SPEECH BY MR KOO TSAI KEE, PARLIAMENTARY SECRETARY (NATIONAL DEVELOPMENT) AT THE AWARD OF 1998 CIDB CONSTRUCTION INDUSTRY SCHOLARSHIPS ON WEDNESDAY, 22 JULY 1998 AT 11.00 AM AT THE CONSTRUCTION INDUSTRY TRAINING INSTITUTE (CITI) FUNCTION ROOM 1, 200 BRADD

Singapore Government Press Release

Media Division, Ministry of Information and The Arts

36th Storey, PSA Building, 460 Alexandra Road, Singapore 119963.

Tel: 3757794/5

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SPEECH BY MR KOO TSAI KEE, PARLIAMENTARY SECRETARY (NATIONAL DEVELOPMENT) AT THE AWARD OF 1998 CIDB CONSTRUCTION INDUSTRY SCHOLARSHIPS ON WEDNESDAY, 22 JULY 1998 AT 11.00 AM AT THE CONSTRUCTION INDUSTRY TRAINING INSTITUTE (CITI) FUNCTION ROOM 1, 200 BRADDELL ROAD

Good morning, ladies and gentlemen.

The construction industry has had a strong run in the past few years. This boom period has enabled many contractors to grow in size and handle bigger projects. Despite keen competition, local contractors performed quite well, clinching more than 90 per cent of the number of contracts awarded in the past 3 years. In terms of the value of contracts, however, local contractors’ market share has remained at only around 70 per cent.

The reason for this disparity is that local contractors are less competitive when it comes to big projects. While they won more than 80 per cent worth of all jobs below $100 million in the last 3 years, they secured only 46 per cent worth of projects above $100 million. Last year, the top 10 local contractors won about $2.7 billion worth of work compared with $4.2 billion for the top 10 foreign contractors in Singapore. And this is despite the fact that in CIDB’s Registry of Contractors, there are 60 local contractors in the unlimited G8 category, double the number of foreign contractors in the same category.

Why foreign contractors are more competitive in large jobs

Why are foreign contractors more competitive that local firms when it comes to large jobs? There are two main factors: one, they have stronger design and engineering capability; and two, they have better management.

Let us look at each of these factors. First, stronger design and engineering capability. It is not cheap for foreign contractors to operate overseas; their staff costs are very high. Their competitive edge stems from not just doing construction work but in being able to provide a total solution or package, which includes integrating both design and technological know-how. They offer alternatives and win clients over with superior solutions, which save time and costs. Recent examples of projects clinched on this basis include the MRT North-East Line, construction of the new HDB Headquarters and even some condominium projects.

The second factor in their favour is better management. To be competitive at this level, strong management is needed. Foreign contractors frequently do process re-engineering and adapt their management practices to the local context. Where necessary, they are prepared to change traditional methods of subcontracting. They also carry out detailed planning and have stringent controls so as to minimise wastage and optimise resources.

According to CIDB’s data on large construction companies, foreign contractors typically employ 1.5 to 2 times the number of professionals and technicians compared to what local contractors employ for similar-sized projects. This indicates the emphasis foreign firms place on engineering and management.

Industry needs to restructure

This brings me to the point about upgrading the construction industry. As you are aware, the Government has called for a fundamental restructuring of the industry. With the regional construction market in a slump, and a decline in the domestic market, the keen competition in Singapore’s construction sector has further intensified. Local construction firms need to be more productive and dynamic to stay in business.

Local contractors, especially the large ones, can learn from their foreign counterparts. They must realise that it is no longer sufficient to bid for jobs in the same way as before. Their future survival depends on their ability to offer a whole range of services to clients. One way to do this is to form long-term alliances with one another or to merge and pool resources. Also, in-house design capabilities should be developed or long-term partnerships with design-and-engineering firms established.

Another important area is the upgrading of the construction workforce at all levels. A number of policies have been recently implemented aimed at changing the profile of the foreign workforce and raising its productivity. In April, the levy differential between skilled and unskilled foreign workers was widened from $240 to $370 per month. Many contractors are now training their workers and getting them certified as skilled workers. As a result, the percentage of skilled foreign workers has gone up from 14 per cent at the beginning of this year to 17 per cent last month. The target is to raise this proportion of skilled workers to 30 per cent.

The Ministry of Manpower has also introduced a new allocation method for foreign construction workers. This move is aimed at getting main contractors to better manage their workforce and to use more labour-saving methods such as precast or dry construction.

Commitment to Training and Manpower Upgrading

Full-time supervisory training

Ladies and gentlemen, with the industry poised for a major restructuring, I wish to underline the importance of training and upgrading of manpower. Efforts to raise the quality of the workforce should not be confined to the workers’ level alone. The supervisory level is crucial as well. Supervisors ensure that workers are optimally deployed and construction standards are met. Last year, I announced plans to introduce a full-time National Certificate in Construction Supervision course to train a new generation of site supervisors. I am pleased to note that the first course has started earlier this month with 3 classes numbering 80 students in all. This is a good start and I hope CIDB will continue to expand its range of supervisory training courses for the industry.

Grooming talent at tertiary level

To build a strong construction industry with competitive firms, we need good engineers, architects and builders. The industry must continue to attract bright young talent. This is where the Construction Industry Scholarships play an important role.

Since they were first offered in 1993, the response to these scholarships has been growing. This year alone, more than 370 scholarship applications for degree courses were received. This is a whopping 36 per cent more than last year. The total value of the 22 scholarships awarded this year is a record high of $520,000.

My appreciation goes to those companies who are sponsoring these scholarships in support of the Construction Industry Scholarship Scheme. Even in difficult times like this, you continue to recognise the need to attract talent and are willing to invest in manpower. This is indeed commendable and will reap you dividends in the future.

As for the scholarship recipients, I extend my congratulations to all of you. You have chosen a challenging industry and you have been given this financial assistance by your sponsor. You are the industry’s leaders of tomorrow. I am confident you will work hard and do well.

Conclusion

To conclude, ladies and gentlemen, as the construction industry gears itself for a major restructuring to meet the challenges of the next millenium, the importance of developing its human resource cannot be over-emphasised. The industry must develop a genuine commitment to training and manpower upgrading at all levels, from its construction workers and site supervisors right up to its engineers, architects and other professionals. This will give local firms the competitive edge and prepare them for long-term success.

Thank you.

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