Speech by MOS Tan Kiat How at the BCA-REDAS Built Environment and Property Prospects 2022

Wednesday, 26 January 2022

Introduction

Good morning. I am very happy to join you at the BCA-REDAS Built Environment and Property Prospects Seminar 2022.

Over the past two years, our sector has gone through a bruising battle with COVID-19. The sector has shown tremendous resilience to weather this storm. We could only have done so by working together.

On our part, the Government engaged and worked closely with industry partners to mitigate the impact of COVID-19. Together, we managed infection outbreaks at worksites and dormitories, brought in migrant workers safely and kept them safe while they were in Singapore, and ensured that no single part of the entire value-chain was made to bear a disproportionate share of the burden.

We provided substantial support to the sector during the height of the pandemic. This included the $1.36 billion Construction Support Package, Foreign Worker Levy waivers and rebates, wage subsidies for local employees under the Jobs Support Scheme, and legislative relief under the COVID-19 (Temporary Measures) Act.

Businesses also played a part. Firms diligently implemented Safe Management Measures (SMMs) at worksites and quickly adjusted as the situation evolved. The industry also collaborated to implement a tightened end-to-end process to bring in workers safely.

I would also like to thank those working in our sector, including our construction workers, supervisors, engineers, architects and developers for working tirelessly to keep projects going during these challenging times. And because of this close partnership, our sector is in a more resilient position today.

Living with COVID-19

We see encouraging signs in the sector’s recovery. Based on BCA’s survey of progress payments, the nominal construction output is estimated to have almost reached pre-COVID levels. This indicates that construction works are progressing at a steady pace. The inflow of foreign workers has steadily improved. As compared to the period when travel restrictions and tightened entry approvals were in place last year, the current monthly inflow of foreign workers has more than doubled.

However, we are still not out of the woods. Omicron, a highly transmissible COVID-19 variant, has emerged. Like many countries, we face a new wave of infections.

But we are better prepared today. 98% of our construction workers are vaccinated, and about half of the eligible workers have obtained their booster shots. Vaccinations remain effective in protecting our workers against severe illness.

We must remain vigilant and cannot let our guard down. I encourage employers to get your workers to take up the booster shot when it is offered. Firms also need to maintain your Safe Management Measures and update your Business Continuity Plans. Taken together, these moves will slow the spread of the virus and minimise disruptions. BCA is keeping a close watch on the situation, including ensuring a smooth inflow of workers and building material, and will work closely with you to mitigate the impact of Omicron so that the sector can maintain its steady recovery.

Outlook for 2022

Therefore, we can look forward to the year ahead with cautious optimism. BCA has estimated that the total projected construction demand will be between $27 billion and $32 billion in 2022. The upper bound of this forecast is 7% higher than the preliminary estimates for 2021.

Public sector demand is expected to remain firm and contribute to about 60% of the total construction demand this year, at between $16 billion and $19 billion. The pipeline of works includes public housing projects such as HDB Built-to-Order units and those undergoing the Home Improvement Programme, as well as from infrastructure developments such as the Cross Island MRT Line and the Deep Tunnel Sewerage System. Private sector construction demand in 2022 is expected to be similar to 2021, at between $11 billion to $13 billion.

We also expect construction demand to be sustained over the next few years. BCA has estimated that the total projected construction demand will be between $25 billion to $32 billion per year from 2023 to 2026.

The public sector will continue to be the main demand driver, contributing close to 60% of the total annual construction demand, at $14 billion to $18 billion per year. Besides public housing projects as part of the government’s commitment to ramp up BTO supply over the next few years, we expect a strong pipeline of projects including MRT projects and institutional and healthcare developments such as the Toa Payoh Integrated Development and the redevelopment of Alexandra Hospital.

Built Environment Sector Transformation

Against the backdrop of sustained construction demand, I encourage firms to take the opportunity to transform even as you embark on new projects. COVID-19 has exposed many of our sector’s vulnerabilities. We must learn from these painful lessons and take steps to better prepare ourselves for the future. The impetus for our sector transformation has been clear for some time. That is why BCA worked with the industry to launch the Construction Industry Transformation Map, or ITM in 2017.

While we have made good progress under the ITM, our operating environment is also rapidly changing. Automation, digitalisation and sustainability will continue to disrupt many industries, including ours. At the same time, these developments give us the opportunity to redesign and improve our construction practices, processes and working environment.

The Built Environment sector will also need to tackle the pressing domestic challenges of ageing infrastructure and workforce.

