Source : Straits Times - 26 Mar 2009
A WAVE of construction is set to begin on new public buildings as the Government steps up infrastructure spending amid the recession.
Analysts say the public projects will help prop up the construction sector for the next year or so, but they warn that the sustainability of the industry depends on construction demand beyond next year.
Industry revenue needs to hit $22 billion a year on average to sustain the building sector, Singapore Contractors Association president Desmond Hill told The Straits Times.
Below this level, contractors might struggle to survive - especially if the recession deepens, he added.
Public spending on infrastructure, meanwhile, will reach a record high of $18 billion to $20 billion this year.
Senior Minister of State for National Development Grace Fu said earlier this week that another $15 billion to $17 billion will be spent each year in 2010 and 2011.
This was predicted by the Building and Construction Authority (BCA) earlier in January.
Major projects to be awarded this year will include the National Research Foundation’s research campus, JTC Corp’s International School Campus at Tampines, and support facilities for Gardens by the Bay at Marina South, said the BCA.
Health-care and educational facilities will also undergo works, such as redevelopment at the Singapore General Hospital and student hostels at the National University of Singapore.
The Ministry of Education is also expected to make substantial investments to upgrade various schools and institutions, it said.
Overall, about 40 per cent of public- sector demand will come from building projects, with the remaining 60 per cent from civil engineering works.
The Government has stepped back into the construction sector less than a year after it deferred projects worth $1.7 billion last July.
The deferment was to ease pressure on building costs and resources amid a private-sector construction boom, driven in part by the residential property boom.
That came after it had already deferred projects twice: $2 billion worth in November 2007, and $1 billion in February last year.
Major public projects such as the Jurong General Hospital, National Art Gallery and the Communicable Disease Centre were put on hold then, but are now back on the drawing board.
The BCA said work on these projects will commence come 2010 to 2011, along with further investments in upgrading facilities in various housing estates.
CIMB-GK economist Song Seng Wun said construction demand is unlikely to match the record high last year of almost $35 billion for a while.
He estimated it will come in at $15 billion to $25 billion in the next couple of years. ‘The variable factor is dependent on the private sector, whether they will push back residential projects,’ he said.
Its slowdown is unlikely to have a huge impact on Singapore’s gross domestic product (GDP), however, as it contributes only a small component of GDP - 4 per cent last year, for instance.
Still, increased public spending means the skies ahead look brighter for the construction sector than for manufacturing, which is currently suffering, he added.
Industry experts say government forecasting of actual projects will help contractors plan for the future.
Knowing exactly how many contracts - whether for schools, buildings, or public transport - will be offered in the next few years will give builders assurance, said Mr Hill. ‘Companies won’t panic and cut staff numbers, if they know there’s work coming.’
In the pipeline
2007 to 2008
$4.7 billion worth of public projects deferred
2009
$18 billion to $20 billion worth of projects to be awarded
Upgrading of various schools and institutions by the Ministry of Education
National University of Singapore student hostels and teaching facilities
Research campus for National Research Foundation
JTC Corp’s International School Campus in Tampines
Redevelopment of SGH Pathology Education Research Building and National Heart Centre
Construction of cool conservatories, SuperTrees and support facilities for Phase 1 of Gardens by the Bay at Marina South
2010/2011
$15 billion to $17 billion each year
Conversion of former Supreme Court/City Hall to the National Art Gallery
Redevelopment of Communicable Disease Centre
Construction of Jurong General Hospital
More student hostels
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