COVID-19 (Temporary Measures) (Amendment No 3) Bill

Mr Louis Ng Kok Kwang (Nee Soon): Madam, this pandemic has been one whiplash after another for our construction sector. The latest whiplash comes from the surge of cases in India. It has forced us to bar entry for all work pass holders from there. This means the industry’s manpower crunch will continue and even worsen.

This Bill allows contractors to adjust the monetary sums of contracts that have not yet been completed. This will help contractors cope with the increased manpower costs.

However, as raised in my previous speech on the COVID-19 (Temporary Measures) (Amendment No 2) Bill, it remains unclear whether yet again allowing modifications of agreed-upon contracts is a lasting solution. Ultimately, we are talking about labour supply problems that may be long run, given that the pandemic shows no signs of abating in many developing countries.

On that, I have three points of clarifications.

My first point is about temporarily allowing workers to get their skills certified here in Singapore. Typically, migrant workers looking to join our construction sector must first enrol in Overseas Testing Centres (OTCs) within their home countries. At these OTCs, they must complete either the Skills Evaluation Certificate (SEC) or Skills Evaluation Certificate (Knowledge) (SEC(K)), which certify that the worker qualifies as Basic-Skilled construction workers.

 On 5 May, BCA introduced an exemption. For six months, workers from China can obtain their skills certification in Singapore rather than in their home country. This reduces the bottleneck in China, where some OTCs remain closed, and helps alleviate our labour supply crunch.

 Can the Minister clarify what is the usual passing rate of the SEC and SEC(K) tests in each country’s OTCs? For areas where the passing rate is usually quite high, can the Government consider introducing similar temporary exemptions from other source countries? For instance, there remain OTCs that are closed in Myanmar and Thailand. This can help to temporarily alleviate the supply crunch without compromising on the skill requirements we have set.

 My second point is about expanding the list of source countries which we debated earlier. We have always restricted the list of countries from which each industry can hire Work Pass holders. For the construction sector, the list is Malaysia, China, India, Bangladesh, Sri Lanka, Myanmar, Philippines, Thailand, Hong Kong, Macau, Taiwan and South Korea.

 Can the Government explain the basis for restricting this list of source countries? Can the Government also consider expanding the list of source countries? There are likely other countries where migrant workers with basic skills can be found. Indeed, times like this highlight the risks of over-relying on a limited number of source countries. 

 Let me clarify that expanding the list of source countries can align with our goal of moving the industry towards increased productivity. With a more diverse supply pool, it might become easier to find higher skilled workers. We then could move towards raising our skills requirements for what counts as Basic Skilled or Higher Skilled, as well as tapering off the number of lower skilled migrant workers in the sector.

  My third point is about the impact on Government expenses. Will this Bill result in the Government ending up spending more on construction projects than previously expected, as contract sums get adjusted upwards?

While I understand that the final impact will have to be quantified by Assessors, who will have to look at applications on a case-by-case basis, has the Government at least estimated the range of increased costs that it will have to bear as a result of potential contract adjustments?

 It is likely that, at any given time, the Government is the largest spender on construction contracts in Singapore. We must help the construction sector but we must also find the balance and guard against the possibility that all of our yet-to-complete projects see ballooning costs as a result of this legislative amendment. Madam, notwithstanding my clarifications, I stand in support of this Bill.

Mr Desmond Lee (Minister for National Development): Mdm Deputy Speaker, I thank all the Members for their comments, their ideas, both to tackle the immediate situation that is confronting our construction sector and the impact on home buyers, but also the suggestions that Members have made in regard to the mid- and long-term future of construction here in Singapore. Let me address the issues raised.

Mr Louis Ng was concerned about public sector expenditure and about fiscal prudence. The pandemic has, indeed, driven up manpower costs for contractors. So, we need to share some of this burden. But in doing so, I agree with him that agencies will need to maintain fiscal discipline. When adjudicating claims, the Assessors will take into consideration the amount of support that has already been provided, such as foreign worker levy rebates and other forms of support, in determining what a just and equitable outcome of manpower cost-sharing should be. 

Mr Yip Hon Weng spoke about the need to engage developers and contractors to better understand their difficulties and not just press them to complete their projects as if it was business as usual. And he had given some examples he heard anecdotally about the agencies using a template to press contractors. I seek the Member's support to provide specific details so that we can look into these concerns that have been raised. Based on what we know so far, the only template our agencies had been circulating to contractors is one with regard to prolongation cost submissions. In fact, the agencies are pressing the contractors to submit their claims for prolongation costs, because these agencies want to lean forward to help these firms cope with the non-manpower related cost increases in these projects. So, perhaps, for us to check the facts.

