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Opening Remarks by Mr Heng Swee Keat, Minister for Finance, at the Singapore Contractors Association Ltd Annual Dinner 2018, 13 Sep 2018, Shangri-la Hotel

13 Sep 2018

SCAL President, Mr Kenneth Loo
Distinguished Guests
Ladies and Gentlemen

A very good evening to all of you. I am very haappy to join you for this 81st birthday celebration and to see so many of you coming for this event. I must say I’m surprised so many of you turning up. There are so many tables. 

1. Journey thus far and outlook for the Built Environment

a. Singapore stands out for its unique blend of skyscrapers and multi-cultural heritage buildings.

b. On my way here, I watch your SCAL video on your website. Let me ask how many of you have seen that video? It is a very nice video. SCAL members really making your mark - from pre-independence days, the old shophouses you construct; to independence, and all the important projects that we have; and of course our modern infrastructure. 

c. Indeed, you have left a mark on our urban landscape in the last 81 years. Latest being the collaboration with BCA and other industry stakeholders to launch the series of guidebooks for the industry to transform the way they build. I understand that the Mass Engineered Timber guidebook was just launched last Wednesday at the Singapore Green Building Week. 

d. The government is committed to rejuvenating our built environment.

e. In National Day Rally 2018, PM announced the expanded HIP scope and the HIP II.

f. There is also ambitious endeavours and large expenditures towards a range of upcoming projects from Remaking of our Heartland (ROH) to mega-industrial complexes. I hope all these present good growth opportunities for all of you here.

2. Transformation is crucial to remain competitive in the long-term

a. The construction industry is a cyclical one – Construction sector contracted by 4.6 per cent year-on-year.

b. The Government is helping the industry to ride out this tough period by bringing forward $1.4 billion in public projects to start from 2017 to early 2019.

i. These include small to large projects – from estate upgrading work to the upgrading of a number of community clubs, neighbourhood police posts and other public sector buildings.  

c. But things are looking up. BCA expects total construction demand this year to reach $26 to $31 billion, higher than the $25 billion recorded a year ago. Demand is expected to continue to increase to between $26 to $35 billion a year over the next few years. 

i. The public sector will continue to lead construction demand in the coming years, fuelled by construction works for major infrastructure projects such as Changi Airport Terminal 5, the North-South Corridor, Deep Tunnel Sewerage System and new MRT lines.

d. To remain competitive, firms cannot go about business as usual. The window of opportunity to embark on transformation becomes narrower every day. How can we transcend size, location, and status as mature economy? It has to go beyond brick and mortar.

e. There are many long-term trends are affecting our economy, including the construction sector. 

i. Demographic challenges. We continue to face the problem of an ageing population and shrinking labour force. This means that the pool of available construction workers will shrink.

ii. Emergence of new technologies. New technologies are disrupting traditional business models. And the pace of change is accelerating. Moving first and moving fast is key to staying competitive. For example, digital technologies such as Building Information Modelling or BIM, can be used to plan and optimise fabrication processes of building components. The construction process can be virtually mapped out to identify potential conflicts before actual work is started on site. These can translate into time and cost savings.

f. By building new capabilities, firms can create new value, stay relevant, and compete. 

i. Specifically, through adopting more productive construction methods, such as Design for Manufacturing and Assembly (DfMA), and increasing digitalisation through Integrated Digital Delivery (IDD).

ii. These are the capabilities that will give our home-grown companies a fighting edge in a competitive world. Take for example, Teambuild Construction which obtained first mover advantage and established themselves as a DfMA expert in the industry by being an early adopter of advanced pre-fab technologies such as Prefabricated Pre-finished Volumetric Construction (PPVC). They also went on to develop their supply capabilities for DfMA, enabling them to provide more holistic services in the long run. They have also adopted digital technologies to streamline its work processes and improve collaboration. I encourage more firms to take a bold step and explore new possibilities in improving their construction processes.

g. I am happy to hear that since the Construction ITM was launched in October last year, the sector has made good progress in spite of the difficult market conditions.

i. Through DfMA adoption in projects and investment in highly automated Integrated Construction and Precast Hubs (ICPHs) producing precast and modular units, a number of leading local firms worked together to drive transformation in our industry. For example:

• Lian Ho Lee Construction Pte Ltd adopted Mass Engineered Timber (MET) and Structural Steel for the construction of SMU’s Tahir Foundation Connexion. 

