Written answer by Ministry of National Development on the number of local SMEs impacted by the reduced Dependency Ratio Ceiling (DRC) for the construction sector

Feb 5, 2024

Question No: 5357

Question by: Ms See Jinli Jean

To ask the Minister for National Development (a) how many local SMEs are impacted by the reduced Dependency Ratio Ceiling (DRC) for the construction sector from 1:7 to 1:5 from January 2024; (b) how much will the reduced DRCs impact the SMEs’ project production timeline and cost; and (c) how is BCA educating owners of construction projects involving these SMEs, to factor into their budget the updated cost due to reduced DRCs so that worker safety is not compromised.

Answer:

Based on MOM’s data as of Oct 2023, most local Small and Medium Enterprises (SMEs) in the construction industry would not be affected by the reduced Dependency Ratio Ceiling (DRC) from 1:7 to 1:5, as they were already operating within the reduced DRC of 1:5.

2.             The Government has implemented various measures over the years to smoothen the industry’s transition to the reduced DRC. First, we gave firms almost two years to adjust to the reduced DRC, by announcing the move in February 2022.

3.             Second, we mitigated disruption to existing operations, by allowing firms that exceeded the reduced DRC of 1:5 on 1 January 2024 to retain their workers who exceed the firm’s DRC limit until their work passes expire. This applied to workers who were hired or had their work passes renewed before 1 January 2024.

4.             Third, we made moves to shift the construction industry towards more productive and less manpower-intensive building methods. For example, we required firms working on all large building projects (i.e. projects with a Gross Floor Area of 25,000 sqm and above) to adopt Design for Manufacturing and Assembly (DfMA) technologies from April 2022. This enables the shift of construction activities to offsite, factory-like settings that are safer and more productive. To facilitate the adoption of these technologies, we supported firms with co-funding schemes, like the Productivity Innovation Project (PIP).

5.             Taken together, these measures help firms to streamline their processes to operate within the reduced DRC. The Government will continue to partner the construction industry in its transformation journey.