Mr Lawrence Wong, Minister for National Development and Second Minister for Finance Distinguished guests Fellow members Ladies & gentlemen
1. Good evening! It is a great pleasure for me, to welcome you all to the SCAL Annual Dinner 2016.
2. The Singapore Contractors Association was formed in 1937. So this is our 79th year and we will be celebrating our 80th Anniversary next year. From a humble beginning with only 30 members at that time, the Association has today a membership of more than 2,800 representing the construction industry in Singapore. Our members account for about 70 to 75% of all construction projects locally.
3. Just last week, the outbreak of locally transmitted Zika infection has been detected and further cases have since surfaced. In light of this outbreak, SCAL has urged all our members to immediately step up their “mozzie wipe-out” exercises, including conducting a hundred percent check for potential mosquito breeding habitats, housekeeping, and fumigation of their worksites and dormitories. We also called on our members to monitor their workers closely and send staff for medical attention immediately if suspected of Zika virus infection.
4. SCAL has always been asking our members to be a responsible contractor, and conduct frequent checks to seek and destroy mosquito breeding grounds at their construction sites. Going forward however, we need to find more effective ways to stop the Aedes mosquito from breeding.
Construction Outlook and Challenges
5. Earlier this year, it has been reported that total construction demand for 2015 was $27.2 billion, below BCA’s expectations of between $29 billion to $36 billion. This was attributed to the rescheduling of some major public infrastructure contracts such as MRT projects from the fourth quarter of 2015 to early 2016.
6. For 2016, the total construction demand was projected to be between $27 billion and $34 billion. With the economic slowdown and an increased supply of completed private housing projects and offices, growth for the second quarter of 2016 moderated to 3.3% year-on-year, down from 4% in the first quarter. However on a quarter-on-quarter basis, the sector grew at a seasonally-adjusted annualised rate of 5.3%, faster than the 1.4% growth in the preceding quarter. I foresee that we will continue a similar trend of steady, slow growth till the end of the year.
7. With softening demand, the construction industry faces three key challenges: pricing, competition and business sustainability.
8. There is rising competition for jobs among our local contractors. Many are pushed to tender for projects at unrealistically low prices to sustain their businesses, but that in turn affect their profitability.
9. Meanwhile, the industry also faces foreign competition that undercut prices just to enter the Singapore and regional markets. These foreign players are often big corporations that have the advantage of substantial financial resources to sustain any losses. These practices have detrimental effect to the sustainability of our small domestic market.
10. As Singapore transforms and prepares for the future economy, the local construction industry will need to address some fundamental issues, failing which we will be left further behind.
11. The construction sector has often been cited as a laggard sector when it comes to productivity. This is a worldwide phenomenon. In its report “Shaping the Future of Construction” published in May 2016 by BCG, the World Economic Forum recognised that unlike other industries that have undergone tremendous changes through innovation and technology over the last few decades, the construction industry has been relatively slow to embrace new technologies, and its labour productivity has stagnated accordingly.
12. SCAL appreciates the government’s strong support to boost construction productivity over the past few years. Through the various assistance and funding schemes, our members have benefited from the adoption of new methods and processes such biometrics, new machineries and equipment, and adoption of prefabricated, pre-finished volumetric construction, or PPVC, resulting in greater efficiency, safety and reduced reliance on manpower, particularly foreign manpower. However, with the current environment where survival is crucial, it would be a challenge for members to embrace initiatives that require high capital investment.
13. At industry level, SCAL has taken two initiatives. The first is a study on construction productivity in Singapore, in collaboration with the Singapore Chinese Chamber of Commerce and Industry, or SCCCI. The study will identify key considerations for measuring construction productivity, with the aim to better understand the underlying factors and make recommendations that will help raise construction productivity. The study is in its final stages and SCAL will share its findings with government and key stakeholders once it is completed.
14. The second initiative is the SCAL Productivity and Innovation Award, or PIA. This is an industry initiative to raise productivity in the construction sector through a ground-up approach for innovative ideas. The competition calls for the involvement of all levels of staff in a company to propose projects, products or process-changes that will result in significant improvements in their workplaces. Through PIA, we hope to inculcate a mindset of continuous improvement at workplaces that will enable out-of-thebox thinking to identify new ideas, technologies and work processes to perform a task better and more efficiently, using less people.
