Ms Hazel Poa asked the Minister for National Development what measures are currently in place to ensure the financial viability of HDB’s BTO contractors and whether these measures will be enhanced.
Mr Desmond Lee: Members Mr Don Wee and Ms Hazel Poa, as well as Ms Poh Li San1 and Mr Murali Pillai2 who have filed questions for future Sittings, have asked about the Greatearth situation and how it has affected homeowners, main contractors, and sub-contractors.
Greatearth Corporation Pte Ltd and Greatearth Construction Pte Ltd (referred to collectively as “Greatearth”) are the main contractors for five HDB BTO projects. The five projects are at various stages of completion, with two projects at Bukit Panjang – Senja Ridges and Senja Heights – near completion.
Just before mid-August, arising from a feedback from the project consultant, HDB checked with Greatearth and was informed that they had run into financial difficulties and were exploring options to continue with the projects. Slightly more than a week later, Greatearth informed HDB that they were unable to complete the five BTO projects, despite the Government’s assistance provided to all construction firms over the past year. Prior to this, work at the sites had been progressing satisfactorily and there were no signs of work slow-down. HDB engaged Greatearth to explore possible options to resolve Greatearth’s challenges, such as the provision of advance payments to allow Greatearth to continue with the projects. However, Greatearth did not have the financial ability to continue operations and made the decision to undergo liquidation.
HDB is now working closely with Greatearth and their provisional liquidators Pricewaterhouse Coopers (PwC) to bring onboard new contractors to take over and complete the five BTO projects as soon as possible. As part of this process, HDB is facilitating discussions between potential new main contractors and existing sub-contractors. This will allow affected sub-contractors the opportunity to work out a suitable arrangement to remain on the projects and complete the remaining works. It will also minimise the extent of delays for flat buyers.
We recognise that the delays will affect home buyers and further disrupt their life plans and understandably, many will be disappointed. HDB has reached out to the affected flat buyers and will continue to keep them updated about the situation. We will also inform them of the revised completion date of their flats, once the replacement contractors have been appointed and the construction schedule has been worked out.
Flat buyers who are unable to find alternative interim housing arrangements with family members, relatives or on the open market, can apply for temporary housing under the Parenthood Provisional Housing Scheme (PPHS) if they are first-timers. On a case-by-case basis, HDB will also offer Interim Rental Housing (IRH) to low-income households with limited family support and without alternative housing options. In addition, HDB will consider waiving the forfeiture and one-year wait out period for flat buyers who have been affected by these delays and decide to cancel their BTO flats to buy a resale flat, based on an assessment of the flat buyers’ specific circumstances. Flat buyers can contact HDB if there is any further assistance they might require.
The construction industry has been one of the sectors worst hit by the COVID-19 pandemic. Construction costs have increased due to an increase in foreign manpower costs arising from tightened border measures, additional compliance costs from Safe Management Measures to lower the risk of transmission of COVID-19 and increases in the cost of construction materials.
In line with overall support for the construction industry, HDB has provided extensive support for our contractors. This includes:
(a) co-sharing the increase in foreign manpower costs, by allowing contractors to apply to adjust the contract sum for their projects to account for such increases. HDB and relevant agencies are also supporting industry players who are seeking to bring in more migrant workers from various countries in a safe and controlled manner, to ease the construction manpower shortage;
(b) co-sharing the increase in non-manpower related operating expenses arising from the prolongation of construction contracts, such as plant and equipment rental, site maintenance costs and the extension of insurance premiums and performance bonds. In this regard, HDB has provided $36 million in co-funding;
(c) providing some $170 million in advance payments to help ease the contractors’ cashflow and exercising flexibility by deferring the start of the recovery of the advance payment beyond the default two months after construction works have commenced and allowing a longer repayment period beyond the default 12 months;
(d) extending the original duration of 18 or 22 months for which HDB provides steel price protection. Structural works may take longer than usual and we will further extend the steel price protection period to make it a total of nine additional months, so that contractors can continue to receive full protection from steel price fluctuations for the duration of the structural works which have been delayed due to the COVID-19 situation; and
(e) providing additional supplies of concreting materials to contractors for local pre-cast production, going beyond the amount that contractors had earlier opted for at tender closing.
HDB will work closely with our contractors and assist them in tiding over this difficult period. We will continue to engage them and review what more we can do to support them to ensure that construction progress remains on track. We also recognise that the delays will affect homebuyers and will do our best to assist them. We remain committed to minimise the extent of the delays and continue to deliver BTO flats in a timely manner, while ensuring that project quality and safety standards are not compromised.