Partnership with Local Companies for Government Projects

Mr Teo Siong Seng asked the Deputy Prime Minister and Minister for Finance whether the Government can include partnership with local companies as a condition in the tender specifications of key infrastructure projects so that these local companies can build up necessary expertise and track records to help them secure a foothold in overseas projects.

The Senior Minister of State for Finance (Mrs Josephine Teo) (for the Deputy Prime Minister and Minister for Finance): Mdm Speaker, Singapore is a signatory to the World Trade Organization (WTO) Agreement on Government Procurement and a number of Free Trade Agreements. For procurement covered by these agreements, signatories are not allowed to attach conditions requiring tenderers to partner local companies. This applies to Singapore as well.

To help Singapore companies take part in Government procurement, our focus has been and continues to be on strengthening their capabilities and competitiveness and improving their productivity. For example, to strengthen local capabilities in construction and help local firms build track record, the Building and Construction Authority (BCA) topped up the $250-million Construction Productivity and Capability Fund with another $30 million.

Where there are synergies in working together for overseas projects, Singapore companies can work as a group and leverage IE Singapore's Global Company Partnership framework that allows them to undertake projects jointly and to share costs. For example, companies can engage consultants to conduct feasibility studies or to prepare bids for an overseas project, with IE funding up to 50% of eligible costs.

In addition, the Government has also initiated the establishment of Clifford Capital, which provides financing support to Singapore-based companies

Page: 33

participating in overseas infrastructure projects.

I thank the Senior Minister of State for the reply. The point is about us being a WTO member and having to comply with fair bidding. However, we also hear that construction companies are coming from developed countries; in fact, they are coming here to bid at very low prices, and yet it is very hard for our companies to bid for contracts in their countries. So, it seems that this WTO agreement is not presenting a fair, level playing field, especially for big construction companies from developed countries.

The other point is about bringing the smaller companies in. Is there any scheme for the Government-linked companies (GLCs) to work with smaller companies overseas and, together, they bid for contracts?

Mdm Speaker, I thank Mr Teo for his comments. On the point that he made about the foreign contractors coming to bid for jobs in Singapore and whether Singapore contractors equally can access jobs overseas, I take the point about participating as a member of WTO, indeed, is to enlarge the space that our companies are able to operate in and also to enlarge the market that they can take part in. If we were not members of this organisation, then the market size in Singapore is even smaller and it would be even harder for our companies to build up the capability and to spread their activities abroad.

So, I think there are two sides to the argument of being a member of WTO. On the one hand, you remain open, and it means that you have to allow foreign contractors to take part in Government procurement in Singapore but, at the same time, you enlarge the playing field that your own contractors can take part in.

There are many schemes that companies can avail themselves of. But I think the point that has also been considered is that operating out of Singapore is clearly very different from operating within Singapore. The rules are different; the partners are going to be very different; the way you organise your business is going to be very different, and where IE Singapore is concerned, my understanding is that they will extend all support and help wherever necessary, and if the trade associations and chambers have got suggestions on how else the Government can be of help, I think these will certainly be considered favourably. I would suggest that we engage in a conversation on more specific details of how the Government can be more supportive.

Page: 34