LOCAL FIRMS IN THE CONSTRUCTION INDUSTRY

Dr Teo Ho Pin asked the Minister for National Development (a) what are the key initiatives implemented to nurture local firms in the construction industry to be world-class companies; (b) what are the benchmarks to monitor the progress of these firms; and (c) whether there are further plans to strengthen the capabilities of local firms in the construction industry.

Mr Mah Bow Tan: Singapore is an open economy where both local and foreign contractors compete for our construction projects. This is also in accordance with our WTO obligations.

The presence of large foreign firms has provided the competitive pressure for local firms to upgrade and level up over the years. Many of the firms which were once family-run are now managed by professionally trained personnel. Many are also listed on the stock exchange. In terms of the types of work, our local firms are gaining expertise which were previously the domain of the foreign contractors. Several local firms can now build with precast components and be competitive and innovative in winning projects using buildable design and method of construction. The local civil engineering contractors are also winning contracts for the construction of vehicular fly-overs and bridges. In the area of exports, Singapore construction firms secured over S$1 billion worth of contracts each year in the region, except during the years of the Asian economic crisis.

Given Singapore's small size of the construction industry, we have to be realistic about nurturing local construction firms to be world-class companies. While most would probably not be able to achieve world class standard, they can still attain high standards of project delivery and able to compete for projects in the region.

The Building and Construction Authority (BCA) had implemented several initiatives to upgrade the construction industry. Generally, our local firms had responded well to the initiatives. These include:

a. Raising the work quality of the industry through the Construction Quality Assessment Scheme (CONQUAS) and incentives such as the Bonus Scheme for Construction Quality. All BCA registered G6 to G8 contractors must also attain ISO 9000 certification.

b. Raising the productivity levels of the industry through implementing buildable designs and promoting Design-and-Build arrangements for greater efficiency and integration of the designer and builder.

c. Upgrading technology and Research and Development. A $10 million fund managed by BCA has been obtained to finance R&D of innovative construction products and processes. A $10 million Industry Productivity fund has also been made available to raise the general capability and productivity of the construction industry. Other incentive schemes to help firms in capability building and technology upgrading include the Investment Allowance Scheme, Innovation Development Scheme and Local Enterprise Technical Assistance Scheme.

d. Giving recognition to firms which had demonstrated leadership, innovation and sustained efforts in adopting best practices through the BCA Construction Excellence Awards, Best Buildable Design Awards and the new Construction 21 Best Practice Awards. This has provided a channel for local construction professionals and firms to showcase their work and benchmark themselves against foreign contractors.

BCA is currently working very closely with all players in the industry to implement the various recommendations of the Construction 21 study to propel and upgrade the industry to one that is professional, progressive and productive. In addition, as size and financial strength are necessary to enable construction firms to take on large projects, BCA is looking into the following areas which can help local firms to build size:

a. Revamping the BCA Registry of Contractors by raising the registration criteria for the contractors. Contractors will have to meet more stringent turnover, financial strength, track records and professional manpower requirement criteria to be registered at the various financial grades.

b. Encouraging local large firms to merge or to acquire to grow even larger. A joint study by BCA and SCAL is being planned.

c. Facilitating those local contractors who are ready to venture abroad to develop their second wing.