Delayed or Terminated Sports Infrastructure Projects

Mr Muhamad Faisal Bin Abdul Manap asked the Acting Minister for Community Development, Youth and Sports (a) what are the lessons learnt from the recent Changi Motorsports Hub saga as well as the delay in the construction of the Singapore Sports Hub; and (b) what are the measures that the Ministry is taking to prevent such problems from happening again in the future.

The Acting Minister for Community Development, Youth and Sports (Mr Chan Chun Sing): Mr Speaker, Sir, the Changi Motorsports Hub (CMH) and Sports Hub are different types of projects with different financing arrangements. The Changi Motorsports Hub is a commercial project to be fully funded by the private sector and no public funds were invested in this project. The winning bidder of the tender, SG Changi, committed to finance, build and operate the facility according to terms and conditions agreed with the Singapore Sports Council (SSC).

Page: 805

SSC had been closely monitoring the progress of the project throughout. Unfortunately, after paying for the land in full, SG Changi ran into difficulty raising enough funds for the construction of the facility. It was evident by December 2011 that they did not have a feasible solution which SSC could agree to. SSC has therefore terminated the project.

While the termination of the project is primarily due the inability of SG Changi to raise funds, I have nonetheless asked SSC to conduct a detailed post-mortem so that we can do better in future. This would include how the evaluation process and criteria can be refined to better assess bidders' ability to finance the entire project.

The Sports Hub on the other hand is a public-private-partnership (PPP). The successful bidder is to finance, design, build and operate the project through its entire life-span. Each year, SSC will make a Unitary Payment to the bidder that goes towards their debt repayment, amongst other costs, fees, taxes and returns. The bidder would have to ensure the availability of facilities and meet specified performance standards in order to avoid a deduction in their Unitary Payment.

The delay in the construction of the Sports Hub was due largely to the global financial crisis in 2009, which resulted in difficulty in seeking private financing. For this reason, the project only proceeded in early 2010, when the market conditions recovered. If we had insisted on proceeding despite the high financing cost in 2009, the cost to Government would have been significantly higher.

Mr Speaker, Sir, there will always be market risks in large scale commercial projects and public-private-partnerships which involve private sector players. Nonetheless, we should remain open to pursuing such partnerships where the strengths of both the public and private sectors could be combined to bring about the best outcomes for the general public. In doing so, we must ensure that the public interest is safeguarded, as we have done for both the Sports Hub and Changi Motorsports Hub projects.

Mr Muhamad Faisal Bin Abdul Manap (Aljunied): Sir, I thank the Minister. I would just like to ask, in the future, what are the kinds of preventive measures, in terms of building of the Changi Motorsports Hub, that will be put in place to ensure that the tender will go to a more credible bidder?

Mr Chan Chun Sing: Mr Speaker, Sir, I thank the hon. Member for his supplementary question. For the Changi Motosports Hub, like all other private projects, we will have to evaluate the financial strength of the consortium and also their professional ability to execute the project. This will be a key to us safeguarding a public interest to ensure that the projects will go ahead. Having said that, we accept that for all private projects that involve land sales and the private operator taking ownership and responsibility to build those projects, there will still be some inherent risks as per any other private commercial projects.

Mr Cedric Foo Chee Keng: Sir, a follow-up question for the Minister. In some countries where they have no reserves or they have tapped the debt capacity to a large extent, private-public parternership might be understandable. Singapore is rated triple A. We have a lot of reserves. What is the value of going into private sector financing a project where conceivably their interest rates will be higher than the Government's?

Page: 806

Mr Chan Chun Sing: Mr Speaker, Sir, let me explain why we went into the public-private partnership for the Sports Hub. In the development of the Sports Hub, we knew that it was a very significant project that involved not just the construction of a new National Stadium. More important than just the infrastructural development, we were very concerned that we should bring in the expertise to run the whole project in terms of the programming subsequent to the completion of the project. In this, we want to make sure that whoever runs the project for the programming portion, has the ownership to make sure that they do their best and this is why we have structured the scheme such that for every year after the project is completed, as they run the programmes, we will reward them or we give them the Unitary Payment according to their ability to bring in programmes for us.

While we have very good financial standing amongst the community, this may not be the only factor that we consider. So, for example, what we have seen now after the initiation of the Sports Hub project is that, while they are building the infrastructural part of the Sports Hub, they have already commenced the programming component to bring in some of the big sports events. Some of these sports events require a long lead time to do so. So, we will be quietly confident that once the project is completed in 2014, not only will the stadium and the infrastructure facilities be ready, more importantly, the rest of the programming in terms of bringing in events will also run concurrently to meet the schedule and the expectations that we have set for them. So, it is on this basis that beyond the financing cost, we have gone for a public-private partnership in order to bring people with the expertise to run some of these programmes and to bring in some of these mega events to fully utilise the capacity of the new arena beyond what we ourselves may be able to do, by ourselves.