Tackling construction woes

The recent winding up of Greatearth Corporation and Greatearth Construction and their affiliated companies showed the severity of the headwinds that have been plaguing the construction sector.

Since the pandemic started, construction companies have seen work disrupted by the circuit breaker as well as stringent safe-distancing measures at worksites. The biggest challenge is probably the tighter border controls which have restricted the flow of foreign workers and resulted in a manpower shortage. Companies have had to hike salaries to retain their existing workers. Workers have to be tested regularly for Covid-19. All this has driven up costs and put pressure on margins. Supply chains have also been disrupted, which has impacted the supply and cost of construction materials.

The collapse of Geatearth led to further delays of five Build-To-Order (BTO) projects and caused around 2,900 buyers to face long delays for their homes. These projects are Sky Vista @ Bukit Batok, Senja Heights and Senja Ridges in Bukit Panjang, Marsiling Grove in Woodlands and West Coast Parkview in Clementi. As a result, HDB responded swiftly by providing a lifeline to contractors to mitigate the impact. These include:

  1. extending the duration of steel price protection provided by HDB for a total of nine additional months so that contractors do not have to worry about the fluctuation in steel prices,
  2. providing additional supplies of concrete materials such as cement, sand and other aggregates to contractors for local pre-cast production, going beyond the amount that contractors had earlier opted for in their tender, and
  3. assisting contractors who wish to relocate some of their precast production from Malaysia to Singapore in their application for land under a temporary occupation license for the production and storage of the precast components.

In addition to the above, HDB has been releasing advance payments to contractors and has exercised flexibility in recovering the advance payments to help ease cash flow. HDB has also helped co-share the increase in non-manpower related operating expenses such as the rental of equipment and site maintenance costs, as well as co-share the increase in foreign manpower salary costs.

HDB is in the process of seeking potential new main contractors and existing subcontractors to work together and complete the five BTO projects as soon as possible. HDB said that when the replacement contractors have been appointed and the construction schedule worked out, buyers will be informed of their revised completion date.