Rising Construction Costs: Govt Will Step In If Needed

Source : The Straits Times, Aug 31, 2007














'We must have a realistic view of the situation and know what measures the different parties are taking to mitigate it and ride this boom,' said Mr Lim. -- ST PHOTO: ALBERT SIM

THE Government will step in and mitigate any impact from the rising construction costs whenever it is in a position to be pro-active.

Singapore's Trade and Industry Minister Lim Hng Kiang gave this assuarance on Friday just three days after Las Vegas Sands revealed an almost 40-per-cent rise in the projected cost of the development of Marina Bay Sands.

Speaking to reporters after observing the groundbreaking for Singapore's Formula One Pit Building, Mr Lim said the construction sector is experiencing a 'very special set of circumstances'.

'During the downturn, there was consolidation...so our capacity in fact was reduced. Now with this big spurt in construction activities there is a shortage of construction capacity, aligned with higher cost of steel and other construction material, so construction cost has gone up,' he said.

The Government's job, said Mr Lim is to 'try and manage this process'.

He added: 'Where we are in the position to be pro-active and mitigate the impact for example quota for foreign workers and other ways, the Government will continue to do so. We have done so and we'll continue to do so.'

The minister added the Ministry of National Development is in constant talks with the Singapore Contractors Association to contain any price increases that could be detrimental to Singapore.

'We must have a realistic view of the situation and know what measures the different parties are taking to mitigate it and ride this boom,' he explained.

Mr Lim added the construction industry contributes about 4 per cent of Singapore's overall GDP, a 'small part' of the economy, he said, so the impact is not that significant.

Las Vegas Sands president William Weidner had said on Tuesday that costs are expected to rise by up to US$1.4 billion (S$2.1 billion) ? a significant increase on the original US$3.6 billion price tag for the Marina Bay Sands Integrated Resort.

'We are struggling quite frankly to stay within budget', Mr Weidner said.

He attributed the higher cost to recent increases in construction prices, including the cost of sand, as well as various refinements to the design.

Despite the rising budget, Las Vegas Sands had reiterated that it remains committed to the massive resort project, which is expected to transform the Marina Bay area.