Industry Trends & Developments
Singapore, a highly developed and successful free market economy, enjoys a
remarkably open and corruption-free environment, stable
prices and a per-capita GDP equal to that of France,
Germany, Italy and the UK. The government hopes to
establish a new growth path and will continue efforts
to establish Singapore as South East Asia's financial
and high-tech hub.
Singapore's Economy In 2005-2006
The Singaporean government is to focus on restructuring
the economy. The government is expected to operate
on a balanced budget in fiscal years (April-March)
2006-2007 and 2007-2008. Expansion in private consumption
and investment is expected to drive real GDP growth
at an average rate of 5.7% during 2006-2007. Jobs
created in 2006 are estimated to have increased by
around 10% to reach 125,000, the highest since the
Asian financial crisis of 1997.
In 2005, Singapore reported an estimated trade surplus
of US$36.4bn. The nation's exports totalled an estimated
US$655.82bn, while imports stood at an estimated US$194.5bn.
According to the Finance Minister Lee Hsien Loong,
per-capita GDP in 2005 was US$30,228, with an unemployment
rate of 2.5%. Total demand rose by 9.1% in 2005, moderating
from the 18% recovery momentum in 2004. External demand
moved up by 11% and provided much of the growth impetus.
This was mainly from exports of IT and telecom products.
Domestic household consumption demand growth was 2.6%,
reflecting mainly higher public and private consumption
on cars, medical care and rentals.
Singapore's Construction Sector In 2006
During Q206, the construction sector contracted by
0.3%, following a 0.8% drop in Q106. Quarter-on-quarter
(q-o-q) annualised growth momentum (seasonally adjusted)
went up to 25%. The value of all construction work
done and certified for progress payment fell by 5.7%
in Q106, while construction contracts awarded dropped
38% after a 27% drop in Q405.
According to industry experts, demand for construction
services is estimated to be around US$16bn in 2006.
The construction services industry of Singapore was
worth US$11.3bn in 2005. BNP Paribas, a French company,
asserted that construction demand in Singapore is
likely to create approximately 6,000 jobs every quarter
in the medium term. This consistent rise in demand
is due to the improvement of economic conditions during
the period 2001-2005.
In 2005, the construction sector accounted for 26.14%
of GDP. According to Statistics Singapore, at the
end of Q106, the number of private residential units
under construction was 22,295, about 6.4% lower than
that at the end of the previous quarter. Of the 22,554
uncompleted units with the pre-requisite conditions
for sale, 12,277 units had been sold. A total of 1,873
uncompleted private residential units were launched
for sale in Q405, compared with the 2,010 units launched
Major residential projects launched in the quarter
included: The Sail at Marina Bay (the remaining 430
units from a total of 1,111 units) at Marina Boulevard;
The Sea View (the remaining 168 units from a total
of 546 units) at Amber Road; Viz at Holland (165 units)
at Queensway; The Cosmopolitan (the remaining 158
units from a total of 228 units) at Kim Seng Road;
and Park Infinia at Wee Nam (109 units from a total
of 486 units) at Lincoln Road.
A total of 2,530 private residential units were completed
in Q405. Major residential projects completed in the
quarter were Grandeur 8 (579 units) at Ang Mo Kio
Central 3, Kerrisdale (481 units) at Sturdee Road
and Ris Grandeur (453 units) at Elias Road.
The Singaporean construction sector is maturing with
domestic firms displaying strong handle over urban
planning, mass housing development, industrial park
development, transportation network planning, and
environmental management. However, management of process-engineering
projects is an unexplored area. Nonetheless, Singaporean
companies have opportunities to engage in complex
engineering projects such as oil refineries, water
treatment and desalination plants, notably in countries
with demand for such niche expertise.
Major companies operating in this sector in Singapore
include SembCorp Engineers & Constructors, Evan
Lim, Jurong Engineering, CapitaLand and Lum Chang
Building Contractors. SembCorp Engineers & Constructors
is a wholly owned unit of SembCorp Industries, which
functions as a design-and-build engineering and construction
service provider. Evan Lim is one of Singapore's largest
general building and civil engineering companies based
on the number of total contracts awarded. Jurong Engineering
is a Singapore-based contracting company that specialises
in plant engineering and construction work. The company
has operations in South East Asia, China, India, the
Middle East and Africa. Lum Chang Building Contractors
is the primary asset of the Singapore-based Lum Chang
Holdings Group, which, in addition to construction,
has activities in project management and investment
dealing. Approximately 71% of the group's revenue
is accounted for by construction. The group carries
out operations in Singapore, Malaysia and Mauritius
and on the back of recent projects in the UAE has
registered to set up a construction company in Dubai.
In January 2005, the BCA launched a Green Mark for
Buildings Scheme as a bold initiative to move Singapore's
building and construction industry towards environment-friendly
buildings and help strengthen Singapore's position
as a global city committed to balancing its development
with care for the environment. The introduction of
the Green Mark was timely in view of the growing global
concern on sustainable development and increasing
interest in green buildings. Green Mark provides a
platform for the construction industry to demonstrate
its commitment to an environment-friendly approach
in developing and building Singapore's urban landscape.
Benefits to developers and building owners involve
savings in terms of lower operating costs with less
water and energy being consumed.
The Next Generation National Infocomm Infrastructure
(Next Gen NII) is Singapore's digital super-highway
for super-connectivity. Next Gen NII helps entrench
Singapore's Infocomm leadership, ahead of Asian competitors.
