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Covid-19 within workers' dorms to crimp construction sector

Amala Balakrishner
Amala Balakrishner4/17/2020 07:00 AM GMT+08  • 10 min read
Covid-19 within workers' dorms to crimp construction sector
Foreign workers are the unsung heroes who form the backbone of Singapore’s modern city. They carry out the largest part of the republic’s construction activity and are responsible for the well-paved roads, skyscraper buildings and iconic garden city.
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SINGAPORE (Apr 17): Two months ago, 22-year-old Murugan left his village in Tamil Nadu to work for a construction company in Singapore. Despite having incurred an $8,000 debt from agency fees, he is confident the move would eventually bring better prospects for his family. “The job market in India is not so good, so my friends suggested I come to Singapore because the salary is higher. That’s why I am here,” he tells The Edge Singapore.

Little did he expect what was in store for him. Less than a month into work, the month-long circuit breaker, which restricts operations of non-essential services, was imposed from April 7. And Murugan’s residence – the S11 Dormitory @ Punggol – was gazetted as an isolation site. With 797 confirmed cases there, as at 12pm on April 15, it is the biggest cluster. Murugan says he is now “very scared” of being the next victim, especially since two of his roommates tested positive for Covid-19 in the past week. “I can only pray now. Other than that, I just talk to my six roommates or family. That’s the only way to stay calm,” he says.

Resident morale at the Centurion Corp-operated Westlite Toh Guan Dormitory is also bleak. “Every day we see so many ambulances coming and going,” says Mohan, a worksite supervisor. “It is sad to see our friends leave in an ambulance because we don’t know if we will ever see them again.” As at 12pm on April 15, the cluster has 110 cases.

His family’s constant pleas to return home give him more heartache. “My wife is always crying on the phone. She says, ‘News shows Singapore has so many cases. You just come home, no need to work there anymore’,” says Mohan.

Murugan and Mohan are among some 20,000 migrant workers quarantined in eight gazetted isolation dormitories in Singapore. This means the residents are quarantined in their rooms and are only permitted to leave to use the washroom. The six other designated dormitories are: the Acaia Lodge, Cochrane Lodge I, Cochrane Lodge II, Tampines Dormitory, Sungei Tengah Lodge and Toh Guan Dormitory.

Stem the spread

This past week, the daily jumps in the confirmed cases in the workers’ dormitories have reached pretty worrisome levels. On April 15, for one, 404 new cases in the dorms were reported.

“From the epidemiological findings, there is evidence that the infected dormitory residents are linked through common work-sites,” noted Manpower Minister Josephine Teo at an April 14 press conference. The workers also interacted with residents from other dormitories on their days off, or in the dormitory through social activities such as eating together.

“Despite the safe-distancing measures, the virus spread in the dormitories through these socialising activities, much like how it would spread among housemates, friends and the community,” added Teo.

The government has scrambled to impose beefed-up measures to contain the spread among the 200,000 workers residing in Singapore’s 43 purpose-built dormitories. These include the lockdown of the eight gazetted dormitories such that there is no inflow and outflow of workers. Here, workers with respiratory conditions will also be isolated. Meanwhile, the 29 dormitories that are not deemed as clusters will effectively be put under a lockdown to prevent new clusters from forming.

In addition, all 43 dormitories will have medical teams by next week — up from the seven teams operating only at the gazetted isolation areas. These efforts are a bid to ensure migrant workers’ well-being, health and safety, shared Brigadier-General Seet Uei Lim, who chairs the inter-agency task force handling the outbreak in workers’ dormitories. “Now, our focus is on healthcare protection and soon we will expand our healthcare capacity. The end-state is to return to normalcy, [and] ensure that dormitories can take care of our foreign friends,” he said. The task force will also proactively case-find to break the chain of infection, he added.

Aside from this, 7,000 migrant workers in essential services such as energy and telecommunications have been relocated to places such as Singapore Armed Forces’ military camps, the Changi Exhibition centre, flotels and vacant Housing & Development Board (HDB) sites such as in Tanjong Pagar and Jurong. These locations are said to have a combined capacity in the thousands.

Other workers’ accommodation sites include some 1,200 factory-converted dormitories housing 95,000 workers as well as temporary living quarters. Safe distancing and regulations on space and hygiene will be also be practised there. “I want to assure you that we are sparing no effort,” stressed Minister Teo. “We are progressively implementing all of these measures and will ensure that we continue to monitor the health and the well-being of our workers, and if they have any issues, to address them appropriately.”

Non-governmental organisations (NGOs) are complementing these regulations with initiatives and care packages. The Transient Worker’s Count Two (TWC2), for instance, has been giving out phone cards to workers so they can keep in touch with their families or the organisation. “This way, the workers have someone to talk to. It keeps us informed of their needs and concerns,” shares Christine Pelly, TWC2’s spokesperson. Such concerns include whether they will be paid on time, as well as a steady delivery of meals. Different caterers have been mobilised and the supply is not always consistent; at times, some workers go hungry because of late or missing deliveries.

The task force is now looking into these issues to ensure the workers’ psychological and nutritional needs are addressed. It will also ensure that workers receive their remuneration, especially through a trickling-down of the $750 foreign worker levy rebates.

More than just new protocols and firm measures, it is about having “empathy and understanding for the well-being and needs of the workers who have done so much for Singapore”, National Development Minister Lawrence Wong, who is also Co-Chair of the Multi-Ministry Taskforce on Covid-19, points out.

