Construction demand set to fall: Mah

Source : Business Times - 22 Oct 2008

Govt may inject public projects that have been deferred if need arises, but care over timing essential

THE construction sector here must be prepared to face tough and challenging times ahead as demand is expected to decline, said Minister for National Development Mah Bow Tan yesterday.

‘The construction sector will also not be spared the turmoil of the financial markets and weakening economic climate,’ said Mr Mah, who was speaking at the Singapore Contractors Association Limited (Scal) anniversary dinner last night. ‘While the domestic construction demand this year is estimated to reach between $27 billion and $32 billion, it is expected to decline as we go forward.’

Mr Mah also said that industry regulator Building & Construction Authority (BCA) has been monitoring the industry situation closely. ‘From the feedback BCA has gathered from developers, contractors and professionals in recent weeks, we have not seen any disruption or slowing down of work progress due to the crisis so far,’ he said. ‘Progress payments of projects have remained prompt and stable.’

Mr Mah’s assurances come as the industry has been hit by negative news, with several projects being pushed back due to high construction costs and a resources squeeze.

In view of the expected economic downturn, there have been suggestions that the government should inject some $4.7 billion worth of public projects that had been deferred earlier to ease demand. Such measures have been adopted in previous economic crises.

In response to this, Mr Mah said that the government will certainly do that if the need arises. However, the timing must be considered carefully, he said: ‘Doing so now, when the availability of skilled manpower, equipment and other resources is still constrained, will not help. It will only drive the already high construction costs up.’

Mr Mah also called on builders to exercise greater prudence in managing their financial resources and watch out against over-extending themselves on business risks. At the same time, they should also redouble their efforts to improve their productivity and upgrade their capabilities, so as to be better placed to leapfrog competitors and exploit future growth opportunities, he said. In particular, a greater emphasis on manpower development is needed, he said.