Infocomm Development Authority of Singapore (IDA)
announced the Next Gen National Broadband Network
(NBN) Request-for-Concept (RFC) on March 23 2006.
The RFC closed on June 15 2006, with 33 submissions
received from domestic and international telecom companies.
Request-for-Proposal (RFP) has been invited and these
will be evaluated by end-2006. The NBN will be awarded
to a private sector partner in the beginning of 2007.
The appointed party is expected to complete at least
50% of the task within three years of contract assigning,
and complete the project within five years.
Airport Construction and Related Works
Construction work is likely to begin in Q107 on the
first phase of the Seletar Aerospace Park. Once completed,
the US$60mn aerospace project would become Singapore's
aerospace hub. The design of the aerospace park is
to be completed by end-2006, and the first phase of
construction is to be completed by 2009. The project
is a being jointly handled by Singapore-based JTC
Corp and the Economic Development Board. The project
would employ 10,000 people and would contribute US$3.3bn
annually to the Singaporean economy by 2018.
In January 2006, OKP Holdings (OKP), a leading home-grown
infrastructure builder and civil engineering specialist,
announced that its wholly owned subsidiary OKP (CNMI)
Corporation (OKPCNMI) was awarded a US$8.6mn contract
to build an airport runway at the Rota International
Airport, located in the Commonwealth of the Northern
Mariana Islands. The project is expected to be completed
by January 10 2007. It involves the building of 1,000
feet of extension runway at Rota International Airport,
turnaround at both ends of the runway and other related
The SGD1.5bn (US$882mn) Changi Airport project features
the new terminal building as well as a new baggage
handling facility, an automated people mover connecting
the three terminals and 28 new aerobridge gates. Another
terminal for low-cost carriers, the Budget Terminal,
at Changi Airport was completed in December 2005,
and became operational on March 26 2006. The Budget
Terminal at Changi Airport has obtained a second customer
in Cebu Pacific, a low-cost Philippine carrier. On
August 31 2006, daily flights between Singapore and
Manila were to resume after three years of suspension.
Terminal Three of Changi Airport has been completed
successfully, with the terminal's interior fit-out
inaugurated on May 30 2006. With the airport project
completion scheduled for 2008, the airport's capacity
is expected to increase to 64mn passengers. A full-service
nine-storey, 350-room airport hotel is being planned
next to Terminal Three, which would provide a range
of facilities for Changi Airport's passengers.
Changi Airports International is to form a joint
venture with Moscow-based Sheremetyevo International
Airport to manage and operate a new passenger terminal
in Moscow. This terminal is expected to handle 5mn
passengers with expected annual revenues of SGD110mn
Within the transport sector, the US$1bn Kallang-Paya
Lebar Expressway, which will include around 9km of
tunnel, is to be completed in 2007. The Land Transport
Authority (LTA) has awarded the first of six major
contracts for the Kallang-Paya Lebar Expressway to
SembCorp Engineers & Constructors (SEC). The SGD235mn
(US$138.2mn) project comprises the design and construction
of a 1.51km tunnel linking the East Coast Parkway
(ECP) and Nicholl Highway, an interchange within the
ECP and ventilation facilities.
The Land Transport Authority is to install intelligent
road studs (IRS) at road junctions, thus enhancing
road safety. Further, modification of all 3,200 zebra
crossings is expected, with LED technology, by Q307.
This move is expected to help save SGD3mn (US$1.89mn)
in maintenance and operational costs over a 15-year
The LTA has further awarded SGD257mn (US$151.2mn)
contract to a joint venture between SEC and Daewoo
Engineering and Construction to build a tunnel for
the new Kallang-Paya Lebar Expressway (KPE). The contract
involves designing and building a 1.64km section of
a tunnel that will run from Nicholl Highway to the
Pan-Island Expressway (PIE). It also includes constructing
ventilation facilities and two interchanges at the
PIE and Nicholl Highway. The section is part of a
9km tunnel, which will be the longest road tunnel
in South East Asia. Construction work has commenced
and is scheduled for completion in Q406.
In September 2005, the UK-based Balfour Beatty won
a GBP6.2mn (US$27.3mn) contract to design and construct
track on the Boon Lay extension of Singapore's mass
rapid transit system. In a joint venture with Hong
Kong engineering and construction company Gammon,
more than 7,600m of track is to be laid on the 3.8km
two-station line. Detailed design works are underway
for the all-viaduct extension and are expected to
be complete in 2009. The extension to be constructed
on a viaduct, with the track work including UIC60
running rails with UIC60 guardrails on 10,000 numbers
of concrete sleepers, together with a stainless steel/aluminium
third rail DC power system.
Reconstruction work on the Nicoll Highway resumed,
in August 2005, after months spent removing debris,
stabilising and refilling the area, since the highway's
collapse in April 2004. The LTA has opted to use a
road-building technique usually adopted when poor
soil conditions exist. Some 57 concrete piles will
be bored 50m into the ground in the affected area.
The rebuilt area would span 150m, including 100m of
Nicoll Highway and the 50m of Merdeka Bridge that
was cut off to prevent the rest of the road being
affected by the collapse. In areas closer to buildings,
piling equipment that oscillates rather than vibrates
will be utilised, to minimise disturbance to the ground.
Japan-based Nishimatsu and Lum Chang, the main contractors
for the Nicoll Highway mass rapid transport (MRT)
station, will undertake the US$3mn reconstruction,
due to end in 2010.