Construction firms to lose some relief measures amid green shoots for sector

WITH the built environment sector seeing signs of recovery, relief measures supporting firms who cannot perform their contracts and relating to co-sharing of non-labour costs in construction contracts will not be extended, barring any unforeseen circumstances, said Minister of State for National Development Tan Kiat How.

However, the government is reviewing whether the measures relating to the co-sharing of cost increases attributed to foreign work permit holder salaries should be extended.

"While the foreign manpower inflow has been improving in recent months, we will continue to monitor the situation and review whether a further extension is needed," said Tan.

Tan's comments were made in response to a question from Saktiandi Supaat, Member of Parliament for Bishan-Toa Payoh Group Representation Constituency (GRC), who asked whether the government would consider implementing transitional measures to support construction firms once the relief measures expire in Q1 2022.

In his reply, Tan said relief measures under the Act were always "meant to be temporary" and "firms will need to partner each other for long-term sustainability and resilience".

"Based on project progress payments made at the industry level, the current level of construction output is close to pre-Covid levels. This indicates that construction works are progressing at a steady pace," he said.

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Responding to Saktiandi, Tan also said that the number of construction firms which ceased operations in 2021 was comparable to the average number of firms that wound up annually between 2018 and 2020.

About 2,200 construction firms closed their shutters in 2021. Meanwhile, a total of 2,187 construction firms closed their shutters in 2018, 2,347 firms that wound up in 2019, while 2,027 ceased operating in 2020.

"We do not take decisions to intervene in private contracts lightly," said Tan, while reiterating that the relief measures under the Covid-19 (Temporary Measures) Act were extended "several times" to cushion the impact of Covid-19 on the sector.

"This has provided firms with additional time and support to negotiate amicable outcomes between parties."

"We strongly encourage all contracting parties to agree on mutually beneficial arrangements to sustain their projects," said Tan.