2nd Reading Speech by MOS Tan Kiat How on the COVID-19 (Temporary Measures) (Amendment No. 2) Bill

Monday, 5 April 2021

Sir, let me first sketch out the context of this Bill before outlining the amendments. The Built Environment sector, especially the construction industry has been severely impacted by COVID-19.

Almost all construction work stopped during the Circuit Breaker period last year. Many companies, especially our SMEs were hard hit as no work meant there was no progress payment.

Even when works restarted, companies had to adapt to new requirements, such as ensuring our workers attend their Rostered Routine Testing and adhering to Safe Management Measures at the worksites.

In response, the Government has intervened very significantly to support the sector. Amongst other measures, we introduced a $1.36 billion Construction Support Package, extended waivers and rebates of the Foreign Worker Levy, and provided wage subsidies under the Jobs Support Scheme.

The most recent measure announced last week include the waivers for foreign worker levies for construction Work Permit and S Pass holders during their SHN period of 14 to 21 days upon entry into Singapore, for the period between 1 January 2021 to 30 September 2021.

We have also put in place legislation through the COVID-19 (Temporary Measures) Act to provide temporary relief to businesses and individuals who are unable to perform their contractual obligations due to COVID-19. This ensured that no single part of the Built Environment value-chain has to bear a disproportionate share of the burden brought about by the pandemic.

To recap, Part 2 of the Act provides temporary relief from stipulated types of legal action, and also provides firms with a defence against breach of contract and damages due to COVID-19.

Under Part 8, we provided a mechanism for firms to seek relief from additional rental costs that are incurred due to construction delays due to COVID-19. Under Part 8A, we legislated for a universal extension of time of four months, or 122 days, for construction contracts. Under Part 8B, we required the players in the value chain, from builders to contractors to sub-contractors, to co-share additional costs for delays due to COVID-19. Under Part 8C, developers who face construction delay can seek relief on the date of delivery of possession.

We also provided for the co-sharing of costs between developers and purchasers of the out-of-pocket expenses incurred by purchasers where developers are not able to deliver the units by the committed delivery date due to delays caused by COVID-19.

We are working closely with industry partners to get the sector back on its feet. I am pleased to share that almost all our Construction S Pass and Work Permit Holders have returned to work. Although the number has decreased by about 15% in January 2021, compared to the year before. The last infection case for Construction S Pass and Work Permit Holders in dormitories was more than 30 days ago.

Construction activities at the worksites have largely resumed, to approximately 85% of pre-COVID levels. Construction demand is expected to rebound to some extent in the next few years. BCA estimates that $23 to $28 billion worth of projects will be awarded this year.

However, despite this steady progress, firms in the Built Environment sector continue to face significant pressures in the near term. Construction projects have to manage with lower productivity on-site due to Safe Management Measures, which are needed to keep our workers and the broader community safe. Firms face shortages of manpower and labour cost increases as we need to continue to limit the inflow of migrant workers into Singapore for good public health reasons.

BCA and MOH are reviewing the Safe Management Measures at worksites, taking into account the need to balance the risk of onsite transmission and other considerations, including the vaccination of our migrant worker population.

We have commenced COVID-19 vaccination for our migrant workers. To date, 97% of some 9,000 COVID-naive workers from five largest dormitories have received their first dose of vaccine. A further 30,000 migrant workers across 30 dormitories are scheduled to get their first dose in the coming weeks. The take-up rate of the vaccination has been encouraging, and we aim to make significant progress by the end of this year.  

While the sector is slowly getting back on its feet, we are not out of the woods yet. It is in this context that I am introducing the COVID-19 (Temporary Measures) (Amendment No. 2) Bill. First, the proposed amendments to the Act will allow us to extend the existing reliefs for the sector provided under Part 2 of the Act. This will have the effect of extending the period for cost-sharing in construction contracts under Part 8B of the Act. Second, the proposed amendments will also allow us to better administer Part 8C of the Act. Let me go through these in turn.
 
Extension of reliefs provided in the Act 

For construction and supply contracts, we intend to extend the temporary relief measures for a period of 6 months, to 30 September 2021. The construction industry has long and complex value chains, with multiple tiers of sub-contracting. Given the cascading chain nature of construction and supply contracts across the multiple tiers, an expiry of the relief could result in a wave of contractual disputes, especially during this time when the sector is still stabilising. 

If firms are embroiled in legal disputes and forced to wind up, this could lead to a domino effect where multiple firms along the value chain wind up successively. This ripple effect could result in further construction delays or uncompleted projects.

Therefore, in consultation with industry partners, we believe that it is prudent to extend this cost-sharing relief under Part 8B for another 6 months. Contractors who incur additional cost as a result of delays from COVID-19 would also benefit from this extension.

