Number of Firms in Built Environment Sector that have Ceased Operations in Recent Years

15 Mr Saktiandi Supaat asked the Minister for National Development (a) how many firms in the built environment sector have ceased operations in 2021 due to insolvency, as compared to 2018 to 2020; (b) given the intention for the extended relief periods under the COVID-19 (Temporary Measures) Act 2020 (COTMA) to expire in Q1 2022, whether the Government is considering any transitional measures to prevent firms from suffering a hard landing; and (c) what are the examples of “unforeseen circumstances” which would see a further extension of the relief period under COTMA.

The Minister of State for National Development (Mr Tan Kiat How) (for the Minister for National Development): Mr Speaker, Sir, the Government has put in place a wide range of support measures to help construction firms cope with the cost pressures brought about by COVID-19. This includes the $1.36 billion Construction Support Package to help firms in the construction industry cope with the cost of implementing safe management measures at worksites, as well as to co-share prolongation costs for public sector projects. Firms have also received support for their manpower costs through the Jobs Support Scheme and Foreign Worker Levy waivers and rebates. The Government has also put in place unprecedented legislative measures through the COVID-19 (Temporary Measures) Act, or COTMA, to provide relief for contractors and to enable equitable co-sharing of increased costs by project parties due to the pandemic.

These measures have helped the construction industry tide over the COVID-19 pandemic. About 2,200 construction firms ceased operations in 2021, which is comparable to the average number of firms that wound up annually between 2018 and 2020. There were 2,187 firms that wound up in 2018; 2,347 firms that wound up in 2019; and 2,027 firms that wound up in 2020.

We do not take decisions to intervene in private contracts lightly. The COTMA reliefs are meant to be temporary and firms will need to partner one another for long-term sustainability and resilience. However, given the significant impact of COVID-19 on the Built Environment (BE) sector, we have extended the relevant COTMA reliefs several times. This has provided firms with additional time and support to negotiate amicable outcomes between the parties.

And we have seen encouraging signs of the sector’s recovery. Based on project progress payments made at the industry level, the current level of construction output is close to pre-COVID-19 levels. This indicates that construction works are progressing at a steady state. As such, barring any unforeseen circumstances, such as a severe industry-wide disruption to construction works caused by COVID-19, the reliefs under COTMA Part 2 and Part 8B will end on 28 February 2022. We strongly encourage all contracting parties to agree on mutually beneficial arrangements to sustain their projects.

Part 10A of COTMA has been extended until 31 March 2022. This Part pertains to the co-sharing of cost increases attributed to foreign Work Permit holder salaries. While the foreign manpower inflow has been improving in recent months, we will continue to monitor the situation and review whether a further extension is needed.

Mr Speaker: Mr Saktiandi Supaat.

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Speaker, I would like to thank the Minister of State for his reply. I have two supplementary questions, short ones. The progress that the Minister of State mentioned is good news, especially if COTMA is going to be tapered off this year. But I have a bit of concern in terms of expectations of disputes probably going up later this year, especially between contractors and their respective employers. So, my first question is whether there will be any low-cost ways for these firms to resolve disputes going forward, especially if measures taper? Secondly, are there any specific arrangements to transition workers from these BE firms that go out of business?

Mr Tan Kiat How: Mr Speaker, Sir, I thank the Member for the two supplementary questions. On the first point, I would just like to assure the Member that we are very focused on this issue, making sure that the construction works in the BE sector proceed safely and seamlessly. There are very important public sector projects, from housing to transportation, to private residential projects that we know are important to Singaporeans and we want to make sure the construction works continue smoothly and safely and that the entire sector is on a steady keel.

We have been in regular contact with the construction industry, the BE sector, from developers to consultants, architects, engineers, contractors, facility managers, companies big and small. Especially since the Government accounts for almost 60% of the total construction output in Singapore, we have been working very closely with the industry. All the Government agencies, the Government procurement entities, like HDB and LTA, have been working very closely with their contractors and their subcontractors, making sure that work continues.

So, I would just like to reassure the Member that we are monitoring the situation very closely. In fact, my colleagues from MOM and MND meet these firms on a very regular basis, going through issues of payment, workers, inflow of workers, salaries and so on.

On a related second point around the movement of workers, we have been working together with the Singapore Contractors' Association Limited, or SCAL, to look at different mechanisms. For instance, if one firm decides to wind up or decide to shed workers, how can the workers be so allocated or shared with other firms which may be growing their business? There are certain mechanisms in place, including the Manpower Exchange. We are also in close contact with the various firms through the Association. These are issues that we are working on very closely and we will monitor the situation in the coming months.