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BCA forecasts pickup in construction sector

12 January 18 | The Straits Times

Public building projects are set to give the lacklustre construction sector a much-needed boost this year, even as industry players continue to voice concerns about the state of the market.

Preliminary estimates from the Building and Construction Authority (BCA) yesterday painted a mixed picture for the sector.

On the one hand, the authority is projecting the total value of contracts awarded this year at between $26 billion and $31 billion - a marked improvement from the $24.5 billion awarded last year.

At the same time, however, the final 2017 total of $24.5 billion indicated how dire the situation in the sector has been - falling $3.5 billion short of forecasts. At the end of last year, the sector had shrunk for five consecutive quarters.

The BCA said that part of the reason for the missed forecast was the postponement of major infrastructure projects such as the North-South Corridor to this year. Such projects could thus provide the turnaround this year.

Public projects are set to be worth between $16 billion and $19 billion this year, more than last year's $15.5 billion, and are expected to make up some 60 per cent of all contracts. Private sector demand is expected to reach between $10 billion and $12 billion, up from last year's $9 billion.

The Government has already brought forward $1.4 billion in public projects, Mr Desmond Lee, Second Minister for National Development, said at the BCA-Redas Built Environment and Property Prospects Seminar yesterday.

He said at the event at the Grand Copthorne Waterfront hotel: We have also been encouraging government agencies to parcel out large infrastructure projects into smaller chunks where possible. This helps agencies diversify risk and creates more opportunities for our local firms.

Led by the public sector, demand is expected to continue increasing in the next five years. A technological shift laid out in the Construction Industry Transformation Map launched last October is also expected to help.

Industry players were cautiously optimistic about yesterday's forecasts, concerned that while the value of awarded contracts will go up this year, the value of the work that is actually done will remain at 2017 levels.

Said Mr Kenneth Loo, president of the Singapore Contractors' Association, which represents some 3,000 companies: Based on the BCA forecast, the construction market would continue to be weak this year. It would take some time for the positive economic outlook to translate to job volume and construction contracts.

This year will still be challenging for firms as the construction volume might be status quo or slightly better. They have to take steps to weather the storm.

Similarly, Ms Jenny Chen, an accountant for 3-link Engineering, which caters to private sector commercial and smaller-scale residential buildings, said her firm has secured more contracts for the coming few years, but that this is still not enough, and its performance is at most average.

We did not have many projects in the last two years and are still struggling. It has been tough, she added.

GA Construction's general manager Joseph Liew, however, sounded a more hopeful note, saying: It is a boost for the industry, especially in the current environment. The last two years have not been ideal, and with an injection (of contracts) on the Government's part, hopefully there will be a big enough pie for everyone.