Construction, an economic driver

Foreign workers are the unsung heroes who essentially form the backbone of Singapore’s modern city. They carry out the largest part of the republic’s construction activity and are responsible for the well-paved roads, skyscraper buildings and iconic garden city.

Last year, Singapore’s construction activity hit a five-year high, with some $33.4 billion worth of projects awarded to public and private-sector developments. This is 9.5% more than in 2018 and surpasses the upper end of the $27 billion-$32 billion forecast range. This growth was slated to extend into 2020, on the back of developments to Changi Airport terminal 5, Jurong Lake District and the Cross Island Line. Expansion to the two integrated resorts at Marina Bay Sands and Resorts World Sentosa was to further boost the sector’s growth.

To this end, total nominal construction output for the year was projected to increase to between $30 billion and $32 billion, from the $28 billion estimated in 2019, the Building and Construction Authority (BCA) said in a release in early January. The agency’s prediction is supported by the improved construction demand since 2018 that comes after a slowdown between 2015 and 2017.

Covid-19 has hit hotels and airlines hard. The local construction industry has been inadvertently hurt as well. With a 4.3% y-o-y contraction in 1Q2020, a stronger decline is slated for the coming quarter. “Unfortunately, the construction sector will take a big hit in 2Q2020 from the Covid-19 pandemic — from the one-month circuit breaker and the rising infections/quarantines at foreign worker dormitories,” observes Selena Ling, who heads the research and strategy division at the Oversea-Chinese Banking Corporation (OCBC). The decline is further exacerbated by a possible drag to private-sector real estate from weak business and consumer sentiments, she warns.

United Overseas Bank (UOB) economist Barnabas Gan agrees, noting that empirical evidence shows the primary drag is expected in private construction activity – which held 40% of total contracts awarded in 2019. “With most construction activities being put on hold for the most part of April, construction growth in 2Q20 will likely contract 15% y-o-y with downside risks,” he points out.

Constricting construction companies

The suffocating effects of Covid-19 on project timelines and cash flows has left construction operators gasping for air. For instance, developer Boustead Projects is uncertain of its financial performance for the year given the fluidity of the pandemic and its significant disruptions to global supply chains. The company had in February halted activities at Seletar Aerospace and its neighbouring facility after becoming a cluster.

Now, “as all revenues for our design-and-build construction management contracts are recognised [upon completion for milestones], it means that any project delays inevitably lead to reduced revenue recognition”, Boustead’s investor relations department tells The Edge Singapore. As such, it says revenue and cash flows will be strained till the circuit breaker is lifted.

For now, the company is taking solace from the government’s Jobs Support Scheme, which gives out a 75% wage co-payment for all Singaporeans in April, and a 25% co-payment from May till September. It is also looking forward to the foreign worker levy rebate to cushion the impact of the suspended operations.

Figtree Holdings, which constructs commercial buildings, shares similar sentiments. “At this stage, the company is unable to quantify, nor determine, the true extent of the financial impact of [the pandemic] on earnings per share and net asset value for FY20 ending Dec 31,” says managing director Danny Siaw. “However, the Covid-19 pandemic and its effects on the global and domestic economy are expected to impair the group’s earnings capacity and ability to secure new projects in the next 12 months.”

A greater drag, however, will come if the quarantine of migrant workers continues after the circuit breaker is lifted, notes Siaw. While he does not specify the percentage of the migrant workers in the company’s workforce, he says they account for most of the staff onsite.

The drag on the construction sector is also seen globally and is perpetuated by declining global trade volumes, says Ho Kong Mo, managing director at Surbana Jurong’s cost management division. Drawing reference to the 30% decline in global trade forecast by the World Trade Organization (WTO), Ho says developers will also be affected by disruptions in materials supply. As such, he expects a more prudent wait-and-see approach for projects that have yet to commence.

With this in mind, UOB’s Gan says the sector’s performance beyond 2Q20 is hard to foresee. “Potential scenarios [in Singapore] include the extension of the circuit breaker measures beyond the current stipulated period, which would further weigh on the construction sector,” he says. He adds that the extent of the infection of migrant workers — both those in the dormitories as well those whose travel has been halted — could create a manpower shortage.

For now, Gan’s full-year forecast for the sector is 0.7% y-o-y growth from pent-up momentum after a lull in 1H2020. In contrast, his full-year forecast for the economy is –2.5%, while manufacturing and services are predicted at –3.8% and –3.1% respectively.

In what is seen as a favourite pump-priming move, the construction sector can again look to ramped-up, public-sector infrastructure projects to kickstart activities, says OCBC’s Ling. However, there is a precursor: the situation must be sufficiently safe for work to resume, and this lift from the government might be a late-2020 or 2021 story, she warns.

If there is a key point to be made about the outbreak among the workers’ dormitories, it is a renewed appreciation of what the likes of Murugan and Mohan are doing, at a wage level shunned by most locals.

“They have played an important part building our HDB flats, Changi Airport, MRT lines,” said Prime Minister Lee Hsien Loong. “We have worked with their employers to make sure they will be paid their salaries, and can remit money home. We will provide them with the medical care and treatment that they need. We feel responsible for their well-being. We will do our best to take care of their health, livelihood and welfare here, and to let them go home, safe and sound.”

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