• Woh Hup Pte Ltd is using Prefabricated Pre-finished Volumetric Construction (PPVC) for the construction of a condominium in Tampines

• Teambuild and Soilbuild are also completing their ICPHs in Singapore soon. 

ii. We see promising results in our site productivity improvement. The DfMA adoption rate, which doubled in 2017 from the 10% in 2016, cumulatively stands at 12% as of 2017 over 2010 levels. We will work more closely with all of you to achieve our target of at least 20% by 2020. 

h. When we succeed, we will have Singapore firms that will not only be able to thrive locally, but also compete overseas. In particular, the construction industry and the Built Environment sector as a whole can benefit from the growing demand for infrastructure and urban solutions in ASEAN.

i. Some of you may know that the World Bank Infrastructure and Urban Development Hub is actually in Singapore. At this year’s Budget speech, I announced the setting up of an Infrastructure office – called Infrastructure Asia – to bring together the key stakeholders across the region and catalyse more project opportunities.

i. We also want to strengthen urban environment and integrate horizontally across sectors to carry on the momentum of ITMs.

j. But ultimately, transformation is not for transformation sake. What we want to see is a vibrant industry that is competitive both in Singapore but also beyond our shores. And one that generates good jobs and wages to attract more Singaporeans into the sector 

3. Critical Role of SCAL as a TAC

a. As we press on with transformation, SCAL will continue to play a critical role. 

b. You are the important link between the government and industry in at least three areas:

(1) Driving initiatives. I am pleased to hear that SCAL has driven several initiatives to help the industry:

i. The construction productivity study initiated by SCAL, in collaboration with the Singapore Chinese Chamber of Commerce and Industry (SCCCI), put forth recommendations on how SCAL can best lead the industry to transform. SCAL has started to implement some of these recommendations such as providing platforms and forums to provide the latest updates on construction technologies and sharing best practices, and encouraging companies to recognise productivity initiatives at all levels within the organisation.

ii. You introduced the SCAL Productivity & Innovation Awards (PIA) 2018. 22 number of submissions this year. I heard there is a lot of excitement on some of these projects come Judging Day on 27 Sep.

iii. BCA-SCAL productivity clinic is another good example. Since Dec 2011, SCAL has advised 360 firms to boost their productivity and upgrade their workforce capability. SCAL is working with BCA to enhance this initiative.

iv. SCAL Academy will also be expanding their training curriculum to develop a future-ready workforce for the industry. Some of the new upcoming training initiatives include that for Mass Engineered Timber (MET), Prefabricated Prefinished Volumetric Construction, Virtual Design and Construction (VDC) and Building Information Modeling (BIM)

(2) Gather feedback. During the ITM development process, I understand that SCAL provided very useful channels for industry feedback through sessions such as the SCAL CEO Lunch. The work is not done. The development of the ITM is an iterative process and we will need to continue leveraging on SCAL and you to gather industry feedback and progressively refine its initiatives according to the latest developments.

(3) Foster collaboration. I understand that SCAL is working with BCA and other industry stakeholder groups to look into adopting collaborative contracting models in building, which reduces uncoordinated works upstream and correspondingly abortive works downstream. Beyond this, SCAL can help to “match-make” firms for possible collaboration on bigger projects, whereby each of them would be able to lend their expertise in areas that they are strong in. 

i. In the last issue of The Business Times’ The SME magazine, I read about the progressive Singapore builders such as CMC Construction and Unison Construction which have invested in advancing their firm’s DfMA and BIM capabilities for higher productivity and more efficient collaboration among project parties. I hope more of such firms can be identified and pulled together to collaborate and synergise your efforts. 

ii. For those who already have strong partnerships with other firms in the construction sector, I also want to encourage you to look at collaboration with adjacent sectors in the Built Environment , such as real estate, security, and environmental services.  Processes in these sectors can be harmonized to strengthen their collective value chain.  

4. The Government is committed to supporting the industry in this journey of transformation

a. I know that transformation is not an easy journey, especially for many small and medium-sized enterprises.

b. The Government is committed to supporting the industry through various initiatives.

i. BCA set up a one-stop office, BuildSG, in April this year. BuildSG will centrally manage BCA’s key incentive and manpower schemes to provide a more streamlined customer experience for firms and individuals in the sector. It will be working closely with tripartite partners to provide firms and individuals more support along this transformation journey. 

ii. Main contractors can tap on government support schemes, such as MOM/Workforce Singapore (WSG)’s Capability Transfer Programme (CTP), to facilitate transfer of capabilities through working together with their specialist subcontractors. 

iii. For Trade Associations and Chambers (TACs) like SCAL, you can tap on the Local Enterprise and Association Development (LEAD) programme by Enterprise Singapore to advance the construction sector. Up to 90% funding support may be given for high-impact projects done in collaboration among TACs. You can also tap on LEAD to upgrade and strengthen your internal capabilities that would support your efforts in driving industry transformation. 

iv. We have also enhanced the scholarship and sponsorship programmes to place a greater emphasis in the retention of our students from university and polytechnicsand help support and encourage firms to adopt good HR Practices. More details will be shared by BCA subsequently. 

5. Conclusion

a. We have made good progress since the launch of the ITM but we need to press on with transformation. SCAL will play a key role.

b. My heartiest congratulations to SCAL for 81 years of excellence. You have been and will continue to be a valued partner of the Government.

c. In your SCAL video, it says “SCAL is ready to lead”. That is an excellent tagline! Here’s to many more years of working alongside to rejuvenate Singapore’s future infrastructure together and as Minister Lawrence Wong said, “We are not done building Singapore, we have many more things to do”.

d. Thank you.