Singapore’s financial and construction sectors set to weather crisis

Singapore’s marine engineering, construction and financial sectors are among those the government expects to thrive amid the current financial crisis.

Observers say the construction industry will be boosted by long-term contracts while the strong asset quality of local banks is shielding the financial sector from global turmoil.

Local financial institutions have been beefing up their risk management capabilities and improving asset quality in recent years.

These measures are expected to ensure the banks have a more robust capital base, and could also give them an edge over foreign players.

Senior director of Financial Institutions in Asia at Fitch Ratings Singapore, Ambreesh Srivastava, said, “At this point in time, capital is at a premium, and anyone who has capital would probably have the confidence of the market, and stand to gain at the expense of the others who are facing a crisis of confidence.”

The construction sector is thriving on long-term contracts signed during the 2007 property boom. Many of these projects are slated for completion in two or three years, and the industry is expected to be kept busy till then.

The downturn the construction sector experienced in 2005 also weeded out weaker players, leaving stronger firms which are more likely to weather the current storm.

President of Singapore Contractors Association, Desmond Hill, said, “We’ve had a bad patch where we were actually in negative growth, and in fact, only in the last one and a half to two years, the industry started to pick up again. So the contractors that are currently still around actually are quite resilient.”

According to industry players, this resilience has convinced banks of their reliability, and construction firms have yet to see any impact on their lines of credit.

Source : Channel NewsAsia – 7 Oct 2008

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