But I do agree with the Member that we need to adopt an even stronger collaborative posture during this crisis. As I have said during the opening speech, at this time in the sector, where there are many interlocking relationships of many stakeholders, if one goes down, the entire project is in peril, and we all have to lean forward and help one another. This applies to both Government agencies as well as private developers.

In fact, when the crisis started last year and construction work had to be shut down for some months, we formed a working group comprising Government agencies and trade associations like SCAL and REDAS. At the start, we met every day digitally, then on a weekly basis; and now, we still meet once a month to better understand the situation on the ground, the dynamic situation, as it evolves, to flag issues up and to work together to resolve them practically. 

We have also asked Government agencies to lean forward to help contractors through this difficult period. Several agencies have gone above and beyond our previously announced measures to help contractors, such as granting even more extensions for contractors to complete their projects.  

Notwithstanding this, we are looking at ways to simplify the process for public sector projects, similar to what we have done for the non-manpower prolongation cost claims, as well as the additional extensions of time, where direct disbursements and extensions were given respectively, without the need for extensive or prolonged negotiation. 

Mr Henry Kwek suggested extending the Additional Buyer’s Stamp Duty (ABSD) remission timeline for developers, to relieve pressure on them, too. We had earlier provided a 12-month extension of the PCP and ABSD remission timeline for commencement and completion and a six-month extension to the remission timeline for sale, to account for delays due to COVID-19. 

We will continue to monitor the impact of the COVID-19 pandemic on various stakeholders, including developers, and take further steps as necessary.

Mr Louis Ng referred to BCA’s recently announced scheme to temporarily allow new China construction Work Permit holders to enter Singapore to work first, and then, take their skills certification test locally, instead of in China. He asked if the Government could consider introducing similar temporary exemptions for other countries. 

To provide some context, BCA had earlier consulted the industry on possible measures to help alleviate the manpower crunch in the construction sector. SCAL, the contractors association, had suggested exercising flexibility on the skills entry requirements, in particular for PRC Work Permit holders, as they are highly skilled in key trades, such as carpentry and structural works, as compared to workers from other countries. Taking this feedback onboard, BCA worked with MOM to roll out this temporary flexibility to help facilitate the entry of PRC Work Permit holders.

BCA will discuss with the industry to assess if this approach can be extended to workers from other approved source countries and examine carefully this proposal.

Mr Louis Ng and Mr Henry Kwek asked whether the Government can consider new sources from which to recruit construction Work Permit holders. 

We are prepared to consider various options to alleviate the current manpower crunch facing the whole sector. But we must consider the COVID-19 situation in these countries, as well as the construction industry’s demand for workers from such sources. Adding more sources may not necessarily be the solution, as the pandemic seems to be worsening globally. 

Regarding Mr Henry Kwek’s suggestion to set up forward operating bases, BCA is actively in discussion with trade associations and industry partners who are exploring upstream ways to ensure the health and safety of the foreign workers that they recruit, while meeting Singapore’s more stringent public health stance. 

In addition, Mr Kwek suggested increasing the allowable age for foreign workers from 50 to 55, and to 60 with regular medical reviews. He also asked whether workers can be allowed to work longer if they can have more rest due to the decreased work intensity during weekdays. 

To clarify, MOM already allows existing Work Permit holders to renew their work permits with their current employers up to the age of 60. For workers above the age of 50 who wish to change employers but are unable to do so due to the age limit, MOM will assess appeals on a case-by-case basis. 

As for working longer hours, it is important for workers to get sufficient rest for their well-being and their safety. And that is why the Employment Act stipulates that the normal hours of work should not exceed 44 hours per week. In addition, employers must not make their employees work for more than 12 hours a day, including overtime, with a limit of 72 hours of overtime in a month. Extending working hours beyond this could lead to fatigue and compromise workers’ safety. Moreover, we all know they have been through an extremely difficult time last year and, still, they are subject to stringent safe management measures.

Mr Kwek also suggested postponing the construction phase of new projects, given the reduced supply of manpower. This is, indeed, something we are looking into for public sector projects. But we need to calibrate this carefully. We need to deliver homes and infrastructure, such as public transport. And we also want to ensure that there is a pipeline of work for our construction sector, so that we retain capacity during this crisis.

Mr Kwek also rightly pointed out that we need to prepare for potential further restrictions on construction works, given the fluidity of the current COVID-19 situation. I would like to reassure the Member that BCA is working with the relevant agencies on contingencies and drawer plans. I also thank the Member for acknowledging the hard work put in by our officers in helping the industry through this crisis. It has been a difficult time for them and also for the sector as a whole. We will certainly continue to support and encourage our officers as they persevere with these efforts.

I will take this opportunity to address the query by the Leader of the Opposition about the impact of the COTMA amendment Bill on BTO prices.