However, the cost-sharing under Part 8B will remain at 50% of the qualifying costs, and will still be subject to a monthly cap of 0.2% of contract sum per month, and a total 1.8% of the contract sum. 

For options to purchase and agreements for the sale and purchase of residential, commercial and industrial properties with developers, including those with HDB, we intend to extend the temporary relief measures under Part 2 for a further period of 3 months, to 30 June 2021. This will provide more time for developers and purchasers who are unable to perform any of their contractual obligations to negotiate and reach a compromise. In particular, in view of the impact of COVID-19 on the economy, we will assist purchasers who require more time to sort out their finances and make their payments. 

Clause 2 of the Bill will amend the sunset period under Part 2 of the Act, so that the reliefs under that Part can subsist beyond 19 April 2021. Specifically, we propose to extend the sunset period for another year, until 19 April 2022. This will allow for the extension of the relief periods for construction and supply contracts, options to purchase, and agreements for the sale and purchase of properties beyond the current sunset date of 19 April 2021.

Amendments to Part 8C 

Next, this Bill also introduces a number of amendments to Part 8C of the Act to facilitate the implementation and the delivery of the relief when it comes into operation in a few months.We have been working very closely with the relevant agencies and industry stakeholders on the operational details.

We want to ensure that the process of tapping on the relief is efficient for both purchasers and developers, given that it will be in effect for a longer period as compared to the other reliefs under the Act.

Let me first briefly recap the Part 8C relief before dealing with the specific amendments.

Part 8C is intended to assist developers who are facing construction delay due to COVID-19, and are unable to meet the committed delivery date of possession to purchasers. We have been encouraging developers who are unable to meet the date of delivery of possession to first discuss with their purchasers and come to a workable and mutually agreeable arrangement.

For developers who are unable to come to an arrangement and require help, Part 8C will allow them to extend the date of delivery of possession by up to the universal extension of time provided for construction projects, which is 4 months, or 122 days. Should the developer need relief of more than 122 days, they can apply to an assessor for a determination of the length of construction delay that is caused by COVID-19.

Where the developer has extended the date of delivery of possession, purchasers may seek reimbursement from the developer for certain out-of-pocket expenses incurred due to the delay in delivery of the unit, up to a specified cap.

This allows for co-sharing of such costs between the developer and the purchaser, and if there are any disputes, parties can apply to an assessor for a determination. The assessor will consider the facts of the matter, and make a just and fair determination of the costs that the purchaser is entitled to claim from the developer.

Let me now highlight the key amendments.

Clause 4 amends the Act to provide for the different manners in which the purchaser may claim and obtain reimbursement of qualifying costs. For example, after the amount has been determined, the developer can directly reimburse the purchaser, or the purchaser can offset the amount of reimbursement against any instalment or other payment payable by the purchaser to the developer under the affected agreement. This will provide more options for purchasers and developers to settle between themselves the reimbursement that is due, based on what works best for them. 

Clause 5 introduces a new provision to empower the Registrar of assessors to, on such terms as the Registrar of assessors thinks just, extend the period within which a person is required under Part 8C to do anything.

There may be instances where parties have genuine exceptional circumstances for requiring more time to carry out an action in relation to the relief. This provision gives the Registrar the flexibility to extend the time for these parties if the extension is justified.

Clause 6 amends the Act to provide that the Minister is to appoint one or more authorised nominating bodies, for the purpose of providing assessors to hear and determine applications. As Part 8C will be operational for a few years until the projects of all qualifying contracts are completed, we can expect personnel changes amongst the assessors. Allowing the authorised nominating bodies to appoint assessors who satisfy the requirements prescribed will facilitate a more efficient management of personnel turnover.

Clauses 8 and 9 deal with miscellaneous matters relating to proceedings before an assessor, including subsequent determinations and the confidentiality of information and documents, and the making of regulations under this Part.

Conclusion

Sir, let me conclude. The Built Environment sector builds our homes and workplaces, lays our essential infrastructure like roads and utilities, and develops our recreational and green spaces like malls and parks. An impact to the Built Environment sector goes beyond the stakeholders in the value chain and will affect other industries and Singaporeans, in one way or another.

While the sector has been severely impacted with the onset of COVID-19, it has shown grit and resilience to get back on its feet. The government is committed to partner the industry to ensure that the ecosystem continues to function, construction work continues to progress smoothly, and we do not lose important industrial capabilities even as we transform the sector. 

This Bill is an important part of this effort to ensure the sector stays on its feet and emerge stronger. 

With that, Mr. Speaker sir, I beg to move.