Round-Up Speech by Minister Desmond Lee on the COVID-19 (Temporary Measures) (Amendment No. 3) Bill

May 11, 2021

Mdm Deputy Speaker, I thank all the Members for their comments and ideas to tackle the immediate situation that is confronting our construction sector and the impact on our home buyers, and also suggestions that many of you have made with regards to mid- and long-term future of construction here in Singapore. Let me address the issues raised.

Public Sector Expenditure and Projects

Mr Louis Ng was concerned about public sector expenditure and our fiscal prudence. The pandemic has indeed driven up manpower costs for contractors, so we need to share some of this burden. But in doing so, I agree with him that agencies will need to maintain fiscal discipline. And when adjudicating claims, the Assessors will take into consideration the amount of support that has already been provided, such as Foreign Worker Levy rebates and other forms of support, in determining what a just and equitable outcome of manpower cost-sharing should be.

Mr Yip Hon Weng spoke about the need to engage developers and contractors to better understand their difficulties, and not just press them to complete their projects as if it was business as usual; and he had given some examples anecdotally about agencies using a template to press contractors. I seek the Member’s support to provide details so that we can look into these concerns that have been raised. Based on what we know so far, the only template that our agencies have been circulating to contractors is one with regards to prolongation costs submissions; and in fact, agencies are pressing contractors to submit their claims for prolongation costs because these agencies want to lean forward to help these firms cope with non-manpower-related cost increases. It would be best for us to check the facts.

I agree with the Member that we need to adopt an even stronger collaborative posture during this crisis. There are many interlocking relationships in the sector, and if one goes down, the entire project will be in peril. Therefore, we all have to lean forward to help one another. This applies to both government agencies as well as private developers.

In fact, when the crisis started last year and construction work had to be shut down for some months, we formed a working group comprising Government agencies and trade associations like SCAL and REDAS. At the start, we met every day digitally, then on a weekly basis, and now we still meet once a month, to better understand the situation on the ground as it evolves, to flag issues up, and to work together to resolve them practically. We have also asked government agencies to lean forward to help contractors through this difficult period. Several agencies have gone above and beyond our previously announced measures to help contractors, such as granting even more extensions for contractors to complete their projects. Notwithstanding this, we are looking at ways to simplify the process for public sector projects, similar to what we have done for the non-manpower prolongation cost claims, as well as the additional extensions of time, where direct disbursements and extensions were given respectively, without the need for extensive and prolonged negotiation.

Mr Henry Kwek suggested extending the Additional Buyer’s Stamp Duty remission timeline for developers, to relieve pressure on them too. We had earlier provided a 12-month extension of the Project Completion Period and Additional Buyer’s Stamp Duty remission timeline for commencement and completion, and a 6-month extension to the remission timeline for sale, to account for delays due to COVID-19. We will continue to monitor the impact of the COVID-19 pandemic on various stakeholders, including developers, and take further steps as necessary.

Additional Measures to Address Manpower Shortage

Mr Louis Ng referred to BCA’s recently announced scheme to temporarily allow new PRC construction Work Permit Holders to enter Singapore to work first and then take their skills certification test locally instead of in China. He asked if the Government could consider introducing similar temporary exemptions for other countries. To provide some context, BCA had earlier consulted the industry on possible measures to help alleviate the manpower crunch in the construction sector. The Singapore Contractors Association Limited, or SCAL, had suggested exercising flexibility on the skills entry requirements, in particular for PRC Work Permit Holders, as they are highly skilled in certain key trades such as carpentry and structural works, as compared to workers from other countries. Taking this industry feedback onboard, BCA worked with MOM to roll out this temporary flexibility to help facilitate the entry of PRC Work Permit Holders. BCA will discuss with the industry to assess if this approach can be extended to workers from other approved source countries and examine this proposal carefully.

Mr Louis Ng and Mr Henry Kwek asked whether the Government can consider new sources from which to recruit construction Work Permit Holders. We are prepared to consider various options to alleviate the current manpower crunch facing the whole sector. But we must consider the COVID-19 situation in these countries, as well as the construction industry’s demand for workers from such sources. Adding more sources may not necessarily be the solution, as the pandemic seems to be worsening globally.

Regarding Mr Henry Kwek’s suggestion to set up forward operating bases, BCA is actively in discussion with trade associations and industry partners who are exploring upstream ways to ensure the health and safety of foreign workers that they recruit, while meeting Singapore’s more stringent public health stance.

