PUBLIC HOUSING AND INFRASTRUCTURAL PROJECTS

Mr Tay Beng Chuan asked the Minister for National Development if his Ministry will consider bringing forward the implementation of major public housing and infrastructural projects to restore the growth of the construction sector which contracted by 16% in the third quarter of 1999.

Mr Mah Bow Tan: For the whole of 1999, the construction sector is expected to contract by 15%. The public sector's share of the total construction demand dropped to 56% in 1999, as compared to 69% in 1998. This is mainly due to the sharp drop in tender prices, rather than the number of projects which increased by 3.9% from 812 projects in 1998 to 844 projects in 1999.

We expect construction demand to pick up this year due to improved market sentiments in the private sector and major public infrastructure projects in the pipeline. The public sector's value share of total construction demand is expected to climb to 70% in 2000. Public civil engineering projects are expected to make up 30% of total construction demand. Contracts for large projects such as the S$1 billion Marina MRT Line and the S$1.5 billion Jurong Island Phase 4 and Tuas View extension reclamation project will be awarded this year. Public residential (HDB) and institutional projects are expected to contribute another 15% each.

HDB's building programme has to be carried out in tandem with its public housing programme. This, in turn, is largely dependent on the demand for new flats. HDB cannot overbuild just to prop up the construction industry. Otherwise, it will result in high holding costs for the unsold flats.

There is generally a 1 to 2-year time lag before construction GDP picks up. As such, we expect the construction industry to contract by about 8.3% in 2000 before regaining positive growth. Based on feedback from the various Government agencies, there is a fair distribution of major projects in 2000 and 2001 which would contribute significantly to the continuous and sustainable growth of the industry over the next few years.