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

Monday, 5 April 2021

Mr Speaker Sir, I thank Members for their comments and support of the Bill.  Let me address the issues raised.

Mr Louis Ng asked about the impacts of the reliefs and our considerations for extension. I have laid out some of the considerations in my Second Reading speech earlier. I want to assure the member that we recognise that the relief measures are interventions into private contracts. The sanctity of contract is fundamental for Singapore, and a key aspect of the rule of law.

Hence, this is not a decision we have taken lightly. In this exceptional circumstance, we need to intervene to safeguard and preserve the capacity of our Built Environment sector, by supporting the entire value chain. The industry has also consistently provided feedback to us that the ongoing moratorium on legal proceedings during the current COVID-19 pandemic has proven very useful in helping the sector focus on staying on its feet.

Mr Ng also asked about the percentage of parties that have been able to resolve their differences amicably and in a beneficial manner. For construction and supply contracts, there have been about 1,100 notifications for relief filed as of 19 March 2021. Of those, only about 118, or about 10%, eventually applied for an assessor’s determination.

This suggests to us that the majority were able to come to some satisfactory compromise on their own about contractual obligations affected by COVID-19. The relief under this Act provides a framework for conversations to happen, so that firms can amicably settle their differences and move projects forward if they can do so.

Ms Sylvia Lim asked about Part 3 of the Act. To clarify, while the sunset period for Part 3 ends on 19 April 2021, nonetheless, the measures relating to insolvency in Part 3 had already lapsed in October 2020 as the prescribed period was from 20 April 2020 to 19 October 2020.

These are exceptional measures that temporarily suspended creditors’ rights to provide breathing room for financially distressed debtors to negotiate with creditors and pursue the next steps, including for personal bankruptcy, the individual voluntary arrangement and debt repayment scheme; for corporate insolvency, out-of-court workouts, schemes of arrangement, judicial management and Simplified Insolvency Programme; for sole proprietorships and partnerships, the Sole Proprietorship and Partnership Scheme.

Such exceptional measures should be carefully monitored, because the measures also affect creditors and therefore flow of credit to other businesses. There have been no significant increase in the number of personal bankruptcy and corporate insolvency applications, when comparing the number for applications pre-COVID and the post-lapse of Part 3 measures in October 2020. We have been monitoring the situation and will continue to monitor it.

Mr Henry Kwek and Mr Louis Ng brought up the immediate challenge of the manpower shortage faced by the industry. I agree with the members that beyond the temporary relief measures, it is important to address this situation. To alleviate the current labour shortage in the construction industry, we are working closely with the Ministry of Manpower and Ministry of Health to progressively increase the number of incoming workers, but in a safe way to minimise the risk of COVID-19 transmission in our dormitories and in the wider community.

I thank Mr Kwek for his suggestion to set up commercial processing facilities overseas to enable testing. Indeed, there are many operational challenges that we need to overcome to ensure reliable testing overseas. We are actively in discussion with industry partners, including the Singapore Contractors Association Limited, or SCAL, and we are looking at how we can enable and establish better upstream processes to enhance pre-departure testing for workers in source countries.

I also agree with Mr Ng that there is value to retain experienced workers in Singapore as much as possible. However, as Mr Kwek has pointed out, there are also workers who want to go back to their families, and there are indeed workers who went home and could not return or would not like to return.

However, we are trying to keep as many of the workers in Singapore. In this regard, SCAL, with the support of the Ministry of Manpower and BCA, has set up the SCAL Manpower Exchange, or SCMX, to facilitate a change of employer for construction workers, for workers whose contracts with their existing employers have either expired or have been terminated. This will help us retain the experienced workers who want to remain in Singapore.

On Mr Ng’s suggestion to facilitate the re-hiring of workers who have returned to their home countries and want to return to Singapore to work, we are very pleased to have them back in Singapore, and employers know who they are and have applied for them to re-enter Singapore.

However, the constraint is not this. The constraint and challenge we are facing is how to allow these workers to re-enter Singapore in sufficient numbers to meet the industry’s manpower needs, while minimising COVID-19 importation risks, so as to safeguard public health. We are working closely with MOM and MOH on this. 

Mr Vikram Nair rightly pointed out that cashflow is the lifeline for the construction industry. BCA monitors the progress payments in the industry closely and receives frequent feedback from key developers and contractors. This is also why we need to extend the reliefs under the Act so firms do not get engaged in long-drawn litigations at this point in time.

During the Circuit Breaker period, most works were suspended, and contractors received no progress payment. What we did to facilitate cash flow was for government agencies to provide advance payment to help contractors tide over this challenging period, and some private developers have also follow suit. For public sector projects, we have provided at least $665 million of advance payment in total. The Government has also provided financial support, including waivers and rebates of the Foreign Worker Levy, and subsidies for Rostered Routine Testing.

Mr Vikram Nair also asked about co-sharing of additional costs for delays due to COVID-19 under Part 8B, and how easy it is for such prolongation costs to be shared. To facilitate such claims, BCA and SCAL have jointly developed a claims template and detailed guidelines, which are available on BCA’s website. In addition, BCA has also been working with SCAL and other Trade Associations and Chambers, to streamline the claims process. This includes introducing an accepted method to estimate the delays to projects due to COVID-19.