In addition, Mr Kwek suggested increasing the allowable age for foreign workers from 50 to 55, and to 60 with regular medical reviews. He also asked whether workers can be allowed to work longer if they can have more rest due to the decreased work intensity during weekdays. To clarify, MOM already allows existing Work Permit Holders to renew their work permits with their current employers up to the age of 60. For workers above the age of 50 who wish to change employers but are unable to do so due to the age limit, MOM will assess appeals on a case-by-case basis. As for working longer hours, it is important that workers get sufficient rest for their well-being and safety. This is why the Employment Act stipulates that the normal hours of work shall not exceed 44 hours per week. In addition, employers must not make their employees work for more than 12 hours a day including overtime, with a limit of 72 hours of overtime in a month. Extending working hours beyond this could lead to fatigue and compromise workers’ safety. Moreover, they have already been through an extremely difficult time last year, and they are still subject to stringent safe management measures.

Mr Kwek also suggested postponing the construction phase of new projects, given the reduced supply of manpower. This is indeed something we are looking into for public sector projects. But we need to calibrate this carefully. We need to deliver homes and infrastructure such as public transport. And we also want to ensure that there is a pipeline of work for our construction sector, so that we retain capacity during this crisis.

Mr Kwek also rightly pointed out that we need to prepare for potential further restrictions on construction works, given the fluidity of the current COVID-19 situation. I would like to reassure the Member that BCA is working with the relevant agencies on contingencies and drawer plans. I also thank the Member for acknowledging the hard work put in by our officers in helping the industry through this crisis. It has been a difficult time for them and for the sector. We will certainly continue to support and encourage our officers as they persevere with these efforts.

I will take this opportunity to address the query by Mr Pritam Singh, the Leader of the Opposition, about the impact of the COTMA Amendment Bill on BTO prices. It is important to set things in context. The Bill relates to construction contracts entered into before 1 October 2020. For BTO flats that have already been sold, their prices would not change. Likewise, for new BTO contracts, we do not price HDB BTO units to recover construction costs or land costs. Certainly, it would cost more as a whole, but this is not a factor in determining the prices. What we have seen during this crisis is that contractors are buffering up for uncertainties, because they do not know what twists and turns there are in the road ahead. As many of them have found to their detriment last year, and therefore tender prices as a whole for both public and private sectors, we see an increase. With such a contract in place, it will enable contractors to be assured that uncertainties will be cost-shared between contractors and their clients. We hope this will provide more assurance to contractors - whether it is a BTO project, a public sector infrastructure project or a private sector project.

Other Support Measures

Mr Yip Hon Weng asked the Government to consider more measures to help contractors, such as enhancing the Jobs Support Scheme for the sector, further reducing the Foreign Worker Levy and providing additional time for project completion. As I mentioned earlier, we have already intervened significantly and put together a suite of support measures to help the construction industry to cope with the challenges brought about by the COVID-19 pandemic. We will monitor the impact and review if additional support is required as the situation evolves. BCA will also continue to engage industry stakeholders on their concerns, including on availability of credit, as Mr Henry Kwek mentioned. However, all of these are short-term stop-gap measures to help stop the bleed. Fundamentally, we need to work closely with the industry to continue our multi-year effort to transform the sector to become more productive, to grow good local jobs and to reduce overall reliance on low-skill foreign manpower, for longer-term resilience and sustainability.

In this regard, I would like to thank Dr Jamus Lim and Mr Leong Mun Wai supporting efforts that we have been undertaking since 2017 to push for a holistic transformation of the construction sector from end to end. Dr Jamus Lim emphasised that by raising the cost of foreign workers, that in his view, will push employers and contractors to spend more on capital investments to be more productive. We agree to a certain extent, but it actually goes a lot further than that. If he looks at the Industry Transformation Map (ITM) for the construction sector, where we brought developers, contractors, consultants, academics, unionists all together to work on. It is not just the price or the availability of foreign manpower, but assuring that we digitalise the whole sector; that we put in significant investment in technologies; and that we fund, grant, support, train our sector, in order to bring into Singapore and our construction sector a whole new way of construction, which is far more productive that involves advanced precast that can be done off-site.

I would ask both Members to read about our ITM and tell us whether they fully support it. In fact, during COS this year, both MOS Tan Kiat How and myself, took pains to explain again our efforts to transform the sector and create good jobs for our local graduates, diploma holders and ITE certificate holders, in order to push the sector forward. Mr Leong Mun Wai’s point that the Government makes no effort in pushing productivity in the construction sector – that we don’t create jobs and opportunities for Singaporeans – befuddles me. If the Member would read and re-read MOS Tan Kiat How’s speech, he gave examples after examples of Singaporeans describing their journey into the construction sector, seeing how the sector has evolved, how technology has created a niche for them and enabled them to build more productively. Old timers would have seen how construction has moved from 2D to 3D using automation, and young entrants are very excited over the construction sector becoming far more high-tech, digitalised, connected, inter-connected and multi-disciplinary. All these works are happening at great speed.

