Justin Ee quoted in BT: “Construction sector sees more firms formed than closed despite pandemic”

On 21 March 2022, TSMP Law Corporation director Justin Ee was quoted in a Business Times article on the surprising growth in number of construction firms despite the pandemic. He largely attributes this phenomenon on the insolvency protection afforded by COMTA.

He said “It will not be surprising to see a spike in legal actions, bond calls and insolvencies when Cotma is finally discontinued.”

He shared “Once the Cotma reliefs cease, I would expect more pain for smaller players as they generally tend to have less financial and operational resilience.”

He also said “Such firms may voluntarily wind up or be compelled to do so in the coming months if they are faced with the spectre of law suits or insolvency.”

He noted that there should be a backlog of claims, due to an earlier moratorium on legal proceedings.

He said a countervailing factor: As Cotma relief has been extended several times, parties have had “more time and incentive to potentially resolve their disputes or renegotiate their contracts, rather than simply waiting until the ultimate end of the relief period to have their claims adjudicated”.

He also said that there is now considerable demand for construction work “thanks largely to public sector works, such as new MRT lines and public housing projects”.

He said the Building and Construction Authority expects construction demand in 2022 to be between S$27 billion and S$32 billion, with the public sector expected to contribute about 60 per cent of this.

“While financially troubled firms or those saddled with unprofitable contracts may fold as a result of the pandemic, there is nothing to stop some of these business owners or their employees from starting afresh and incorporating new companies to soak up the sustained demand.”


TSMP law corporation