ABSD: Govt to take case-by-case approach for troubled projects

Minister Zaqy adds that government is 'monitoring the construction industry and the property market closely'

Thu, Mar 05, 2020

LEE MEIXIAN


IN response to requests by the construction industry to consider extending the additional buyer's stamp duty (ABSD) timeline from five years to six, Minister of State for National Development and Manpower Zaqy Mohamad on Wednesday said that the government will adopt a case-by-case approach for projects that need help, and does not think it necessary to pro-rate the ABSD penalty because "we don't have to shift the whole mechanism or the whole system" to solve the problem.

In his Committee of Supply speech, he said the government was "monitoring the construction industry and the property market closely" and will adjust its policies as necessary "to ensure a stable and sustainable property market".

Lee Bee Wah, MP for Nee Soon South, felt however that the ABSD regime can be made "more equitable and effective", as the current regime is "not calibrated". "To some extent, it is one-size-fits-all. This is not a call for an easing of the cooling measures, but an appeal for a temporary relief for the real estate industry to cope with the current situation," she said.

Developers have to build and sell all units on residential sites within five years to qualify for remission of the ABSD on the land purchase price. If they fail, they will have to pay the 25 per cent ABSD, with interest.

Ms Lee wanted to see the timeline extended to six years, or to have the penalty pro-rated based on the number of unsold units, similar to the Qualifying Certificate principle. "In anticipation of the high likelihood of project delays, BCA (the Building and Construction Authority) is urging developers not to penalise contractors. How is this possible if developers are bounded by the five-year ABSD remission deadline, which is very punitive? At the same time, the sale of residential units has slowed down."

Among other measures which BCA is implementing to help builders cope with the Covid-19 situation is allowing prefabricated pre-finished volumetric construction (PPVC) projects affected by delays of construction material deliveries from China to install partially completed PPVC modules on site first, and install the finishing works subsequently when the delayed materials arrive. So far, 13 ongoing PPVC projects have done so.

Mr Zaqy also urged main contractors to submit progress payment claims fortnightly instead of monthly for public sector projects, to ease cashflow concerns from delays due to Covid-19. He added that BCA has advised government agencies to take a "sympathetic view" when considering extension of time requests for project delays due to Covid-19. It has also sought the Real Estate Developers' Association of Singapore's support for private sector developers to do likewise. The government has selectively allowed extensions of the completion period for individual projects.

Mr Zaqy said that some firms with more mainland Chinese workers may also face short-term manpower pressure due to Covid-19, given the imposed travel bans. These firms may consider hiring workers from other firms with excess foreign manpower by searching for eligible workers for transfer via the Foreign Construction Workers Directory System online.

Built environment firms can also tap into the support packages announced at the Budget, such as the SME Working Capital Loan under the Enhanced Enterprise Financing Scheme, and the Jobs Support Scheme.

On foreign worker levies, the Minister for Manpower had said last week that it is waiving levies for employers with eligible foreign workers serving quarantine leave of absence or stay home notices. However, it has not done so for all foreign workers in general, because as much as it wants to help businesses, measures to deal with the short-term fallout should not negate longer-term efforts for companies to restructure and become less reliant on foreign manpower.

"Levy waivers would run counter to these objectives," Mr Zaqy added.