COVID-19 (Temporary Measures) (Amendment No 2) Bill
(5 min) Mr Louis Ng Kok Kwang (Nee Soon): Sir, our construction sector has been suffering for the past year. Labour supply has been constrained, and cashflow has been tight. Some construction firms have already gone under, and the struggle is real for those still clinging on.
This Bill helps them. Those who have to pay will have more time to pay. Those who need to deliver will have more time to deliver. I thank MND for looking out for both sides.
Sir, I have two points of clarification for this Bill.
My first point is about what factors that went into deciding on this extension. Can Minister clarify what factors were considered before granting the initial four-month extension in November and now this six-month extension?
The construction sector does indeed need help. But a strong economic recovery must also be built on the rock-solid foundation of contractual obligations. One year after the start of the pandemic, we are granting a second extension of contract deadlines that is even longer than the first extension.
While I support these amendments, can I ask if MND has also studied the impacts to the companies the construction firms has been granted relief from? Are these companies also clinging on and will they go under due to these reliefs granted to the construction firms?
We have said that during this relief period, parties are encouraged to negotiate and resolve their difference in an amicable and mutually beneficial manner. Can I ask Minister what percentage of parties were able to resolve their difference in an amicable and mutually beneficial manner?
Further, I hope that MND can help shed light on a few questions.
First, can MND share what factors it considered in determining this particular course of action? Second, can MND share whether it will consider future extensions of the same nature and, if so, what factors it will consider before making such decisions?
Sir, I think no one in this House disagrees that we want to help our businesses survive. But we should also be concerned about the unintended side-effects of our decisions.
Singapore has always had a reputation as a business-friendly country. With this Bill, we might risk that reputation by again intervening with how contracts play out. It remains unclear whether there will be a third, a fourth and then, a fifth extension. I hope the Government will articulate a long-term plan for our construction sector that clarifies these doubts.
That brings me to my next point. My second point is about how MND and the rest of Government can help the construction sector bounce back on its feet.
This crisis is an opportunity for our construction firms to become more nimble. More than ever, they need to embrace automation, upskilling and other productivity-related initiatives. But such processes take time to implement. In the short run, our construction industry needs workers to fulfill the projects it has already committed to based on pre-pandemic labour conditions.
Therefore, I hope that MND works with other Government Ministries to create a temporary scheme, where employers can more easily rehire Work Permit and S Pass workers who have been repatriated to their countries in the past year.
MND has taken some steps in this direction by allowing workers that have previously obtained the necessary Skills Evaluation Certificate (Knowledge) test (SEC(K) test) qualifications in a particular trade to return and work in the same trade in Singapore, without retaking the test.
The unfortunate reality of COVID-19 is that many companies have shut down. During the painful months of circuit breaker and dorm lockdowns, many experienced workers did not manage to find new employers and were often repatriated rather than circulated back into our economy. These were workers with experience living and working here. They know the expectations, they know the environment. It is more efficient to rehire them than to roll the dice with new workers. But there is no easy way for companies to find and hire these workers.
MND and other Ministries should work together to reduce the obstacles to rehiring such workers.
We can also provide more help for companies to hire workers who want to remain in Singapore but whose company has decided to terminate their contracts and send them back to their home country. A temporary scheme to reconnect employers with such workers will be much appreciated by workers and employers, and it will help our economy.
Sir, notwithstanding my clarifications, I stand in support of this Bill.
Mr Tan Kiat How (Minister of State): Mr Speaker, Sir, I thank the Members for their comments and support of the Bill. They have raised a number of issues and let me address them.
Mr Louis Ng asked about the impacts of the reliefs and our considerations for extension. Firstly, I have laid out some of the considerations in my Second Reading speech earlier and want to assure the Member that we recognise that the relief measures are interventions into private contracts. The sanctity of contract is fundamental for Singapore and a key aspect of the rule of law. Hence, this is not a decision we take lightly.
In this exceptional circumstance, we need to intervene to safeguard and preserve the capacity of our Built Environment sector, by supporting the entire value chain.
The industry has also consistently provided feedback to us that the on-going moratorium on legal proceedings during the current COVID-19 pandemic has proven very useful in helping the sector focus on staying on its feet.
Mr Ng also asked about the percentage of parties that have been able to resolve their differences amicably and in a beneficial manner.
For construction and supply contracts, there have been about 1,100 notifications for relief filed as of 19 March 2021. Of those, only about 118, or about 10%, eventually applied for an assessor’s determination. This suggests to us that the majority were able to come to some satisfactory compromise on their own about contractual obligations affected by COVID-19.
The relief provided under this Act, provides a framework for conversations to happen so that firms can amicably settle their differences and move the projects forward if they can do so.
