CONSTRUCTION INDUSTRY

Mr Tay Beng Chuan asked the Minister for National Development whether the Government will bring forward the implementation of more infrastructure and public building projects to restore the growth of the construction industry which has contracted by 9.8% for the eighth consecutive quarter.

Mr Mah Bow Tan: In terms of contract value, construction demand in Singapore has dropped from its peak of $23.5 billion in 1997 to $15.3 billion in 1998 and $11.7 billion in 1999. For 2000, however, the Building and Construction Authority (BCA) has forecasted that construction demand would rise to $17.3 billion, an increase of $5.6 billion from 1999. This increase is mainly due to two Government reclamation projects. However, the volume of building works is expected to remain stagnant.

As there is a time lag between the award of contract and the progress payments made, the construction industry could move into positive value-added growth towards the end of 2001. This is provided that the good performance of the economy is maintained over the next two years.

To boost the construction demand and to take advantage of the competitive tender prices, the Government has been looking at ways to advance some of the infrastructure and institutional projects. The number of projects awarded by the public sector rose by 25% in 1999, although the total value of projects still fell. This is mainly due to lower tender prices. The Government will continue to look at ways to advance the public sector projects, particularly those that are nearing the tender calling stage. However, as construction projects would need a few years to complete, any action taken now will not lead to immediate results.

Local contractors would inevitably be affected by the fall in construction demand. According to BCA's records, local contractors have been concentrating their activities mainly in building projects. To soften the impact and to avoid being adversely affected by the slow down in the building workload, local contractors should consolidate, merge or diversify their operation to participate in large scale infrastructure works. They should also use this time to improve their productivity, skills and competitiveness to prepare for the recovery of the industry.