It is important to set into context. The Bill relates to construction contracts before October 2020; so existing contracts. And those BTOs that have already been sold are already sold. The prices will not change. Likewise, for new BTO contracts, we do not price HDB BTOs to recover construction costs or land costs. Certainly, it will cost more as a whole but this is not a factor in determining the price that we set for BTO prices.

In any event, in order to manage the overall tender prices for both public and private sectors, I had mentioned earlier in my speech that the agencies are working with the private sector to work on both public and private construction procurement projects going forward. Because what we have seen during this crisis is that contractors are buffering up for uncertainty because they do not know what twists and turns there are in the road ahead, as many of them had found to their detriment in the last year. And, therefore, tender prices, as a whole, for both the public and private sectors, we see an increase.

With such a contract in place, if we can reach an agreement, it will enable contractors to be assured that uncertainty will be cost-shared between the client and the contractor. And we hope that will then provide more assurance to contractors as they bid for new contracts, whether it is a BTO project, whether it is a public sector infrastructure project or whether it is a private sector project.

So, all in, to put in clauses in our standard contracts to enable there to be some fair cost-sharing for uncertainty. I speak broadly. The details will follow as the agencies and our partners reach precise language.

Mr Yip Hon Weng asked the Government to consider more measures to help contractors, such as enhancing the Jobs Support Scheme for the sector, further reducing the foreign worker levy and providing additional time for project completion. 

As I have mentioned earlier, we have already intervened significantly and put together a suite of support measures to help the construction industry to cope with the challenges brought about by the COVID-19 pandemic. We will monitor the impact and review if additional support is required as the situation evolves. BCA will also continue to engage industry stakeholders on their concerns, including on availability of credit that Mr Henry Kwek mentioned. 

But all of these are short-term stop-gap measures – foreign worker levy rebates, cost-sharing, grants. These are all measures to help stop the bleed, as I said. Fundamentally, as I have said repeatedly, both here in this House and also in other settings, we need to work closely with the industry to continue our multi-year effort to transform the sector to become more productive, to grow good local jobs, to reduce overall reliance on low-skilled foreign manpower, for longer term resilience and sustainability.

And in that regard, I would, in a way, like to thank both Assoc Prof Jamus Lim and Mr Leong Mun Wai for supporting the efforts that we have been undertaking since 2017 to push for a holistic transformation of the construction sector, from end-to-end. Assoc Prof Jamus Lim emphasised that by raising the cost of foreign workers, that, in his view, will push employers and contractors to spend more on capital investments to be more productive. Well, we agree with him to an extent but, actually, go a lot further than that.

If you look at the Industry Transformation Map (ITM) for the construction sector, both 1.0 and 2.0, since 2017, where we brought developers, contractors, consultants, academics and unionists all together to work on, it is not just the price or the availability of foreign manpower, but ensuring that we digitalise the whole sector, that we put in significant investments in technology, that we fund, grant, support and train our sector, in order to design for manufacturing and assembly, that is, bring into Singapore, into our construction sector, a whole new way of construction that is far more productive, that involves advance precast that can be done off-site.

And I would ask both Members, Assoc Prof Jamus Lim as well as Mr Leong Mun Wai, to look at and read our ITM and tell us whether they fully support it.

In fact, during the Committee of Supply (COS) this year, both Minister of State Tan Kiat How and myself took pains to explain again our efforts to transform the sector and create good local jobs for our graduates, for our diploma holders and our ITE certificate holders, in order to push the sector forward.

Mr Leong's point that the Government makes no effort to push productivity in the construction sector, that we do not create local jobs or create opportunities for Singaporeans, befuddles me. I was just exchanging notes with Minister of State Tan Kiat How because, during COS, that was really the gist of what we were saying. And if the Member would read and re-read Minister of State Tan Kiat How's speech, he gave example after example of Singaporeans who were describing their journey into the construction sector, seeing how the sector has evolved, how technology has created a niche for them, enabled them to build more productively. Old timers who have seen how construction has moved from 2D to 3D using automation; and young entrants, being very excited that the construction sector is becoming far more high-tech, digitalised, connected, interconnected, multi-disciplinary. All this work is happening at great speed but we are pushing hard. 

And about productivity, Assoc Prof Jamus Lim felt that productivity in the sector had not improved despite efforts. As a result of the efforts over the many years, both regulatory efforts, for example, when we pushed up the buildability score, builders have to meet with certain buildability score before they are allowed to build GLS sites with preconditions of productivity and methods of construction before you can develop the land. All these efforts, including the grants in the Construction Productivity and Capability Fund (CPCF), the new Growth and Transformation Scheme, our PIP scheme – all these are a suite of measures. Regulatory, land-sale related, skills upgrading, grants, grants for individuals, grants for firms and, now, grants for the whole alliance of the value chain.

