CONSTRUCTION OUTLOOK

Rising Construction Costs

1. The construction industry is enjoying its strongest growth since the last boom in the mid-90s. Last year, total contracts awarded hit an all-time high of $24.5 billion. We expect construction demand to remain robust at between $23 and $27 billion in 2008, and between $21 and $24 billion in 2009.

2. Unlike the previous peak in 1997, the current boom coincided with strong global and regional construction demand. We therefore have to contend with international competition for construction resources. The observations on contracting capacity and cranes are also subject to global forces.

3. The current high domestic demand will continue to put pressure on our construction capacity. The Government has anticipated the recovery of the sector and begun easing some manpower policies since early last year. As we have heard from the Minister for Finance, the ability to forecast is an art, and we will try to do as much as we can. Given the pace of growth, the Government has undertaken several measures to mitigate the situation.

4. First, we have increased the labour capacity construction capacity. Working with Ministry of Manpower (MOM), the Building & Construction Authority (BCA) has taken steps to facilitate the inflow of foreign construction workers and supervisors. These include expanding the capacity of its Overseas Testing Centres and reviewing the list of acceptable qualifications for qualified site supervisors. We have also worked with MOM to further review manpower policies like exempting experienced foreign workers from man-year entitlement requirements, as well as raising the dependency ratio and S-pass quota.

5. Second, BCA is also working with the industry to expand the contracting resources. This includes proactively sourcing and securing competent foreign contractors, together with their management teams and specialist contractors, to undertake projects here.

6. Third, the Government is moderating its demand for construction resources by deferring about $3 billion worth of projects to after 2009. This will reduce demand for construction manpower by about 17,000 workers and 2,000 professional and technical staff over the next two years. Urgent projects that are essential for meeting Singapore’s economic and societal needs, such as key infrastructure development and public housing/upgrading projects, will not be affected.

Quality Assurance

7. Member also expressed concern over the quality of work given the tight capacity situation. I would like to stress that ensuring the quality of our built environment remains a key priority for BCA.

8. Our professional engineers are subjected to stringent registration criteria and continuing professional development requirements. To enhance building safety, the Building Control (Amendment) Bill was passed last year to strengthen our regulatory framework. Major enhancements include regulating of underground building works, licensing of builders and provision of adequate site supervision teams.

SUSTAINABLE BUILT ENVIRONMENT

9. While we tackle the current concerns of resource crunch, we must also remain focused on our long-term vision to make Singapore’s built environment a safe, high-quality, sustainable and accessible one.

Green Mark for Buildings

10. In 2005, BCA rolled out its Green Mark for Building Scheme for buildings. In recent months, through active promotion and intense industry educational efforts, we have seen an exponential rise in the number of buildings applying for Green Mark certification.

11. Today, over 200 projects are awaiting assessment. By the end of FY07, there will be close to 100 buildings that will be Green Mark certified. Of these, 10 buildings have obtained the highest Green Mark Platinum level, achieving at least 30% energy efficiency.

12. There is now a growing awareness of the business case for Green Mark buildings.

13. To demonstrate our resolve to embrace sustainable development, Singapore will become one of the first few cities in the world to require new buildings and those undergoing major retrofitting to meet minimum green building standards come April 2008.

14. To spur industry players to vie for higher than the basic Green Mark standard, BCA has put in place a $20m Green Mark Incentive Scheme since December 2006.

15. Nonetheless, the biggest challenge facing many cities, including Singapore, is undoubtedly getting existing buildings up to Green Building standards. To expedite, BCA is working with the National Environment Agency (NEA) to promote energy efficiency in existing buildings. The Energy Efficiency Improvement Assistance Scheme (EASe) from NEA co-funds the cost of carrying out energy audit for existing buildings.

16. BCA is also developing a new grant to encourage existing buildings to upgrade their building envelopes. The grant, set at about $9 million for a start, will help offset the cost of upgrading façade features to improve the overall energy efficiency of the building.

Sustainable Construction

17. BCA will continue to spearhead concerted efforts to adopt sustainable construction in Singapore. It has issued guidelines on the use of steel and high-strength concrete, and will be implementing engineering guidelines for use of steel manufactured to standards other than the existing British standards. This will offer more flexibility in the choice of steel without compromising structural safety. Together with the Waste Management and Recycling Association of Singapore, BCA, various public sector agencies and industry bodies are developing a framework for accrediting construction waste recycling processing facilities within the next few months. This will ensure that recycled aggregates will have a consistent quality to be used as alternative construction materials effectively.

18. To give sustainable construction a further boost, BCA is exploring the introduction of a $15 million Sustainable Construction Fund to incentivise developers to use sustainable materials in their projects. More details will be released later.

PRIVATE ESTATES

Estate Upgrading Programme (EUP)

19. We have an on-going upgrading programme for our private estates, called the Estate Upgrading Programme (EUP). Introduced in 2000, it is intended for upgrading of the public infrastructure of private housing estates. So far, 30 of our older private estates have been selected for EUP, benefiting some 23,000 dwelling units.

CIPC Scheme for Private Estates

20. To allow for smaller scale upgrading works to complement the EUP, the Government will be introducing the Community Improvement Projects Committee (CIPC) scheme for private estates. The scheme is similar in concept to the CIPC scheme for public housing estates, but will be adapted to suit the needs of private estates. It will allow minor improvement works to be carried out on a timely basis. The scheme will be rolled out in FY2008. More details on this will be made available later.

Regular Maintenance Works

21. Beyond EUP and CIPC, the public infrastructural needs of private estates are also met by the regular upgrading and maintenance work undertaken by various government agencies on an ongoing basis.

Playgrounds in Private Estates

22. Member has asked specifically about the upgrading of playgrounds in private estates. The upgrading or development of new parks and playgrounds in private estates can be undertaken when an estate undergoes EUP.

23. In addition, NParks also looks into the upgrading of neighbourhood parks under its park redevelopment programme. The main criterion for NParks’ upgrading of parks is the condition of the park. Within the allocated resources, priority will be given to those parks where the facilities have undergone more serious wear and tear, and where conditions are poorer.

24. When upgrading park facilities in private estates, NParks would seek feedback from the Neighbourhood Committees to ensure that the facilities meet the needs of the residents.

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