http://www.straitstimes.com/premium/...lding-20130117

Cracks show amid boom in building

Manpower crunch, productivity woes could eat into gains for smaller firms

Published on Jan 17, 2013

By Daryl Chin


WHILE the construction industry is projected to enjoy another year of robust growth, the gains may come harder to smaller players dealing with constraints like manpower and the lack of know-how to boost productivity.

The Building and Construction Authority (BCA) has projected construction demand to be between $26 billion and $32 billion this year. This comes on the back of a strong performance - $28.1 billion - last year.

Over half of this year's demand comes from the public sector, which has a large pipeline of housing and infrastructure works, including the Thomson MRT Line and highway expansion.

The remaining portion is made up of private sector construction, which is expected to be moderated somewhat in the light of slower domestic economic growth and global uncertainties.

Average construction demand is expected to be up to $28 billion annually in the next two years.

At a BCA-Redas property prospects seminar yesterday, Senior Minister of State for National Development Lee Yi Shyan noted that the construction sector is having one of its longest growth runs. In the last six years, it has expanded about 10 per cent a year.

He acknowledged that the manpower crunch is a key concern and noted that boosting productivity is the way forward. "The reality is that we cannot continue to rely on an infinite supply of foreign workers," he said.

One reason is that source countries such as China and India are developing and have jobs for their citizens.

The man-year entitlement (MYE) - the total number of foreign workers a main contractor can hire based on the value of the projects - was reduced another 5 percentage points last July. This means that the cumulative MYE cuts would hit 45 per cent by July this year. Foreign worker levies have also been raised.

President of the Singapore Contractors Association Ho Nyok Yong said: "The current 30 per cent MYE cut is already as much as the industry can take. With a higher business volume expected this year, it could have a big impact on smaller players who typically have limited resources and improve productivity at a slower pace."

He added that many of them had trouble applying for government grants as they were not familiar with the process.

A fund set up in 2010 to raise productivity in the construction sector has committed $80 million of the $250 million available to some 2,100 firms.

CIMB regional economist Song Seng Wun noted that the strong construction sector has lured many big foreign players, "who make a loss on projects here in order to get a foothold".

"Material costs have remained stable so far but this might change if developed economies recover. Smaller guys who aren't as efficient will be forced out, or turn to consolidation."

Yesterday, Mr Lee launched a full-time undergraduate sponsorship programme and an Institute of Technical Education (ITE) scholarship scheme to spur Singaporeans to take on managerial posts in the construction sector.

A student on the undergraduate sponsorship programme will get up to $10,000 a year while the ITE scholarship will cover course fees and provide a monthly allowance of $500.

Said BCA chief executive John Keung: "Companies do prefer to employ local workers so we need to get the supply line moving. This small core of talent will have good job opportunities even if construction demand slows."

[email protected]