All these are efforts to transform our sector. But because the construction sector is a long value chain, it does take time, it does take resolve and no one firm can do it on its own.

As for Mr Leong Mun Wai's sense that there are no efforts to bring Singaporeans into this sector, apart from asking him to read Minister of State Tan Kiat How's speech outlining those efforts, precisely those efforts, just a few months ago, I would also share that we have a BCA Industry Scholarship year after year. We award to Singaporeans in ITE, Polytechnic and University, scholarships for young, bright, energetic, Singaporeans who want to venture into this sector, into architecture, into building, into M&E, into the digital space for construction. We pay the bulk of the scholarship, more than 80% of their studies. The industry pays up to 20%. And they are bonded to the Singapore firm in order for Singaporeans to be injected into these firms and to grow with these firms.

And so, all these are efforts that are publicised, these are efforts that are known that we talk about in this House. I would invite Mr Leong Mun Wai to come and have a chat with us so we can tell him a bit more about these efforts and we hope he will support them wholeheartedly in growing a strong local core in our construction sector.

But that is multi-year work. It involves changing mindsets, it involves changing the way firms work, the way firms work with other firms, it involves the Government.

But I think that, at the crux of it today, this Bill, essentially, is about this crisis that we are facing. So, yes, in the mid to long term, we will put in a lot of effort, as we have done over the last few years, to transform our construction sector end-to-end. But in the meantime, what is this House asked to decide at the end of this night? And that is our sector, construction firms, Singapore firms, construction firms which are faced with a severe manpower crunch, asked to deliver projects, that notwithstanding all the support the Government has given on various fronts that I have articulated, they are short of workers. What we are saying is that because the costs have increased beyond their expectation at the point in time when they bidded for these contracts, should we or should we not pass legislation to facilitate the sharing of these additional costs? A framework which nudges dialogue and discussion but, beyond which, we put in an adjudicatory framework to ensure that costs are fairly shared.

These are abnormal times calling for superhuman efforts to keep Singapore going. This is so, even in the construction sector, but especially in this sector, which is so interwoven, which touches Singaporeans' lives on almost every front: building of your homes, building of your roads, building of your public transport, building of the facilities, including the medical facilities that are so critical in the fight against COVID-19.

And so, I ask Mr Leong Mun Wai, because I seem to get the sense from him that he does not support this Bill, does not support bearing some of the burden that Singapore contractors are suffering under, does not support bringing in foreign workers in order to help the sector cope during this period. Because I recall him saying, "Do not bring in foreign workers. Let the contractors take this time during this crisis to learn how to live with less foreign workers." I hope I was mistaken but perhaps the Member could confirm: does he support this Bill? Does he support the need to help the whole sector during this time? Does he support the need to alleviate the suffering and pain that the construction sector is under, which will then have knock-on effects on home buyers, property buyers and companies and businesses who are waiting for their properties? So, that is critical. 

And he makes a number of other points and I am tussling over whether to spend more of this evening, during the Second Reading to address them. But he talks about cooling the property market by increasing the ABSD and then taking that money to pay for the cost increases and then using the money also to fund more HDB rental flats.

I wanted to address them but I think it may be better if the Member raises a Motion, puts up his ideas, sets out his sums as to how much more ABSD he wants to raise. Is it for Singaporeans? Is it for PRs? Is it for foreigners? And how much does he think it will yield? And how much will it go in addressing all the strategies that he has set out in his speech earlier?

Finally, in response to the Leader of the Opposition, I just wanted to clarify whether he supports bringing in foreign workers at this time, bringing in more workers, in order to keep the flow of manpower to the construction sector going? Because he spoke to many contractors who were concerned about the current situation. And does he then support bringing in more foreign workers or does he want to freeze the growth of foreign workers into Singapore?

Madam, I would like to say that I agree with Prof Hoon Hian Teck. He made a good speech. He said that our approach has to be adaptive and strike a balance between two imperatives: saving lives and protecting livelihoods. That is a truism.

But, indeed, these are complex, dynamic and fast-changing trade-offs that we have had to consider in managing this pandemic. Minister Lawrence Wong explained how the Multi-Ministerial Task Force has sought to steer us through all of this uncertainty in his Ministerial Statement earlier today.

Unlike some other countries, Singapore needs to preserve jobs and capabilities by staying connected to the world. We will continue to carefully monitor the economic situation as well as the global health situation and make adjustments as necessary. 

Mdm Deputy Speaker, in conclusion, the amendments before the House today are an important part of our overall support package for our construction sector in view of the manpower crunch brought about by the pandemic. I thank Members and all our industry stakeholders for their strong support for these measures.

Source: Hansard