We will continue to work with the various stakeholders, including SCAL and government agencies to further expedite the claims process. Lastly, under Part 8B, contractors can also seek recourse for cost-sharing amounts that are due but not paid, through the existing adjudication mechanism under the Security of Payment Act, or SOPA, which the industry is very familiar with. 

Mr Don Wee suggested that we inform the industry and banks on the extension of the period where developers are prevented from calling on the performance bonds on contractors. Mr Wee may be pleased to know that the provision for deferment of call of performance bonds is already provided for in the Act. MND and BCA have been in close contact with the industry, and we have updated the industry on the extension of the arrangement under the Act, including through a press release. 

Mr Don Wee also brought up how the impact on the construction industry has also affected homebuyers whose premises under construction have been delayed, and who have had to make alternative arrangements. Mr Vikram Nair has also asked about the extent to which purchasers have been affected.

The number of purchasers seeking reimbursement after Part 8C comes into operation in a few months will depend on the number of projects delayed and whether developers need and choose to tap on the relief. It is in the interest of developers for projects to be completed in a timely manner without having to tap on the relief.

Currently, based on updates from developers for projects expected to be completed in 2021, most are still on track to meet their respective dates of delivery of possession. We have also been encouraging developers who are unable to meet the date of delivery to first discuss with their purchasers and come to a workable and mutually agreeable arrangement, as this may result in a better outcome for both parties. 

Let me assure Members that even as we provide relief to developers, we recognise that purchasers face challenges on their end as well, and we have structured Part 8C accordingly.  

Under Part 8C, developers who have faced construction delays due to COVID 19 and require relief may serve a notice for an extension of the delivery date by up to 4 months, or 122 days, which is aligned with the period in Part 8A. Mr Don Wee asked why four months. This was shared in the Second Reading of the Bill – because construction works stopped for approximately two months due to the Circuit Breaker period, and works were further delayed by at least another two months as all dormitories were only cleared in early August 2020.

Should a developer need further relief for the delivery date to be extended by more than 122 days, they can apply for an assessor’s determination on the length of construction delay that is, to a material extent, caused by COVID-19.

Mr Don Wee also asked whether these reliefs would apply to HDB, where HDB is the developer. For HDB flats, purchasers can similarly claim up to 70% of the prescribed LD formula, which will be aligned with that of the formula stated in the Housing Developers Rules for private residential properties.

This allows for co-sharing of such costs between the developer and purchaser. And if there is any dispute over reimbursement, both parties can seek an assessor’s determination.

On Mr Don Wee’s query on the assessors, similar to Part 2, the assessors making the determinations under Part 8C will be professionals with qualifications and working experience in the relevant fields, such as law, accountancy, finance, or building and construction. There will be mechanisms put in place to ensure that assessors declare any conflict of interest upfront.

Ms Sylvia Lim asked why Part 8C is not in operation yet, and why amendments to Part 8C have been made at this juncture. There are many urgent parts to the amendment that we moved in November last year, including Part 8, Part 8A and Part 8B, and we have made sure that those parts are in operation as quickly as we can. For Part 8C, we have been in active discussion over the last few months with the industry and partners who will run and operationalise the relief framework. We are making amendments now as we incorporate their feedback in preparation for the operationalisation. We aim to streamline the process and help it be implemented more smoothly and more efficiently, given that it will be in effect for a longer period of time as compared to other reliefs under the Act.

Ms Lim will be pleased to know that the relief will apply to all affected agreements for the sale and purchase of residential, commercial and industrial properties that meet the criteria stated in the Act, regardless of when Part 8C comes into operation. Hence, developers will be able to tap on it after it comes into operation in a few months, and purchasers will be able to seek reimbursement then.

Ms Lim also asked how we will address the issue of fairness given that legal representations will not be allowed under the Assessors’ Framework, which she spoke in support of. As with other parts of the Act, the assessor mechanism is designed to provide quick and effective practical solutions to disputes.

The overarching role of the assessors is to make decisions that are just and fair in the circumstances, and they have the power to ask for appropriate information and documents from both parties, including information or documents not sought for by either party, to achieve this. 

Ms Lim raised the concern that a company may be represented by a legally trained employee. In the first instance, we hope to minimise the need for purchasers and developers to even require an assessor’s determination, and we will lay out clearly the qualifying costs that purchasers will be able to seek reimbursement for to make the process more efficient and easy for everyone. The Member will also know that in an ordinary case, if the matter were to go to the Court, the company will have the right to have legal representation.

Therefore, we have taken the position that companies cannot be represented by lawyers. But there is a difference if we say that no one who is legally trained should come before an assessor. What if the individual purchaser himself is legally trained? The point is that the assessment framework seeks to give reliefs on very simple facts when there would otherwise be no relief. So, simple process, simple facts, and at the first instance, we hope to minimise the need for them to come before an assessor to seek determination. 

Mr Speaker, in conclusion, the amendments before the House today seek to provide continued support to the Built Environment sector to ride out the lingering impact of the pandemic. I thank Members and the industry stakeholders for their strong support for these measures and to continue to support the sector to stay on its feet.