The Sports Hub was supposed to have been completed earlier. Now it will be ready by 2015, a few years behind schedule. The delay was due to financing problems faced by the developer.They were not able to raise the funds during the financial crisis and had to stop work.
I have always considered that public infrastructure and facilities should be owned by the state. The funding of these assets should not be privatized, as this would bring along a host of problems, such as the rate of return to be allowed to the investors on the monopoly. In this particular case, the financiers, i.e. the banks, had to deal with the problem of the viability of the project and the financial standing of the asset owner and hub operator.
If the state owns the assets, they will also have to deal with these issues. But, there is now a culture in Singapore to avoid taking the responsibility to make the hard decisions and to pass the them to the private sector and the market and let them find a solution.
A problem does not get solved when it is made by complicated or passed to people who have less resources to handle them. The private sector has to deal with all of the viability and operational issues, and also have to worry about raising the funds and, unlike the state, it does not have a AAA credit rating.
A better approach is for the state to own the Sports Hub and to lease it to the operator at an annual fee. I hope that the lesson of the Sports Hub will be learned and that the funding of mega-projects are not outsourced to the private sector in the future.
Tan Kin Lian
Dear Mr Tan
ReplyDeleteI refer to your paragraph
"But, there is now a culture in Singapore to avoid taking the responsibility to make the hard decisions and to pass the them to the private sector and the market and let them find a solution."
What really takes the cake is that "they" get paid world-class salaries to pass-the-buck to the private sector/markets to find a solution.
Personally, I really don't know what services I'm paying such world beating salaries for.
Mr. Tan
ReplyDeleteYou are so right to pinpoint the characteristics of this civil service lots, that they no longer the LKY's passionate era and calibre, that they only know how to pass on tough situation to the private sector (& called it commercial decision) and they refrain from making tough decisions.
Just look the situation of the IRs you would know that it will turn out to be just a gambling destination thats all. Where are the promises by operators that were made/signed during the bidding?
Many govt policies and practices are on a "commercial" basis. That's why singapore is not a nation but instead we are Singapore Inc. This method of operation generates big $$$ for the govt & elites. How much of the $$$ goes to ordinary citizens is anyone's guess.
ReplyDeleteAll projects are to undergo competitive bidding at tenders. And govt by default will naturally award to the company that bid the lowest. Whether the company or consortium is really financially strong enough is another issue. Govt depends on a rating system to indicate companies' financial standing, but these ratings are given by a couple of govt agencies. Reminds you of the minibomb AA+ rating by Moody's and S&P etc.
Hence it is not uncommon to have those companies go belly-up halfway becoz actually not financially strong and under-bid for the project (no more money to pay workers or buy materials). That's what happened to so many HDB contractors during 2002-2004, leaving many new flats and upgrading projects half-finished for 1-2 yrs.
What happened to the construction of the second half of the Telok Blangah / West Coast Viaduct? According to newspaper reports, it was delayed for some years because the contractor ran into cash flow problems. I remember reading somewhere that the Bartley Road Extension Viaduct is also delayed for some time, except it is not known how long, and I think for similar reasons.
ReplyDeleteRemember the Nicoll Highway collapse in 2004? I remember that it was reported that Nishimatsu / Lum Chang JV had under-bid the project for quite a substantial amount. This is a factor leading them to keep building on despite a design error, in the hope that nothing bad will happen. Needless to say, their gamble did not work.
The root of the problem is gahment wants to sell or lease land at high high price, whatever project you name it, just check the bid. Gahment had also refuse to sell to the highest bid developer recently - reason is highest bid is too low ! So in reality, they are not letting private sector determine the price but wants to control the price. I don't know how they decide what price they will sell and what price tehey will not.
ReplyDeleteWith a high land costs, how can such things not happen ? And who's at the receiving end ? You and me, the consmers lah !
High land price translate to high rental or operating costs. And for business to recover this, they have to charge higher prices. This is one reason for the escalating inflation that we saw the last few years, besides commodity and oil price hike due to China's growing thirst for them. I really hope the gahment will set a "highest bid" price so that developers will not go out there to submit ridiculous numbers and bring up inflation again as the economy recovers. Gahment cannot control oil and commodity price but they can definitely control property prices, starting with the land costs which forms a bigh chunk (about 65% to 70% I learnt from some reports) of the selling prices of condo.
ReplyDelete