An industry poised for post-pandemic recovery, we explore the optimistic outlook of Singapore’s construction sector as it weathers further geopolitical tensions.
SPOTLIGHT ON CONSTRUCTION IN SINGAPORE
The industrial powerhouse of Singapore is set for a promising year in the construction sector.
The industry is buoyed by hope, as 2022 marks the first potential year of recovery post-COVID-19. As reported by the Global Construction Review, the industry is expected to return to pre-pandemic levels following 2.9 percent year-on-year growth recorded in the fourth quarter of 2021. Singapore’s industrial recovery can be seen as a reflection of global macroeconomics. According to the Surbana Jurong’s Singapore Construction Market Review and Outlook for 2022, the global economy is expected to moderate to 4.4 percent this year, following a rebound record of 5.9 percent in 2021.
This optimism is well-justified, after 2020 marked the lowest construction demand in over a decade. By 2021, total demand had grown by over 40 percent, largely as a result of nationwide infrastructural projects, primarily from the Land Transport Authority (LTA) and the Urban Redevelopment Authority (URA). Most recently, the two have combined on an exciting project concerning the development and installation of over 40,000 charging points for electric vehicles in public car parks by 2030.
The resiliency of the sector is evidenced by the prevailing headwinds that it has faced as a result of the pandemic. Perhaps most significantly, this has entailed significant labour shortages that are likely to continue for the long-term in the face of the prohibitive cost of recruiting migrant workers during significant disruption in global mobility. As a result of this, the Singaporean government implemented the worker retention scheme between September 2021 and February 2022, although the efficacy of this initiative was fairly limited. This shortage of manpower is still a considerable setback despite the optimism underlying the industry today, and will likely lead to delays on the completion of ongoing construction projects.
Adjacent to the rising cost of recruited manpower is the exorbitant cost of construction materials, which continues to represent a major hurdle. The cost of raw materials, such as aluminium and cement, has steadily increased on an upwards trajectory since the pandemic’s outset. Even when paying this premium cost, ongoing supply chain disruptions and logistical setbacks continue to complicate delivery. However, a degree of relief in this regard has come with the introduction of Malaysia’s ‘Vaccinated Travel Lane’ with Singapore, thereby facilitating and streamlining the transportation of construction materials between the two countries.
Nevertheless, as new geopolitical tensions emerge on the global landscape, particularly in the wake of Russia’s invasion of Ukraine, energy prices will continue to escalate as a result of sanctions on oil, as will the resulting domino effect on the cost of raw materials. A Reuters report confirms that since the onset of the Russia-Ukraine conflict, oil prices have skyrocketed with a 50 percent surge in the price of liquefied natural gas. This is of particular concern for manufacturers of energy-intensive construction materials, including steel and brick, whose cost will increase further as a result. A study by UK consultant Turner & Townsend surmises that although Singapore’s Building and Construction Authority has an anticipated demand of up to USD 23 billion in 2022, tender prices will increase by between five and eight percent across the industry.
In the face of such uncertainties, a ‘wait and see’ approach is being observed by many of Singapore’s leading construction firms.
SINGAPORE CONTRACTORS ASSOCIATION LIMITED
Founded in 1937 as The Singapore Chinese Contractors Association, the Singapore Contractors Association Limited (SCAL) is the not-for-profit organisation that represents the best interests of over 3,000 construction firms and allied businesses across Singapore.
As the united voice of the industry, SCAL undertakes an active role in advocating for the construction sector’s best interests by facilitating various platforms such as bridging closer working relationships between businesses and government agencies, networking events for members, recognition and awards platforms and administering programmes to drive business success.
To this day, the association continues to follow its original mandate of instilling harmonious business relationships among local contractors and ensuring the regular supply of building materials. SCAL entered its current incarnation following a merger between the Singapore Building Contractors Society and the Singapore Contractors Association in 1977, with the aim of forging a unified industry identity and body of representation.
Since 1984, SCAL has occupied its premises at Construction House. But today, the association has grown to encompass four different subsidiaries in order to cater to the many and varied needs of the entire construction industry.
SC2 Pte Ltd – Dating back to 1993, SCAL’s first subsidiary was established to safeguard people, property and the environment by providing professional safety audits on Occupational Safety and Health (OSH). In 2008, SC2 started to provide certification services and has attained accreditation by Singapore Accreditation Council (SAC) for SS506: Part 1 and ISO 9000 certification.
SCAL Resources Pte Ltd – This second subsidiary (SCR) was formed in 1997. The company observes three key mandates, which essentially involves providing value-added services to SCAL members, assisting local contractors in the planning and staffing of manpower, and lastly, improving the welfare of foreign workers in the local construction industry. As one example of the latter, SCR launched the SCAL recreation centre to cater to the social and recreational needs of foreign workers.
SCAL Academy Pte Ltd – Since 2009, this third wholly-owned subsidiary has been instrumental in planning and designing training and development courses that respond to the industry’s training needs. It conducts various courses to enable employees to develop skills, attitudes, and knowledge to support business needs and personal aspirations. Delivered by qualified, experienced, and dedicated trainers, these include courses accredited under the Ministry of Manpower Accredited Training Provider (ATP) scheme and Workforce Skills Qualifications (WSQ) courses accredited by the Singapore Workforce Development Agency.
The Singapore Construction Mediation Centre Pte Ltd – The fourth and final subsidiary (SCMC), was launched in line with SCAL’s strategic thrust to remain relevant and develop services catered to its members’ needs. The objective of SCMC is to encourage mediation as the preferred resolution process of settlement for construction disputes. SCMC will provide SCAL members with an effective and cost-efficient channel where an amicable and early settlement of disputes will eliminate lengthy and costly court proceedings.
With the concerns and priorities of its ever-growing membership base at the core of its operations, SCAL will continue to support industry in these uncertain times.