Written Answer by Ministry of National Development on financial viability of construction firms with government contracts

Nov 1, 2021

Mr Shawn Huang Wei Zhong: To ask the Minister for National Development in view of construction firms continuing to face immense cost pressures and COVID-19 uncertainties (a) what is the assessment of the financial position and viability of construction firms with government contracts today compared to 2020 and whether there is an increased risk of default; and (b) whether any additional measures are considered by the Government to reduce this risk and ensure the viability of the industry. 

Answer:

Since last year, the Government has put in place a wide range of support measures to help construction firms cope with the cost pressures brought about by COVID-19. This includes the $1.36 billion Construction Support Package to help firms in the construction industry cope with the cost of implementing safe management measures at worksites, as well as to co-share prolongation costs for public sector projects. Firms have also received support for their manpower costs through the Jobs Support Scheme and Foreign Worker Levy waivers and rebates. The Government has also put in place unprecedented legislative mechanisms through the COVID-19 (Temporary Measures) Act to provide relief for contractors, and to enable equitable co-sharing of increased costs by project parties due to the pandemic.

These measures have helped the construction industry tide through the crisis. The number of contractors deregistering from BCA’s Contractors Registration System (CRS) due to financial reasons has remained stable at less than 1% of the total contractors registered in 2020 and 2021. However, for some firms which were already experiencing financial difficulties prior to the pandemic, the prolonged impact of COVID-19 has further weakened their financial positions.

BCA will continue to closely monitor the financial health of contractors, and will continue to work with the relevant Trade Associations and Chambers to provide the necessary support for the construction industry.