Coronavirus: SMEs in construction sector to get help from $1 million industry initiative

Key office holders of the Singapore Constructors Association Ltd presenting care packages to healthcare workers at Alexandra Hospital on May 8, 2020.
Key office holders of the Singapore Constructors Association Ltd presenting care packages to healthcare workers at Alexandra Hospital on May 8, 2020.PHOTO: SCAL

SINGAPORE - The Singapore Contractors Association Ltd (Scal) has launched a $1 million initiative to help small- and medium-sized construction companies hit by the Covid-19 pandemic.

From next Monday (May 11), such companies will be able to apply to the Scal Covid-19 Fund for $300 for each eligible Singaporean or permanent resident employee, and $100 for each foreign employee and a dependant under stay-home notice.

The one-off payment will be capped at $2,500 for each eligible company.

Scal president Ng Yek Meng announced the launch of the fund on Friday (May 8)  when the association delivered care packages to about 1,800 healthcare workers from Alexandra Hospital and Mount Alvernia Hospital.

The fund will be supported through donations from members of the association. So far, about 20 companies have pledged about $400,000.

The Building and Construction Authority will be matching donations dollar for dollar, up to $300,000. Enterprise Singapore will also match $1 for every $2 raised, up to $1,000,000, under the SG Together Enhancing Enterprise Resilience (Steer) programme.

To be eligible for payouts, a company must be a Scal member or Singapore List of Trade Sub-contractors (Slots)-registered trade sub-contractor as of April 1, and a small- and medium-sized enterprise (SME) with a group annual sales turnover of not more than $100 million or employment size of not more than 200 workers.

The firm must also be assessed by Scal to be in financial hardship. Companies will have to present bank statements from the last three months showing a drop in revenue and also that they are unable to pay their expenses, said  Mr Ng.

"It will be on a case-by-case basis, because we are sure that quite a big group of companies will be applying for this fund," he told The Straits Times on Friday.

He added that the association has received feedback from its SME members that they have been facing cashflow problems due to Covid-19 disruptions that started since China closed its borders in March.

These SMEs, which make up about 80 per cent of the 3,000 companies in Scal, are mostly sub-contractors in specialised trades such as electrical or plumbing works.

 
 
 

Each SME company employs about 10 to 20 Singaporeans or permanent resident staff, and about 100 foreign workers, said Mr Ng.

Despite having no revenue for April and May, the companies still have to pay the wages of their employees and foreign workers, and rental for premises or machinery, said Mr Ng. They also have to provide three meals a day for their foreign workers who are living in dormitories, he added.

While all construction companies have been hit by the pandemic, the smaller players are in a tighter spot as they do not have the same kind of cash reserves like the bigger companies, he added.

And this is despite the Government's 75 per cent wage subsidy for local employees for the month of April.

"After deducting the CPF contribution, the net support from the wage subsidy is about 64 per cent of wages for staff. So employers still have to cough up 36 per cent, with zero revenue and other overhead expenses like rental," he said.

The bigger companies in Scal are contributing to the fund because "the smaller players are part of our value chain supporting the industry", said Mr Ng.

 
 
 

"Without them, if they disappear after this Covid-19 period, then the other companies will have problems completing their projects too," he said.

Even if the circuit breaker measures end on June 1, business will not be back to normal for the sector because of the likely labour crunch with foreign workers isolated in their dormitories, said Mr Ng.

Most of Singapore's migrant labour sources such as Bangladesh, India and China have also closed their borders and this will prevent new workers from entering Singapore, he added.