SGHOUSING.COM 新加坡房地产网

Govt looking into speeding up compensation payments to contractors on public sector projects

The Government might consider expediting compensation payments to contractors on public sector projects to help their cash-flow woes following the recent spike in the costs of raw materials, Minister for National Development Mah Bow Tan said yesterday.

Prices for sand and granite aggregates have shot up following Indonesia’s ban on land sand exports in February, and the recent disruption to granite supplies after Indonesia detained barges suspected of smuggling sand.

The Government has promised compensation for contractors, but as yet no timetable for this compensation package has been set.

For many contractors, particularly smaller companies having to cope with price rises of more than 100 per cent, it cannot come soon enough.

Some contractors told The Straits Times recently that they could not absorb the price hikes for long.

Last week, Singapore Contractors Association president Desmond Hill said compensation should be made progressively, because the survival of the industry depends on a healthy cash flow.

Meanwhile, Mr Mah confirmed yesterday that the seized granite barges have not yet been released.

This is despite recent announcements from Indonesia that it has not banned granite exports to Singapore.

Minister of State for National Development Grace Fu said last week that the Government was sourcing granite from countries like Malaysia, Vietnam and China.

But prices have still increased dramatically, due to the increase in transport and logistics costs, Mr Mah said.

The price of sand has gone up from $25 to $60 per tonne, while that of granite has increased from $25 to $70.

Sand and granite are used to make concrete, the price of which has also shot up from $70 to around $200 per cu m.

The Government has said it will pick up the tab for 75 per cent of the additional costs for public sector contractors, but has not confirmed when these payments will be made.

‘We have an index for how much additional cost is involved and the agencies are now working it out,’ said Mr Mah.

As for the private sector, Mr Mah said the government agencies will try to mediate a solution.

‘I don’t expect, with a disruption like this, that everybody will come out with a perfect solution overnight.

‘But I really hope that all parties concerned, including the developers and contractors, will find a way to resolve this because it’s not in everybody’s interest to see any one party suffer unduly as a result of this.

‘The burden has to be shared more or less equally by all parties concerned,’ he said.

Source : Straits Times - 29 Mar 2007