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January 15, 2009

Singapore plans public sector projects to boost construction business
The Singapore government will roll out public sector projects worth up to S$50 million each from the middle of this year, reported the city-state news website Channel News Asia.

It had earlier deferred projects amounting to S$4.7 billion to ease pressure on the construction sector.

The government said the upcoming projects are expected to attract small and medium-sized contractors.

National Development Minister Mah Bow Tan said: "The big contractors have jobs in hand, so it's very unlikely that they would want to go for these smaller jobs. We are talking about things like lift upgrading, schools etc – these are projects which the smaller contractors have advantage and the experience in doing."

Details are being finalised and will be announced during the budget statement next Thursday.

The value of construction contracts for private homes is expected to fall to between S$1.7 billion and S$2.3 billion this year – similar to figures seen after the Asian financial crisis in 1997.

This will drag overall demand from the private sector down to less than half of the S$20 billion recorded in 2008.

On the other hand, public sector construction demand is expected to increase to between S$17 billion and S$19 billion this year, fuelled largely by infrastructure and major road projects.

The Building and Construction Authority (BCA) said a survey has shown that public sector construction demand is likely to be around S$15 billion to S$17 billion a year in 2010 and 2011, with 40 per cent of it coming from building developments and the rest from civil engineering projects.

Industry watchers said the move would help smaller players sustain their operations and cash flow.

Simon Lee, executive director, Singapore Contractors Association, said: "If they have public sector projects that they have secured and they are able to show it to the banks, then I think the banks would come forward and extend their credit line."

Construction demand hit a high of S$34.6 billion in 2008, but it is likely to range between S$22 billion and S$28 billion this year.

The value of construction contracts awarded for 2010 and 2011 is expected to reach between S$20 billion and S$27 billion. Mah said this is still considerably higher than the average annual demand of S$13 billion from 1998 to 2006.

Despite the fall in construction demand, the authorities said the sustained workload over the next two years will still provide jobs for Singaporeans, so it is important to keep up with skills development.

To this end, BCA – along with industry partners – will organise a training and career fair on January 17.

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