As we continue to build our city, there will be an increasing stock of ageing infrastructure and buildings, many which still have decades of useful life span ahead of them. It is estimated that more than 50% of the building stock will be more than 30 years old by 2025. So, how do we maintain them cost-effectively, ensure that they remain safe and sound, refresh and upgrade them to meet new sustainability standards, and preserve those that have special heritage and cultural significance to our society?

Our Built Environment workforce is also ageing. About 40% of our resident Professional, Managerial, Executive and Technical (PMET) workforce are 50 years and older. It is critical to attract and retain the next generation of professionals and industry leaders. Compared to many of us, our young people have many more career pathways to choose from when they enter the workforce. As industry seniors, and as parents, we are happy that they have all these exciting opportunities. But it also means that we must work harder to transform the Built Environment sector to offer attractive and rewarding careers for those joining us.

In this context, we have started refreshing our ITM. The Future Economy Council (FEC) Urban System (US) Cluster Sub-committee, co-chaired by Mr Liam Wee Sin, Group Chief Executive of UOL Group Limited and myself, has been studying how our sector can be more productive, digital, and sustainable. Over the last year, we have actively engaged industry stakeholders in small groups and through focus groups to get inputs and to brainstorm ideas.

We are mindful that the sector is still recovering from the impact of COVID-19 and uncertainty remains over the horizon. Our transformation effort would have to take these realities into consideration. Nonetheless, we are heartened that many stakeholders have expressed their desire to not waste this crisis and to seize this window of opportunity to change. We will share more details when ready, and we look forward to your continued inputs and support.

On our part, the public sector is committed to lead by example in this transformation effort, as the main driver of construction demand and in our role as industry regulator and industry champion.

Under the Productivity Gateway Framework, public sector projects are required to achieve a minimum 30% productivity improvement over 2010 levels through the adoption of Design for Manufacturing and Assembly (DfMA) technologies, and to implement Integrated Digital Delivery (IDD).

Under the GreenGov.SG, all new buildings and existing buildings undergoing major retrofitting works are required to obtain the Platinum Super Low Energy standard, and the Maintainability badge under the Green Mark 2021 framework.

These represent the best-in-class standards for energy efficiency and Design for Maintainability (DfM). For buildings with Gross Floor Area of more than 5,000 sqm, they are required to adopt Smart Facilities Management (FM) solutions for building operations and maintenance.

The government has also introduced various incentive schemes to support the private sector. For example, private developers can tap on the Built Environment Transformation Gross Floor Area (GFA) scheme that was launched recently to be more productive, digital and sustainable. Firms can also tap on the Construction Productivity and Capability Fund (CPCF) and the Productivity Solutions Grant (PSG) to enhance their productivity.

Before I conclude, let me say a few words in Mandarin.

过去两年来，冠病疫情对建筑环境业造成很大的影响，包括员工短缺，以及建筑材料价格上涨。虽然困难重重，但建筑环境业者展现了毅力，团结起来，共度这个难关。经过各方的努力，加上政府提供的援助，建筑环境业已经开始复苏。

随着建筑需求逐步恢复，建设局预计今年颁发的建筑合同总值可以达到270亿元到320亿元。当中，来自政府项目的建筑需求，预料介于160亿元到190亿元之间，包括公共住房、医疗保健和基础建设项目。

建设局也估计，建筑需求接下来几年会保持平稳。2023年到2026年的整体建筑需求，每年预料介于250亿元到320亿元之间，而政府项目将继续是主力，占合同总值的大约六成。

尽管已经看到曙光，建筑环境业者还是不能松懈下来。Omicron变种病毒株正在横扫各国，新加坡也受到威胁。不过，这一次我们的准备比较充足，98%的建筑工人已经接种了疫苗；而当中符合资格的建筑工人，也已经有大约一半施打了追加剂。

在应对疫情的同时，建筑环境业者应该继续推动建筑业转型。冠病疫情突显了这个行业的短处，而转型能够加强行业的韧性，更好地应对未来可能出现的挑战。为了帮助业者转型，政府通过多项计划来提供援助和补贴；我呼吁业者们好好利用这些援助，为未来做好准备。

Conclusion

In conclusion, we have worked hard in the last two years to manage the challenges of COVID-19 and set the sector on the path to recovery. The deep trust and partnership between the Government and the industry, as well as between various stakeholders along the value-chain, have enabled us to get through this crisis together. Let us build on this foundation, as we embark on the next phase of industry transformation and create good jobs for Singaporeans.

On this note, I would like to thank REDAS for collaborating with BCA to organise this annual event. I would like to take this opportunity to wish everyone an early happy lunar new year filled with happiness, health and prosperity.

Thank you.