Ms Sylvia Lim asked about Part 3 of the Act. To clarify to the Member, while the sunset period for Part 3 ends on 19 April 2021, nonetheless, the measures relating to insolvency in Part 3 had already lapsed in October 2020 as the prescribed period was from 20 April 2020 to 19 October 2020. These are exceptional measures that temporarily suspended creditors' rights to provide breathing room for financially distressed debtors to negotiate with creditors and pursue next steps, including for personal bankruptcy, the individual voluntary arrangement and debt repayment scheme; for corporate insolvency, out-of-court work-about schemes of arrangement, judicial management and simplified Insolvency Programme; for sole proprietorships and partnerships, the Sole Proprietor and Partnership scheme.
Such exceptional measures should be carefully monitored because the measures also affect creditors and therefore, flow of credit to other businesses.
There has been no significant increase in number of personal bankruptcy and corporate insolvency applications, comparing the figures for applications pre-COVID-19 and the post lapse of Part 3 measures in October 2020. We have been monitoring the situation and we will continue to monitor it.
Mr Henry Kwek and Mr Louis Ng brought up the immediate challenge of manpower shortage faced by the industry. And I agree with both Mr Henry Kwek and Mr Louis Ng that beyond the temporary relief measures, it is important to address this situation.
To alleviate the current labour shortage in the construction industry, we are working closely with MOM and MOH to progressively increase the number of incoming workers, but in a safe way to minimise the risk of COVID-19 transmission in our dormitories and into our wider community.
I thank Mr Kwek for his suggestion to set up commercial processing facilities overseas to enable testing. Indeed, there are many operational challenges that we need to overcome to ensure reliable testing overseas. But we are actively in discussion with industry partners, including the Singapore Contractors Association Limited, or SCAL, and we are looking at how we can enable and establish better upstream processes to enhance pre-departure testing for workers in source countries.
I also agree with Mr Ng that there is value to retain experienced workers in Singapore as much as possible.
However, as Mr Kwek has pointed out, there are also workers who want to go back to their families and there are indeed workers who went home and could not return or would not like to return.
But however, we are trying to keep as many of our workers in Singapore here in Singapore. In this regard, SCAL, with the support of MOM and BCA, has set up a Manpower Exchange, or SCMX for short, to facilitate a change of employer for construction workers, for workers whose contracts with their existing employers have either expired or terminated. This will help us retain the experienced workers who want to remain in Singapore.
On Mr Ng's suggestion to facilitate the re-hiring of workers who have returned to their home countries and want to come back to Singapore to work, we are very pleased to have them back in Singapore. And employers know who they are and have applied for them to re-enter into Singapore.
However, the constraint is not this. The constraint now and the challenge we are facing is how to allow these workers to come back, to re-enter Singapore in sufficient numbers to meet the industry's manpower needs, while minimising COVID-19 importation risks, so as to safeguard public health. We are working closely with MOM and MOH on these aspects.
Mr Vikram Nair rightly pointed out that cashflow is the lifeline of the construction industry. BCA monitors the progress payments in the industry closely and receives frequent feedback from key developers and contractors. This is also why we need to extend the reliefs under the Act so firms do not get engaged in long-drawn litigations at this point in time.
During the circuit breaker period, most works were suspended and contractors received no progress payments. What we did to facilitate the cashflow was for Government agencies – and some private developers have also followed suit – to provide advance payment to help contractors tide through this challenging period. For public sector projects, we have provided at least $665 million of advance payment in total. The Government has also provided financial support, including waivers and rebates of the foreign worker levy, and subsidies for Rostered Routine Testing, or RRT for short.
Mr Vikram Nair also asked about co-sharing of additional costs for delays due to COVID-19 under Part 8B and how easy it is for such prolongation costs to be shared.
To facilitate such claims, BCA and SCAL have jointly developed a claims template and detailed guidelines, which are available on BCA's website.
In addition, BCA has also been working with SCAL and other Trade Associations and Chambers, to streamline the claims process. This includes introducing an accepted method to estimate the delays to projects due to COVID-19. We will continue to work with the various stakeholders, including SCAL and other Government agencies to expedite the claims process.
Lastly, under Part 8B, contractors can also seek recourse for cost-sharing amounts that are due but not paid, through the existing adjudication mechanism under the Security of Payment Act, or SOPA, which the industry is very familiar with.
Mr Don Wee suggested that we inform the industry and banks on extension of period where developers are prevented from calling on the performance bonds of contractors. Mr Wee may be pleased to know that the provisions for deferment of call of performance bonds is already provided for in the Act. MND and BCA have been in close contact with the industry and we have updated the industry on extension of arrangement under the Act, including through a press release.
