Thank you, President. I speak in support of the Construction Industry Security of Payment Bill
(“the Bill”)
The Bill stipulates provisions to improve the payment terms of contracts, establishes an adjudication mechanism to resolve disputes and empowers the party to which payment is owed to suspend or reduce the rate of progress of work or services under the circumstances specified in the legislation, so as to ensure that various stakeholders can receive payment as scheduled, reduce the incidence of default on payment in the industry, and provide protection for the entire supply chain of the construction industry.
The Bill seeks to improve the contractual terms and conditions to address the long-standing problem of delayed payments between contractual parties in the construction industry. By prohibiting unfair payment terms such as “pay when paid”, the Bill ensures that a paying party cannot refuse or delay payment to a lower-tier contractual party because it has not received payment from the upper-tier contracting party. This enhances the financial stability of the supply chain, protects the legitimate rights of contractors and suppliers at all levels and ensures a smooth cash flow so that wages can be paid to workers on time.
The Bill also establishes an adjudication mechanism to provide an efficient and binding mechanism for resolving payment disputes. In the past, if there was a dispute between the parties, they had to wait until the end of the contract before it could be referred to arbitration or the court. With the enactment of the legislation, there will be a clear time frame within which the adjudicator must make a determination within 55 working days after his/her appointment. This will help expedite the overall dispute resolution process, reduce the risk of cash flow disruption and safeguard the smooth implementation of works projects.
In addition, the Bill provides the claimant with the right to suspend or reduce the rate of progress of work if the paying party fails to pay by the deadline the amount of the claim that it has admitted and undertaken to pay, or the amount determined by the adjudication mechanism. Such pressure will urge the paying party to take a more active role in resolving payment disputes and to better manage its own financial position in order to avoid delays in the progress of the works. The claimant will also be able to respond flexibly to financial difficulties, avoid additional financial burdens due to advance payment and reduce business risks.
At present, many countries, including Singapore, the United Kingdom and Australia, have enacted legislation on payment protection in the construction industry, so that construction works can be carried out more efficiently and cost-effectively. It is expected that after the implementation of the Bill, the long-standing problem of workers toil and sweat without getting paid will be solved. In addition, the security of payment will be improved, as the risk premium arising from default or delayed payment will be gradually reduced, and the procurement costs of projects can also be lowered. This will help attract more investors and contractors to enter the construction industry, enhance its overall competitiveness and promote its sustainable development.
With these remarks, President, I support the Bill.