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Singapore builders seek force majeure advice as coronavirus causes labour crunch

Reuters SINGAPORE | Updated on February 18, 2020 Published on February 18, 2020

Singapore construction firms are asking for advice about whether they have the option of invoking force majeure clauses in building contracts as the government turns away or quarantines Chinese labour to stop the spread of the coronavirus, lawyers told Reuters.

Singapore has an estimated $20-$24 billion of public and private sector building projects in the works this year - and any large impact on the sector, which is highly dependent on foreign labour, could help push the economy into recession.

Derek Loh, a partner at Singapore-based TSMP Law Corporation, said five clients involved in public sector construction projects have approached him in recent weeks for advice on force majeure - which refers to unexpected external circumstances that prevent a party to a contract from meeting their obligations.

These clients that have sought advice are largely those that employ Chinese labour,” said Loh.

Two other senior lawyers, who declined to be named, said they had also received queries related to force majeure.

The Building and Construction Authority, a government agency, has said, however that contractors involved in public sector projects can seek extensions. It has also urged private sector developers to give extensions to contractors that work for them.

Some Chinese companies have already invoked force majeure on contracts due to the virus, including China's top LNG buyer China National Offshore Oil Corp and Jiangsu New Times Shipbuilding Co.

Singapore, which has one of the highest numbers of virus infections outside China at 77, has halted the issuance of new visas to Chinese nationals since January 31. Workers from China with existing work visas must seek approval before re-entry, and if approved, must spend 14 days in quarantine.

Singapore's labour ministry said last week it was rejecting 400 applications daily from returning workers with recent travel history to China and had also cancelled some work passes. It has also prevented employers from hiring foreign staff if rules are breached.

The Singapore Contractors’ Association did not respond to a request for comment.

Construction labourers without any travel history to China have also been infected, with five Bangladeshi workers among confirmed cases. The firm involved, Boustead Projects Ltd , said it halted construction activities to disinfect areas and is continuing to assess the impact on the project concerned.

The construction sector, which is allowed to hire workers from only a handful of countries including China, India and Bangladesh, expanded 2.8 per cent in 2019, one of the strongest performers in an economy that recorded a growth rate of 0.7 per cent, its slowest in a decade.

The last time several construction firms sought to invoke force majeure in Singapore was in 2007 when Indonesia banned sand exports to the city-state bringing building activity almost to a halt.

($1 = 1.3893 Singapore dollars)

Published on February 18, 2020
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