CONSTRUCTION 'BUBBLE'

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CONSTRUCTION 'BUBBLE': 13.

Mr Liang Eng Hwa asked the Minister for National Development in view of the mega projects coming up, including the two Integrated Resorts, developments at Orchard Road and the sports hub (a) whether this will lead to the formation of a construction “bubble”; (b) what his Ministry intends to do to manage the expected tight labour market in the construction industry; and (c) whether this will lead to higher cost of construction for public housing and upgrading projects.

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Ms Grace Fu Hai Yien (for the Minister for National Development): Mr Speaker, Sir, with the positive economic outlook and launch of several major developments, including the Integrated Resorts, Business Financial Centre, and Sports Hub over the next few years, we expect a considerable upturn in construction activities.

The Building and Construction Authority (BCA) has projected that the annual construction outputs would rise to between $14 and $17 billion for the next few years, up from about $12 billion achieved in the past three years. For the Member's information, this is still significantly lower than the peak volume of almost $20 billion achieved between 1997 and 1998. So, the issue of construction "bubble" actually does not exist.

The rise in construction activities will lead to a corresponding increase in demand for construction manpower. That the Government acknowledges. BCA estimates that the industry would require an additional 40,000 to 50,000 foreign workers, including supervisory and professional staff. My Ministry is working closely with MOM, and we have already initiated several measures to ease the manpower supply situation.

Since October 2006, MOM has raised the quota for S-pass holders from 5% to 10%. From January 2007, MOM will exempt foreign workers from Non-Traditional Source countries who have worked in Singapore for at least six years from the Man-Year-Entitlement requirements. This would free up a supply of about 40,000 experienced NTS workers. BCA is also setting up more Overseas Testing Centres at the source countries to certify and facilitate the entry of additional foreign workers.

My Ministry and MOM will continue to work with the relevant public agencies to

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monitor and stay responsive to the industry manpower needs.

Construction costs, like other goods and services, are subjected to market forces. The Member should remember that the construction industry is recovering from contraction since early this year. So they are actually starting from a low base. While appropriate manpower policy adjustments could help to mitigate potential cost increases, with the strong demand for construction manpower and materials, we expect construction cost to rise gradually.