Construction demand set to fall: Mah

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Published October 22, 2008

Construction demand set to fall: Mah

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

By UMA SHANKARI


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.

http://www.straitstimes.com/Money/St...ry_293360.html

October 22, 2008 Wednesday

Construction sector in for tough times

Industry hopes the Govt will resume deferred public-sector projects

By Joyce Teo, Property Correspondent


THE construction sector will not escape the global financial turmoil but the Government will help cushion an anticipated fall in demand, said National Development Minister Mah Bow Tan last night.

'Accordingly, we must all be prepared to face some tough and challenging times ahead,' he told an industry gathering.

'Fortunately, we have had a good run so the momentum is sustaining us one year and, if we are lucky, another year.'

Domestic construction demand is estimated at $30 billion this year, but it is expected to fall, he said.

The global crisis has not caused any disruption or slowdown so far and progress payments of projects have remained prompt and stable.

'But we still need to be watchful because the situation is very fluid and can deteriorate as the financial crisis feeds into the real economy over the next few months and quarters,' warned Mr Mah, who was speaking at the Singapore Contractors Association's annual dinner.

The financial meltdown overseas has brought rapid changes to the once red-hot construction sector.

While there remains a lack of capacity, raw material prices have already started to come down, said industry experts.

Mr Jon Button, director of Gammon Construction, said: 'There'll be a levelling off of demand for the next couple of years. Quite a few (private-sector) projects are already deferred.'

He added that contractors continued to tender for work.

Association president Desmond Hill told the gathering that they hope to see the Government bring back deferred projects by next year or in 2010 as existing jobs will be coming to completion.

Mr Mah said in his speech the Government is prepared to consider suggestions that it resume deferred public projects.

'It is something that we are in a position to consider and will certainly do so, should the need arise. However, we must consider the timing carefully,' he said.

The Government has since last November deferred $4.7 billion worth of public- sector construction projects to ease the pressure on building costs.

Mr Mah said the Government will monitor the situation closely, taking into account construction demand, contracts awarded and cost trends.

Injecting some of the deferred projects back into the market now, when the availability of skilled manpower, equipment and other resources is still 'pretty tight', will not help, he said. 'It will only drive already high construction costs up.'

But there was a brighter note from Mr Mah: 'Look beyond the gloom...and see whether the slowdown presents an opportunity for the industry to consolidate and strengthen its capabilities after recent years of strong growth.'

The industry, he said, must start preparing to tackle the increasingly challenging business environment, as well as exploit future opportunities and 'continue to stay relevant and remain sustainable'.

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