15. The competition is still ongoing. Applications have closed and I am told that we have about 30 entries from 13 construction firms. The winners will be announced on 20th October during BCA’s Singapore Construction Productivity Week 2016.
16. A perennial challenge for the construction industry is the ability to attract and retain talent. However this is not unique to Singapore. In its analysis of megatrends shaping the future of the construction industry, the World Economic Forum reckons that new technologies in the construction industry will require a new set of highly skilled workforce. This will be a struggle to recruit given that the industry is less glamourous than other sectors.
17. In 2014, the Ministry of National Development, BCA, industry stakeholders and the institutes of higher learning or IHLs, got together to develop a five-year Roadmap aimed to attract and retain a strong pipeline of local talent for the built environment sector.
18. SCAL has been in partnership with several organisations to groom a pipeline of industry talents. For instance, SCAL has a partnership with the Nanyang Technological University, or NTU and BCA for our members to grant scholarships and sponsorship to students pursuing degrees in the Civil and Environmental faculty. SCAL has also been working closely with the polytechnics and the Institute of Technical Education, or ITE, for our members to offer internship opportunities for their students. We look forward to working with other IHLs as well.
Workplace Safety and Health
19. On a more sober note, the workplace safety performance of the construction sector has been of great concern since the start of 2016. There were more fatal injuries as compared to the same period last year. It is a worrying trend that the industry has to address urgently. It needs a collective effort from all companies, stakeholders across the construction value chain and the government to work together to stem the tide.
20. At the company level, SCAL cannot stress enough the need for construction firms to put workplace safety and health a top priority. Every incident, injury or fatality can be, and must be prevented. This can only be achieved with the total commitment starting from the top management through to rank and file workers.
21. SCAL launched the inaugural Annual Construction Safety Promotion Month in June this year. As part of this campaign, SCAL engaged CEOs of construction companies to personally conduct site safety walkabouts, safety briefings, safety timeouts and other awareness activities at worksite under their charge. We call for top management commitment to foster a strong construction safety culture within and throughout their organisation.
22. Across industry stakeholders, an upstream process is required where safety is built in as a criterion, factoring in reasonable timelines for projects to be completed and separate budgets for safety in the tender and procurement processes specified.
23. SCAL has initiated the setting up of a Workplace WSH Work Group in the Construction Industry Joint Committee, or CIJC, to review the approach taken for construction safety. This includes conducting research and analysis on construction fatalities and injuries, identifying key drivers to improve construction safety, identifying roles and responsibilities of individual stakeholders, carrying out promotion and awareness activities, and liaison with government agencies such as the WSH Council, the Ministry of Manpower and BCA.
24. Over the years, SCAL has been asking for environmental, health and safety, or EHS workers to be recognised as skilled workers, and put under the higher skilled R1 classification. We are delighted that the government finally accepted our recommendation after several years of urging, and from 1st October 2016, BCA will be extending its Multiskilling scheme to more experienced workers specialised in safety related works on site. We look forward to more of such constructive engagements with the government for the benefit of the industry.
Construction for the Future Economy
25. The construction industry has built Singapore in the past 50 years. As Singapore plans for its future economy, construction will similarly play a critical role in building for the future. New and expanded infrastructure, buildings and facilities will be needed in areas such as urban solutions, advanced manufacturing, aerospace, logistics, healthcare, financial services and so on. We have the opportunity now to prepare the local construction industry to develop and be ready with new construction capabilities, specialist installations and skills, especially among our small and medium enterprises or SMEs.
26. The success of our future construction industry will hinge on our ability to adopt and exploit new innovations so that companies will boost productivity, streamline their project management and procedures, and enhance quality and safety. However SCAL cannot do this alone. To capture all this potential will require a committed and concerted effort by the industry across many aspects, from technology, operations and strategy to personnel and regulations.
27. SCAL looks forward to participating in the ongoing discussions for Singapore’s Future Economy. With a longer term view of the sector, I am confident that we will be ready and be part of the exciting journey towards building SG100.
28. With that, I would like to thank you all for your presence this evening and I wish everyone an enjoyable evening.