Construction firms challenged as business shrinks, cashflow hit

Singapore

THE beleaguered oil and gas industry has barely started to climb out of the hole when another major business sector - construction - is headed for dark times, with increasing liquidations and collapses.

Backed into a corner by a shrinking market and cashflow gap, at least 20 construction and engineering firms were involved in winding up applications in the third quarter (July to September) alone, according to a count by The Business Times.

Corporate lawyers say that despite the recent property en bloc boom, more builders - especially small and mid-sized ones - have been struggling to stay afloat amid a liquidity squeeze and mounting debt as the sector continues to languish.

Justin Yip, partner, Withers KhattarWong, said: "In the last few years, we have seen an increase in small and mid-size construction companies getting into financial difficulties, resulting in filings for judicial management, liquidation and appointment of receivers over the…