Cheer for small builders

Mah provides sneak peek of revived projects to be announced on Budget Day

MORE deals up for grabs, less money required upfront and subsidised courses to groom local talent these are some of the initiatives that small-time construction firms can keep their eyes peeled for come Budget Day next week.

The sneak peek, provided yesterday by National Development Minister Mah Bow Tan, brought cheer to struggling contractors, although some hoped the measures will benefit local players more than foreign ones.

“These measures to be introduced by the authorities are appropriately timed,especially when the economy is doing badly,” saidMr Chan Eng Meng, a manager from C.A.H Construction. “Now we just have to see what the exact projects are that the Government is bringing back.” Details such as the number of public-sector projects will be announced in the Budget speech on Jan 22.

The contracts to be revived starting from mid-year which may be for schools and Housing Development Board (HDB) estate upgrading promise to be bite-sized for small players, as Mr Mah said the value of each would not exceed $50 million.

“We will also bring forward other suitable new projects in the pipeline, in addition to the projects that were originally planned for 2009,” said Mr Mah, who had said in December that some of the Government’s$4.7-billion worth of deferred construction projects would be brought forward with priority given to small ones.

Those are separate from the $22-billion to$28-billion worth of construction projects estimated by the Building and Construction Authority (BCA) to be awarded this year. The amount, despite an expected dip in demand this year, remains much higher than the average annual demand of $13 billion from 1998 to 2006, said Mr Mah.

There are 1,500 small and medium contractors defined as having annual revenue of under $1 million on the 2,000-strong membership list of the Singapore Contractors Association Limited.

Many applauded the Government’s pledge to lower the security deposits required for public construction projects from “5 per cent to between zero and 2.5 per cent wherever possible”.

This is because banks will then ask for a smaller amount of collaterals to issue security deposits, said Mr Goh Yeow Lian, executive chairman of Wee Hur Holdings.

But a local manager, who declined to be named, told Today that breaking down the projects into smaller amounts would be helpful. “This way, the local smaller players can be involved and as a result, prevent revenue from flowing to other countries,” he said, explaining that some of the big scale projects have been won by foreign firms, which in turn buy the raw materials from their home contacts, causing an outflow of money to foreign countries that are resource-rich.

Another assurance from Mr Mah was that government agencies would make more prompt payments to contractors once the certified works are complete. The Building and Construction Authority (BCA) is also encouraging private developers to follow suit, he said.

It was reported four years ago that HDB upgrading projects were delayed because contractors faced financial difficulties; HDB then came out to say that it would help by paying contractors at more stages as the work progresses.

Training-wise, the BCA is working with the Work Development Agency to introduce training programmes to draw locals into the construction industry. This Saturday, there will be a career fair for such jobs.

Would the small players like to see the latest measures around regardless of whether the times are good or bad?

Mr Chan, who especially hoped the lower security deposit would stay, said “It would be good if these initiatives are here to stay for the long term, because if there are more players in the market, the industry will be more competitive. When there is competition, costs will be driven down.”

Source : Today – 15 Jan 2009

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