Dr Jamus Lim felt that productivity in the sector has not improved despite efforts. As a result of efforts over the many years, for example, when we pushed out the buildability score, builders have to meet a certain buildability score before they are allowed to build; we have GLS sites with pre-conditions on productivity and methods of constructions before one can develop the land. All these efforts, including grants through the Construction Productivity and Capability Fund (CPCF), the new Growth and Transformation Scheme, and our Productivity Innovation Project (PIP) incentive scheme – all these are efforts to transform our sector. But because the construction sector is a long value chain, it takes time and resolve, and no one firm can do it on its own.

As for Mr Leong Mun Wai, he sensed that there is no effort to bring Singaporeans into the sector. Apart from MOS Tan Kiat How’s speech outlining those efforts just a few months ago, I would also share that we have a BCA industry scholarship. Year after year, we award to Singaporeans – in ITE, in polytechnics, in universities – scholarships for young and bright Singaporeans who want to venture into the sector – into architecture, into building, into M&E, into digital space for construction. We pay the bulk of the scholarship, while the industry pays up to 20%, and the students are bonded to local firms, in order for Singaporeans to be injected into these firms, to grow with these firms. All these are efforts that are publicised, and I invite Mr Leong Mun Wai to come have a chat with us, so that we can tell you more about these efforts, and I hope you will support them wholeheartedly in growing a strong local core in our construction sector. But this is multi-year work – it involves changing mindsets, it involves changing the way firms work, the way firms work with other firms, and it involves the Government.

But I think the crux of the Bill today, it essentially is about this crisis that we are facing. In the mid- to long-term, we will put in a lot of effort, just as we have done in the last few years to transform our construction sector end to end. But in the meantime, what is this House asked to decide at the end of this night? Our sector, local construction firms that are faced with severe manpower crunch, asked to deliver projects, and not withstanding all the support that the Government has given, they are short of workers. What we are saying is that because costs have increased beyond their expectation at the point in time when they bid for these contracts, should we or should we not pass legislation to facilitate the sharing of these additional costs. These are abnormal times, calling for superhuman efforts to keep Singapore going, and this is so even in the construction sector, which is so interwoven and which touches the life of all Singaporeans on almost every front – building of your homes, building of your roads, building of your public transport, and building of medical facilities that are so critical in the fight against COVID-19.

I get a sense from Mr Leong Mun Wai that he does not support this Bill; does not support bearing some of the burden that Singaporean contractors are suffering under; does not support bringing in foreign workers in order to help the sector to cope during this period. I recall him saying not to bring in foreign workers, let the contractors take this time during the crisis to learn how to live with less foreign workers. I hope I am mistaken, but perhaps the Member could confirm if he supports this Bill? Does he support the need to help the whole sector during this time? Does he support the need to alleviate the suffering and pain of the construction sector, which will then have knock-on effects on home buyers, property buyers, companies and businesses who are waiting for their properties. He made a number of other points – he talked about cooling the property market by increasing Additional Buyer’s Stamp Duty (ABSD), and taking the money to pay for the cost increases, and also using the money to fund more HDB rental flats. It may be better for the Member to raise a Motion, put out his ideas, set out his sums as to how much more ABSD he wants to raise, and is it for Singaporeans, PR or foreigners, and how much he thinks it will yield and how much will it go in addressing all the strategies he has set out in his speech earlier.

In response to Mr Pritam Singh, I just wanted to clarify whether he supports bringing in more foreign workers at this time, in order to keep the flow of manpower to the construction sector going, because he spoke to many contractors who are concerned about the current situation. Does he then support bringing in more foreign workers, or does he want to freeze bringing in foreign workers?

Management of Trade-offs

Finally, I agree with Professor Hoon Hian Teck that our approach has to be adaptive, and strike a balance between saving lives and protecting livelihoods. Indeed, these are complex, dynamic and fast-changing trade-offs that we have had to consider in managing this pandemic. Minister Lawrence Wong explained how the Ministerial Taskforce has sought to steer us through these uncertainties, in his Ministerial Statement earlier today. Unlike some other countries, Singapore needs to preserve jobs and capabilities by staying connected to the world. We will continue to carefully monitor the economic situation as well as the global health situation and make adjustments as necessary.

Conclusion

Mdm Deputy Speaker, in conclusion, the amendments before the House today are an important part of our overall support package for the construction industry, in view of the manpower crunch brought about by the pandemic. I thank Members and all our industry stakeholders for their strong support for these measures.