May 29, 2014

Over $2 billion of construction projects deferred to stagger foreign worker demand

SINGAPORE - More than $2 billion of public construction projects will be deferred in order to spread out labour demand, as the Government continues to slow the inflow of foreign workers, Prime Minister Lee Hsien Loong said on Wednesday.
This will not affect projects which are urgent, such as Housing Board flats and train network expansion. Instead, the delays will apply to the new Science Centre and extensions to Gardens by the Bay, for example.
Singapore could save 20,000 or 30,000 foreign workers that way, he said: "These are necessary trade-offs and I hope Singaporeans will understand."
Keeping an eye on construction manpower, and foreign manpower more generally, is part of the Government's efforts to manage Singapore's population.
Mr Lee replied that the Government will help all firms to adapt to having fewer foreign workers, but cannot ease up on foreign worker limits. 
Source: ST, May 28, 2014


This is bad news for construction companies such as Yongnam (+2.04%) that rely heavily on public contracts and have yet to accumulate sizeable order books for 2014. 


It does seem odd to intentionally defer projects on the basis of foreign worker demand. As the article says, urgent projects such as housing and train network expansion will not be affected. I would not expect infrastructure projects to be delayed as every other ASEAN member is rushing out infrastructure upgrades for the AEC.

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