Number of shuttered construction firms in 2021 similar to 2018-2020 average

Around 2,200 construction firms ceased operations last year, comparable with the average number of those that wound up annually between 2018 and 2020, said Minister of State for National Development Tan Kiat How yesterday.

Support measures have helped construction companies to cope with the cost pressures brought about by the Covid-19 pandemic, he added.

These include a $1.36 billion construction support package to provide relief on increased costs in implementing safe management measures at worksites, the Jobs Support Scheme to support manpower costs, and foreign worker levy waivers and rebates.

The number of construction companies that wound up in 2018 was 2,187, while in 2019 it was 2,347 and in 2020 it was 2,027, 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 last year 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," Mr Tan 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.