CONSTRUCTION INDUSTRY (Release of more public sector work to private sector)

Mr Goh Chong Chia asked the Minister for National Development whether he will consider releasing more public sector work to the private sector instead of giving the work directly to Government corporatised companies as the construction industry has yet to recover from the 1997 economic crisis.

Mr Goh Chong Chia (Nominated Member): Mr Speaker, Sir, in asking Question No. 6, I wish to declare that I am an architect in private practice.

The Minister of State for National Development (Dr John Chen Seow Phun (for the Minister for National Development): Mr Speaker, Sir, the Public Works Department (PWD) was corporatised in 1999 as part of the Government's efforts to progressively devolve its non-policy and non-regulatory functions to the private sector. This would benefit the private sector in the long term.

To effect the corporatisation, the Government granted the corporatised PWD a moratorium period of five years starting from 1st April 1999. During this period, PWDCorp Pte Ltd is to continue with architectural and engineering consultancy, project management, and construction supervision for the construction and engineering projects of Ministries. This is to ensure a smooth transition process in the corporatisation. However, projects of $20 million or below are opened for competition among the private sector consultants. The value of work assigned to PWDCorp during the moratorium period is not more than what was already with the PWD before its corporatisation. PWDCorp does not perform any construction works.

The private sector has in fact benefited as a result of the PWD corporatisation. Before its corporatisation, PWD was handling all Ministry projects. Since corporatisation, the Government has directly awarded more than $450 million worth of projects each year to other private sector consultants. Nearly half of these are sizeable projects worth between $12 million and $20 million in value each.

Mr Simon S C Tay (Nominated Member): Sir, I believe the Minister of State mentioned $450 million worth of contracts. Could I know how much this is as a percentage of the works given out by the Government?

Dr John Chen Seow Phun: Sir, I do not have the figures with me, but let me just do a mental calculation. For $450 million, if you exclude the big projects, eg, reclamation and so on, I would say maybe in the region of 10%-20%. It is just a guess.

Mr Simon Tay: Sir, I appreciate the Minister of State doing his back-of-envelope work. 10%-20%, if it excludes the very large projects like reclamation, seems a little low, if I may say. Is there any inclination to push it up higher? Is the private sector up to the job? Historically, the Government has had reasons to doubt the private sector. But for capacity growth in this sector, could this not be fostered?

Dr John Chen Seow Phun: Sir, may I remind the hon. Member that PWD was formerly part of the Government and all the jobs were given to PWD. This moratorium is basically to ensure a smooth transition. PWD is now in the private sector and, therefore, it has to compete with the private sector for all the jobs, although there is a 5-year moratorium. Once the moratorium is over, they will have to compete on an equal footing. So, because it was only corporatised in 1999, I am sure, over time, the percentage and value will increase.

Mr Thomas Thomas (Nominated Member): Sir, since PWD is now privatised and in the private sector, can the Minister of State tell us how much private-sector work is PWD doing?

Dr John Chen Seow Phun: Sir, this is a related question. If I know the exact figure, I would have been able to give the percentage to the hon. Member. However, now that he has jogged my memory, PWD is doing a lot of Government work, eg, schools, even the Terminal 3 design and so on, but the huge projects, eg, MRT excavation, all these are not done by PWD. I will have to check whether I am right, but I believe it is actually more than 10%-20%, probably even close to 50%. We are talking only of PWD, not Government, because Mr Tay asked about Government projects. Government projects include many other things. If my memory serves me right, it is probably about 50%. In that case, PWD would handle about $500-$600 million, and the private sector handles the other 50%.

Mr Goh Chong Chia: Mr Speaker, Sir, in view of the prolonged recession in the construction industry, would the Government consider reviewing the moratorium?

Dr John Chen Seow Phun: Sir, we have forwarded the feedback to the Ministry of Finance and I believe they are currently reviewing it.