Construction set to remain worst performer

Construction workers at the construction site of the new State Courts complex located in Havelock Square.
Construction workers at the construction site of the new State Courts complex located in Havelock Square. PHOTO: ST FILE

Construction will remain the worst-performing sector in Singapore this year, if economists' forecasts are anything to go by.

The sector will grow just 0.3 per cent this year, according to the median forecast of economists in the latest quarterly survey by the Monetary Authority of Singapore.

This was a major downgrade from last December's forecast of 2.4 per cent, after economists absorbed the fact that the sector grew just 0.2 per cent last year.

The figures point to persistent challenges construction firms are facing, even as the Singapore economy continues its recovery, mainly on the back of manufacturing.

For Nan Guan Construction, the slowdown is unmistakable.

SLOWDOWN IN BUSINESS

The volume of work for smaller jobs in the private sector - small apartments, condos - has gone down. BTOs (Build-to-Order units) have gone down as well.

MR AKBAR KADER, managing director of Nan Guan Construction, on challenges facing the construction industry.

"The volume of work for smaller jobs in the private sector - small apartments, condos - has gone down. BTOs (Build-to-Order units) have gone down as well... Generally, the feeling is that the market is down and it is worse than last year," its managing director Akbar Kader told The Straits Times.

"There are bigger infrastructure jobs coming up, but they are huge and can involve only a few players. How many can really benefit?"

Mr Kader was referring to the $700 million worth of infrastructure projects that the Government has pledged to bring forward to this year and the next, to support the construction sector.

Singapore Contractors Association president Kenneth Loo said the industry's consensus is that of a "downward trend", owing partly to the tight manpower situation.

"The foreign worker levy will also have an impact on cost. Recently, there has been an increase of $50 for R2 workers. This will influence manpower cost, which has always been a big concern in construction businesses," he added.

R2 refers to the basic-skilled worker category, which will see its levy jump from $650 to $700 from July 1.

Amid the slowdown in business volume and the manpower constraints, employment in the construction sector fell by 11,500 last year, the latest Manpower Ministry data showed. Productivity also fell, shrinking by 1.1 per cent last year.

In this year's Budget, driving up construction productivity remained part of the agenda.

The Government has announced a Public Sector Construction Productivity Fund of $150 million to buy innovative solutions and let them gain traction in Singapore.

Meanwhile, some construction bosses will try to make the most of the relatively lean period here.

Nan Guan's Mr Kader said: "I think it is a good time for companies to send people for training and to look overseas for opportunities."

A version of this article appeared in the print edition of The Straits Times on March 16, 2017, with the headline 'Construction set to remain worst performer'. Print Edition | Subscribe