to understand; is that what the Member is saying?

Mr Leong Mun Wai: Minister, yes. I think some Singaporeans – because there are like about 100,000 gig workers in Singapore – and then, there are also Singaporeans who are unemployed. Given this COVID-19 environment now, if you raise the wages high enough, there is a threshold that I think Singaporeans will come in, even as a general construction worker. That is my perception. Thank you. Please enlighten me.

Mdm Deputy Speaker: Minister.

Mr Desmond Lee: I thank the Member for clarifying that his proposal is to replace general foreign workers – the R1 and R2 workers who do the building onsite – with Singaporeans. And he is focusing principally on those who are doing food delivery.

Our approach is different. Our approach is different. Our approach is in recognition that the processes need to be significantly re-orientated. The processes need to be changed and enhanced in order to create a good job for Singaporeans – a job which commands the level of productivity and skills that warrant the kinds of pay that I think the Member is talking about.

He does not have a figure but he is talking about increasing the pay until a threshold where Singaporeans come in. Whereas for him, he thinks if you increase the pay, Singaporeans, including delivery drivers and riders, will do the jobs that current workers from India, Bangladesh and other source countries are doing, as they are.

But what we are saying is that, yes, we need to pay the Singaporean more, but the job has to be different and it is not just as the Member suggests – architects, engineers or consultants but even builders. Even builders. But that requires mechanisation and automation. I visited once an Integrated Construction and Prefabrication Hub (ICPH), which is a precast hub yard. They are actually building rooms, building panels for construction and Singaporeans are doing those jobs. But it is very different from the kind of job that the Member envisions Singaporeans will be doing.

So, it is a different strategy. At the end of the day, even as we automate, even as we increase productivity – as both Mr Leong Mun Wai and Assoc Prof Jamus Lim say we should – there will still be a need for some foreign workers. We hope they will be more skilled. We will keep them in our sector, keep them here, to supplement the core of Singaporeans that we want to build for the sector. And I seek the Members' support for this.

Mdm Deputy Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim: Mdm Deputy Speaker, with your indulgence, I would like to begin with a point of clarification. I had erroneously stated that the Member Gerald Giam had indicated earlier that he had suggested permitting worker transfers from the 56th day onwards. Gerald had shared with me that he plans to advance this proposal but has not, in fact, done so in this House. So, I wish to clarify this for the record.

In terms of a quick clarification question for the Minister, I thank him for his clear articulation of efforts via the ITM to transform the sector by allowing costs to rise. As he rightly pointed out, I am fully in support of this general principle. But I should also note that we spent many hours earlier debating over what seems to anyone not in the industry to be a severe reluctance to even entertain a small escalation in the transportation cost of construction workers.

So, my question then is whether the Minister believes that the construction ITM has truly made headway in changing mindsets and behaviours and, if not, what is the timeline for which we can expect an actual change such that we will see increases in wages?

Mdm Deputy Speaker: Minister Desmond Lee.

Mr Desmond Lee: Madam, I had said both at COS as well as just moments ago that we are looking at making significant changes to the foreign manpower strategy for the construction sector. We have steadied the sector for it. They recognise that this is going to be painful. But we will make some significant moves starting from next year, including doing away with the MYE framework, moving to one in which it biases towards more productive offsite work. And there are opportunities then for Singaporeans to come into the sector. And not just raise the wages of the foreign workers. But even those foreign workers working offsite will have to be more skilled to operate the machinery and, therefore, the wages will have to be higher – because they are more productive and more skilled.

But the same time, we will also tighten on the dependency ratio ceiling. We are studying how to make those moves to push the sector to be more lean. We are pushing on multiple fronts, not just on worker numbers and quotas; not just in making it expensive to construct. But it has to be more productive and command better salaries.

The Member spoke earlier about a proposal that his colleague Mr Gerald Giam did not yet make to this House. So, I thank him for his clarification. It is a proposal, I presume, we will be expecting shortly. And I presume MOM will be looking forward to that.

But I remember the Member saying in his speech that it is important to retain the existing foreign workers in Singapore. I am fully in agreement with him. My colleague from MOM will also agree. Given the worker shortage, I think both Assoc Prof Jamus Lim and we in the Government feel that it is important for employers to work with their existing foreign workers, look at their remuneration, look at their work conditions and, of course, find ways to encourage them to continue to stay in the sector.

But I have some questions about this. The Member talked about, well, SCMX is one, which is actually SCAL's effort to help to provide a marketplace for workers within Singapore so that they move employers, rather than be sent back. But his proposal – or what he says is Mr Gerald Giam's upcoming proposal – is to, in effect, make it easier for workers to move from one employer to another.

If you speak with contractors, including the small subcontractors that the Leader of the Opposition has spoken to, what they are most concerned about and unhappy about over the last few months, is precisely worker poaching. You have a worker working with you, suddenly he is gone and it is because of moves and flexibilities which now the Member would like to enhance that will probably exacerbate this worker poaching.

MOM and SCAL's approach is different, recognising that the rule that the Member talks about was for a different time and a different era. I think Dr Tan See Leng can come in later if the Member would like to ask MOM more about this.

But now, with worker scarcity, with projects at stake, it is precisely the opposite that needs to be done, within appropriate limits, ensuring that this poaching gets put to a stop.

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 Desmond Lee].

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