DELAY IN COMPLETION OF SPORTS HUB

DELAY IN COMPLETION OF SPORTS HUB: 13.

Mr Viswa Sadasivan asked the Minister for Community Development, Youth and Sports (a) what accounts for the delay in the completion of the Sports Hub; and (b) whether the Government has assessed the pecuniary and reputation damage to Singapore, especially if this delay causes Singapore to give up the opportunity to host the 2013 South East Asian Games.

Dr Vivian Balakrishnan: The Government decided to develop the new Sports Hub through a Public-Private Partnership (PPP) mechanism. In this mechanism, the winning bidder would design, build and operate the entire facility over a period of 25 years. The Government in turn would pay the Consortium for operating the facilities and delivering services at contractually agreed standards through annual payments over the same period. The ultimate objective of using such a mechanism is to have a vibrant, compelling, financially viable and fully utilised public facility. In fact, this is currently the largest sports infrastructure PPP project in the world. I make these points because I want to emphasise that the contractual arrangements for these are very complex, and all parties to this contract must perform appropriate due diligence to protect their respective interests. Consequently, this is far more complicated than a standard Government procurement contract. It would have been far easier and far simpler to simply procure a new building. But this is not the way this contract is being structured.

Specifically in the case of our Sports Hub, external events in the past two years have resulted in a delay in the conclusion of our contract negotiations. The steep rise in building materials and in

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construction costs in the first half of 2008 required both us as well as the bidder to review the financial aspects of the construction. We had actually resolved this by the middle of 2008. Members will recall that we were then overtaken by the global financial crisis which led to a global squeeze on credit lines, not only in Singapore but indeed the world over. All the banks who had previously been happily queueing to extend credit to the consortium then became very reluctant to extend credit or even where they were, they would have extended credit at exorbitant interest rates which would, ultimately, have led to us paying more.

So, if we had proceeded hastily and blindly with the project despite such an unfavourable environment, we would have ended up paying a lot more for building materials and in interest costs. I therefore took the decision to adopt a more cautious approach and to wait for a more appropriate time to proceed.

The Government remains fully committed to the development of the new Sports Hub. In fact, now with the stabilisation of the global economy, stabilisation of construction costs and the gradual improvement in credit availability, we expect the project to get back on track in the coming months.

Mr Speaker: Question time is up, Dr Balakrishnan.

Dr Vivian Balakrishnan: Just one last paragraph. The Consortium has recently launched a financing competition to raise bank financing for the project and there has been significant interest from the banks. So we are targeting to achieve financial close by the middle of the year and to start construction thereafter.

The SEA Games is a significant item in Singapore's sporting calendar, and I

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wanted SEA Games to be our first international multi-sport event held in our new Sports Hub. Consequently, since we are expecting the Sports Hub only to be ready at the end of 2013 or early 2014, I informed the President of the South East Asian Games Federation that it would be best for us to host the Games in 2015. In response, he informed me that there were at least two other countries who were keen to host the Games in 2013. I, therefore, concluded that that would be an optimal outcome for everyone concerned.