News

Security of Payment legislation in 3rd Quarter of 2004 
Posted on Friday, May 07, 2004 - 11:51 AM

During a speech at the BCA Awards 2004 on 6th May 2004, the Minister for National Developmen, Mr Mah Bow Tan, announced that broad consensus has been reached on key provisions of the proposed legislation. The bill is expected to be tabled in Parliament in the 3rd Quarter of 2004.
The minister first announced in October 2003 the intention to introduce a security of payment legislation to improve cash flow across the industry. BCA has since studied the relevant legislations of UK, Australia and New Zealand, and consulted extensively with the industry, including SCAL, 6+6 Trade Alliance, SIA, REDAS, IES and SISV. A broad consensus has been reached on the key provisions of a security of payment model for Singapore. The proposed legislation is being drafted and is expected to be tabled in Parliament by the third quarter of 2004.

The key principle behind the proposed legislation is that any party carrying out construction work or supplying construction-related goods/services will have the right to receive progress payments for work done.

It will provide a framework for rapid payment dispute resolution via adjudication. Suspension of work will be allowed after adjudication and if the adjudicated amount is not paid. Direct payments will also be allowed. For example, the client or developer can pay the first-level subcontractor directly if the main contractor fails to pay, and thereafter recover the payment from the main contractor.

The proposed security of payment legislation will smoothen the cash flow across the industry and provide some respite to the troubled industry.