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Construction trade body hands government its first-ever Budget wish list

11 January 17 | The Business Times


WARY of intensifying pressures on the construction sector in the near future, the sector's representative trade body has submitted its Budget wish list for the first time to the Finance Ministry (MOF).

The almost 3,000-member strong Singapore Contractors Association (SCAL) had handed the list over last month, hoping for fiscal support measures to give the sector more time - and room - to defray costs.

It also asked for more support to help construction firms reposition themselves for the future economy.

Cost is the most important consideration, especially in this economic context, said SCAL president Kenneth Loo when approached by The Business Times.

Prior to this year, SCAL used to submit its Budget wish list through the Singapore Business Federation (SBF).

We submitted the list to MOF directly in the hopes that more can be done for the sector. It's good for a communication purpose, we want our voice to be heard, he added.

Official flash estimates showed that the construction sector saw 1.3 per cent growth for 2016, but had entered a technical recession in the second half of the year.

It shrank by 14.8 per cent in quarter-on-quarter terms in Q3 2016, then a further 4.7 per cent in Q4. The sector's output in Q3 was valued at S$4.7 billion. Full estimates for Q4 will be released in February.

There has been a noticeable slump in projects awarded in 2016. About S$26.1 billion was awarded last year, some S$1 billion less building and civil engineering work than in 2015, a government official had said recently.

Public-sector projects are expected to provide a stronger boost for the sector in 2017. Some S$28-35 billion worth of construction contracts will be awarded this year, with public-sector ones making up 70 per cent, or up to S$20-24 billion.

But there was no denying the gloom that has clouded the sector. Mr Loo said that members were worried about costs as the number of projects awarded dipped.

As such, the association is hoping that the government can step in more to take advantage of the over-capacity in the construction industry.

It also urged the government to delay the expected increase in foreign worker levy. On July 1 last year, the foreign worker levy for R2 workers rose from S$550 to S$650. It is expected to increase further to S$700 this year.

Acknowledging that the sector cannot be going back to the old days of relying on foreign labour, Mr Loo said that the levy remains a major, if not the biggest cost for construction companies.

SCAL is hoping also that the Productivity and Innovation Credit (PIC) scheme can be extended so that more construction firms can invest in technology and innovate to raise productivity. This will improve firms' bottomlines.

At the same time, the trade association also suggested that a parcel of vacant land can be set aside for construction firms to park their idle heavy machinery and equipment at an affordable rate.

Many construction firms have invested a lot in equipment to raise productivity, but now that construction volume has dropped, they need to find space to put these machines aside, said Mr Loo.

Workplace safety was also a major concern in SCAL's wish list. It suggested that separate budget provisions on workplace safety and health should be introduced in government procurement and tendering for all government construction projects to improve workplace safety.

SCAL noted that the construction sector will be a major pillar of Singapore's future economy as it looks to grow areas such as urban solutions and logistics. As such, it proposed that the government provides incentives such as grants, tax rebates or concessionary tax rates to large companies that hope to forge collaborations with small local companies.