Around 2,200 construction firms ceased operations in 2021, comparable with previous years: Tan Kiat How

Support measures have helped construction firms cope with cost pressures brought about by the Covid-19 pandemic. ST PHOTO: LIM YAOHUI

SINGAPORE - Around 2,200 construction companies ceased operations last year, comparable with the average number of companies that wound up annually between 2018 and 2020, said Minister of State for National Development Tan Kiat How on Tuesday (Feb 15).

Support measures have helped construction companies cope with the cost pressures brought about by the Covid-19 pandemic, he added. They include a $1.36 billion construction support package to provide relief on increased costs to implement safe management measures at worksites, the Jobs Support Scheme to support manpower costs, and foreign worker levy waivers and rebates.

A total of 2,187 companies wound up in 2018, 2,347 companies wound up in 2019 and 2,027 companies wound up in 2020, Mr Tan said in Parliament.

Construction demand this year is projected by the Building and Construction Authority to be between $27 billion and $32 billion.

Due to the pandemic, the construction sector has been grappling with manpower shortages, rising material costs and cash flow issues.

Mr Tan was responding to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), who asked how many construction companies ceased operations in 2021 due to insolvency and the support measures available to them.

In additional to financial support, legislative measures are also in place through the Covid-19 (Temporary Measures) Act to provide relief for contractors and to ensure equitable co-sharing of increased costs by project parties due to the pandemic, said Mr Tan.

He noted that the decision to intervene in private contracts is not taken lightly, and the relief measures in the Act are meant to be temporary and companies will need to partner each other for long-term sustainability and resilience.

Relevant relief measures in the Act have been extended several times, providing companies with additional time and support to negotiate amicable outcomes, said Mr Tan.

The sector is displaying encouraging signs of recovery, he added.

Barring any unforeseen circumstances, such as a severe industry-wide disruption to construction works caused by Covid-19, the reliefs under the Act will end on dates previously announced.

"Based on project progress payments made at the industry level, the current level of construction output is close to pre-Covid-19 levels. This indicates that construction works are progressing at a steady pace," he said.

The co-sharing of cost increases due to foreign work permit holder salaries will end on March 31 this year.

"While the foreign manpower inflow has been improving in recent months, we will continue to monitor the situation and review whether a further extension is needed," said Mr Tan.

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