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09 May 2020 Updated 13 May 2020

Coronavirus: Contractors body launches $1m fund to help smaller players

The Straits Times Charmaine Ng

Construction SMEs hit by pandemic can apply for one-off payments capped at $2,500

The Singapore Contractors Association Limited (Scal) has launched a $1 million initiative to help small and medium-sized construction firms hit by the Covid-19 pandemic.

From Monday, such companies will be able to apply to the Scal Covid-19 Fund for $300 for each eligible Singaporean or permanent resident employee, and $100 for each foreign employee and a dependant under stay-home notice.

The one-off payment will be capped at $2,500 for each company.

Scal president Ng Yek Meng announced the launch of the fund yesterday, when the association delivered care packages to 1,800 healthcare workers from Alexandra Hospital and Mount Alvernia Hospital.

The fund will be supported through donations from members of the association.

So far, about 20 companies have pledged about $400,000.

The Building and Construction Authority will be matching donations dollar for dollar, up to $300,000. Enterprise Singapore will also match with $1 for every $2 raised, up to $1 million, under the SG Together Enhancing Enterprise Resilience programme.

To be eligible for payouts, a firm must be a Scal member or Singapore List of Trade Sub-contractors-registered trade sub-contractor as of April 1, and a small and medium-sized enterprise (SME) with a group annual sales turnover of not more than $100 million or which hires not more than 200 workers.

The firm must also be assessed by Scal to be in financial hardship. Companies will have to present bank statements from the last three months showing a drop in revenue and their inability to pay their expenses, said Mr Ng.

"It will be on a case-by-case basis, because we are sure that quite a big group of companies will be applying for this fund," he told The Straits Times yesterday.

He added that the association has received feedback from its SME members that they have been facing cash-flow problems due to Covid-19 disruptions since China closed its borders in March.

These SMEs, which make up about 80 per cent of the 3,000 companies in Scal, are mostly sub-contractors in specialised trades such as electrical or plumbing works.

Each SME employs about 10 to 20 Singaporeans or permanent residents, and about 100 foreign workers, said Mr Ng.

Despite having no revenue for last month and this month, the companies still have to pay the wages of their employees and foreign workers, and rental for premises or machinery, said Mr Ng.

They also have to provide three meals a day for their foreign workers living in dormitories, he added.

While all construction companies have been hit by the pandemic, the smaller players are in a tighter spot as they do not have the kind of cash reserves that bigger firms do, he added.

And this is despite the Government's 75 per cent wage subsidy for local employees for last month.

"After deducting the CPF (Central Provident Fund) contribution, the net support from the wage subsidy is about 64 per cent of wages for staff. So employers still have to cough up 36 per cent, with zero revenue and other overhead expenses like rental," he said.

The bigger companies in Scal are contributing to the fund because "the smaller players are part of our value chain supporting the industry", said Mr Ng. "Without them - if they disappear after this Covid-19 period - then the other companies will have problems completing their projects too," he said.

Even if the circuit breaker measures end on June 1, business will not be back to normal for the sector because of the likely labour crunch with foreign workers isolated in their dormitories, said Mr Ng.

Most of Singapore's migrant labour sources such as Bangladesh, India and China have also closed their borders, and this will prevent new workers from entering Singapore, he added.

Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.