Mr Don Wee also brought up the impact on the construction industry and it has affected home-buyers whose premises under construction have been delayed and who have to make alternative arrangements. And Mr Vikram Nair has also asked about the extent to which these purchasers have been affected.
The number of purchasers seeking reimbursement after Part 8C comes into operation in a few months will depend on the number of projects delayed and whether developers need and choose to tap on this relief. It is in the interest of developers for projects to be completed in a timely manner without having to tap on the relief.
Currently, based on updates from developers for projects expected to be completed in 2021, most are still on track to meet their respective dates of delivery of possession.
We have also been encouraging developers who are unable to meet the date of delivery to first discuss with their purchasers and come to a workable and mutually agreeable arrangement, as this may result in a better outcome for both parties.
Let me assure Members that even as we provide relief to developers, we recognise that purchasers face challenges on their end as well, and we have structured Part 8C accordingly.
Under Part 8C, developers who face construction delays due to COVID-19 and require relief may serve a notice for an extension of the delivery date by up to four months, or 122 days, which is aligned with the period in Part 8A.
Mr Don Wee asked why four months, why 122 days. This was also shared during the Second Reading of the COTMA Bill. It is because construction work stopped for approximately two months due to the circuit breaker period, and works were further delayed by at least another two months as all dormitories were only cleared in early August 2020. Therefore, adding two months together, two plus two, that is four months and 122 days.
Should a developer need further relief for the delivery date to be extended by more than 122 days, they can apply for an assessor's determination on the length of construction delay, that is, to a material extent, caused by COVID-19.
Mr Don Wee also asked about whether this relief will be applied to developments where HDB is the developer. I would like to share with Mr Wee that for HDB flats, purchasers can similarly claim up to 70% of the prescribed LD formula, which will be aligned with that of the formula stated in the Housing Developers Rules for private residential properties. This allows for co-sharing of such costs between the developer and purchaser. And if there is any dispute over reimbursement, both parties can seek an assessor's determination.
To also to reply Mr Don Wee's query regarding the assessors, similar to Part 2, the assessors making the determinations under Part 8C will be professionals with qualifications and working experience in the relevant fields, such as law, accountancy, finance, or building and construction. There will be mechanisms put in place to ensure that assessors declare any conflict of interest upfront.
Ms Sylvia Lim asked why Part 8C is not in operation yet and why amendments to Part 8C are being made at this juncture.
There are many urgent Parts to the amendment that we moved in November last year, including Part 8, Part 8A and Part 8B and we have made sure that those Parts are in operation as quickly as we can.
For Part 8C, we have been in active discussion over the last few months with the industry and partners that will run and operationalise the relief framework. And we are making amendments now as we incorporate their feedback in preparation for the operationalisation. We aim to streamline the process and help it be implemented more smoothly and more efficiently, given that it will be in effect for a longer period of time as compared to other reliefs under the Act.
Ms Lim will be pleased to know that the relief will apply to all affected agreements for the sale and purchase of housing, commercial and industrial property that meet the criteria stated in the Act, regardless of when Part 8C comes into operation. Hence, developers will be able to tap on it after it comes into operation in a few months and purchasers will be able to seek reimbursement then.
Ms Lim also asked how we will address the issue of fairness, given that legal representation will be not be allowed as a default under the assessor framework and she spoke in support of it. As with other Parts of the Act, the assessor mechanism is designed to provide for a quick and effective practical solution to disputes. The overarching role of the assessor is to make a decision that is just and fair in the circumstances and they have the power to ask for the appropriate information and documents from both parties, including information or documents not sought for by either party to achieve this.
Ms Lim raised the concern that a company may be represented by a legally trained employee.
In the first instance, we hope to minimise the need for developers and purchases to even require an assessor's determination and we will lay out clearly the qualifying costs that purchasers will be able to seek reimbursement for to make the process more efficient and easy for everyone. The Member will also know that in the ordinary case, if the matter were to go to Court, the company would have a right to legal representation.
Therefore, we have taken the position that for assessments, companies cannot be represented by lawyers. But there is a difference if you say that no one who is legally trained should come before an assessor. What if the individual purchaser himself is legally trained? The point is that the assessment framework weeks to give relief on very simple facts when there would otherwise be no relief. So, simple process, simple facts. In the first instance, we hope to minimise the need for them to come before an assessor to seek determination.
Mr Speaker, in conclusion, the amendments before the House today seek to provide continued support to the Built Environment sector to ride out the lingering impact of the pandemic. I thank Members and the industry stakeholders for their strong support for these measures and to continue to support the sector for staying on its feet.
Source: Hansard
