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BCA dismisses contractors’ claims on excessive concrete prices since sand ban; says positive steps in pipeline on cost-sharing

The Building and Construction Authority (BCA) has dismissed claims made by contractors that concrete suppliers have been profiteering from high concrete prices.

In a statement to The Straits Times yesterday, BCA said it had examined the documents submitted by the Singapore Contractors Association Limited (Scal).

BCA concluded that ‘they do not provide sufficient basis to substantiate the allegations of profiteering’.

This ‘thick file’ of evidence on profiteering - making excessive profits on goods in short supply - was raised in Parliament by Ang Mo Kio GRC MP Lee Bee Wah on Monday.

She asked if the Ministry of National Development (MND) had responded.

BCA said the file, submitted on Feb 23, contained copies of contracts, orders, and terms and conditions signed between contractors and ready-mixed concrete companies before and after the Indonesian ban on land sand exports.

Although Scal’s claims have been dismissed, the industry has been taking positive steps towards resolving the issue of sharing costs.

BCA said it was aware the Construction Industry Joint Committee’s (CIJC) - which represents the construction industry - is currently finalising a ‘practice note’ with other industry players on the increase in costs for private sector projects affected by the sand ban.

This note will contain recommended guidelines on how the cost should be shared between concrete suppliers, contractors and developers, said CIJC chairman Chang Meng Teng.

‘We’re trying to follow the Government’s 75-25 per cent formula, but we recognise this is probably not possible in all cases,’ said Mr Chang.

After the sand ban, the price of a tonne of sand went up from $25 to $60.

The disruption of granite supplies from Indonesia made matters worse, with concrete prices soaring from $70 per cubic metre to $200 per cubic metre.

Prices for concrete have recently stabilised at around $170 per cubic metre.

One concrete supplier, who declined to be named, said there was no reason to talk about profiteering because prices are not fixed.

‘There’s still competition between us, and prices fluctuate with the market. So during uncertain times, it was only natural that it moved up,’ he said.

He also noted that things were moving towards resolution between the parties involved.

In response to BCA’s statement, Ms Lee said that after three months of waiting for a response, some contractors were disappointed.

If more information was needed, BCA could have asked for it, she said.

Mr Simon Lee, executive director of Scal, maintained that its report showed that the increase in sand prices did not correspond with the hike in concrete prices.

Sand is an essential ingredient in concrete.

The report, which focused only on the effect of the price increase of sand, stated clearly contractors’ expected losses if they were not compensated, he said.

To encourage more concrete suppliers to enter the market, the Government has released land for new concrete batching plants.

National Development Minister Mah Bow Tan said in Parliament on Monday that if necessary, the Government ‘is prepared to release more if there is demand for it’.

Source : Straits Times - 25 May 2007