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Guide to Setting Up a Construction Company in Singapore

You will get information on setting up a construction company in Singapore in this article. Please remember that the information which is provided in this article is for the general guidance only and it’s not meant to replace professional advice.

The construction sector is a key pillar of the economy of Singapore. Strong demand for construction has been witnessed by the country over recent few years because of many large scale projects in the public sector like public housing, MRT lines and building the business parks. The projects in the private sector like shopping malls, residential projects, hotels, etc. have also contributed to this demand.

According to official figures, a 16% year to year increase was noted in construction demand in Singapore. Demand was S$26.6 billion in the year 2010 and increased to S$32 billion in the year 2011. Despite the slowdown of 2012, the construction industry has strong prospects. Authorities saw total construction demand in the range of about S$21 billion to S$27 billion for 2012. While figures for 2012 might have been lower than the figures of 2011, it should be noted that high levels of onsite construction activity was expected that year because of the volume of the contracts awarded in the last couple of years and also because of the on-going construction of the major engineering projects in civil sector like the MRT Line.

The resilient and strong construction sector of Singapore is attracting industry players from different segments of the construction value chain looking to start business in Singapore. The statistics for company registration in Singapore show that in the year 2011, the construction sector was among those top-10 industries which showed the highest number of the new company incorporations during the previous year.

 

Licenses for setting up Construction Company in Singapore:

The license for offering professional engineering services

Who requires the license for offering the professional engineering services?

The Professional Engineer Act states that any firm that is intending to supply professional engineering service in Singapore should be licensed by the Professional Engineer Board (PEB). Only limited companies, multi-disciplinary partnerships, unlimited companies, and the limited liability partnerships are granted the license.

More specifically, the construction firms which engage in business activities of the following types must obtain the license:

  • The firms that carry out the building completion works including:
    • Glass & glazing works,
    • Curtain cladding or walling works;
    • Wood and joinery works
  • The firms which engage in the building construction works like:
    • General contractors specialized in the building construction and major upgrading work;
    • The renovation contractors specialized in renovations of buildings;
    • The contractors of structural repairs
  • The firms which perform the building installation works like:
    • Electrical works;
    • The installation and the erection of building equipment;
    • The installation of awnings and window shades;
    • The installation of automated systems for buildings for remote monitoring;
    • The installation of fire protection and security alarm systems;
    • The installation of solar control films;
    • The installation of air conditioners, heaters and other types of plumbing work.
  • The firms which carry out the mixed construction activities
  • The firms which specialize in the construction work other than construction of buildings, such as:
    • Construction of tunnels, elevated highways, bridges and viaducts;
    • Construction of power and communications lines;
    • Construction of drainage systems and dams;
    • General contractors who are involved in “non-building” construction;
    • Roads construction;
    • Marine construction like constructing piers, harbors, wharves, docks, etc.;
    • Construction of sewers, gas and water pipelines;
    • Other types of non-building construction (for example, playgrounds)
  • The firms that lease construction equipment;
  • The firms that are involved in site preparation works, including:
    • Land reclamation;
    • Excavation works and earth moving works;
    • Landscaping;
    • Investigation, treatments and stabilization of soil;
    • Wrecking & demolition works.
      • The firms that execute structural repair work like:
      • Laying building foundations;
      • Stone setting, brick laying and cementing;
      • Roofing;
      • Producing the structural pre-cast components;
      • Other types of structural works
    • The firms that offer other activities related to specialized construction, such as:
      • Shot blasting or sand blasting works;
      • Scaffolding work.

     

    Prerequisites for the license to offer the professional engineering services

    Incorporation of Business:

    Before applying for the license for professional engineering services, businesses should be registered either as unlimited company, limited company, limited liability partnership or multi-disciplinary partnership. Of these, the most recommended and preferred option is incorporating as a Singapore private limited company, because of the various advantages like limited liability, legal entity status, perpetual succession, tax incentives and a credible image. Foreign companies can either decide to register as a Singapore branch office or Singapore subsidiary company.

    The Licensing Criteria for the Applicants:

    Singapore’s Professional Engineers Board has prescribed criteria for unlimited companies, limited companies and partnerships to be licensed and offer professional engineering services. This guide has a scope limited to only licensing requirements for limited corporations.

    Criteria for the limited companies:

    • Memorandum of Association must state that the main objective of the company is providing professional engineering services.
    • Company should have $500,000 minimum paid-up capital.
    • Articles of the Association must state that the majority of the company’s directors will be registered engineers or allied professionals.
    • Company should be insured against professional liability.
    • Professional engineering works that the company undertakes in the country should be under management and control of a company director who is a registered engineer holding a valid certificate to practice.

    Approval of the Premises:

    • In case you plan on using a conversion building as office premises and there is a need to make alterations or additions to a building, then there is a requirement for prior approval from the Singapore’s Urban Redevelopment Authority.
    • There is also a requirement for prior approval from the Building and Construction Authority (BCA) if you want to display signs on the conversion building.
    • In case you plan on executing any fire safety work at the office premises, there is a need to get approval from Singapore Civil Defense Force. A Fire Safety Certificate or Temporary Fire Permit should be procured from Singapore’s Fire Safety Bureau.
    • In case you plan on executing any fire safety works in the proposed office premises, then there is a requirement for prior approval from Singapore Civil Defense Force.
    • As the operator of a business, you will be required to verify the permissible uses for the property and to obtain the “Change of Use Approval” form from the Urban Redevelopment Authority before proceeding to convert or rent premises for business operations.

     

    Application Procedure for the License of Professional Engineering Services:

    • The procedure for license application consists of submitting an application form with the following supporting documents to Singapore’s Professional Engineers Board:
      • Certified copy of company’s Memorandum & Articles of Association;
      • List of directors and members of the company along with the particulars about whether they are allied professions, registered engineers, or otherwise;
      • Certified copy of the Professional Liability Insurance Policy. A written confirmation from an insurance company saying that policy satisfies Section 24 of the Professional Engineers Act is also required. Note that written conformation must be addressed to applicant (insured) and it must have the policy number on it;
      • Certified copy of Incorporation Certificate of company and of corporate shareholders.
      • Certified copy of resolution passed by the board of directors regarding the appointment of the director responsible for management and control of the professional engineering work;
      • A copy of the documents lodged with the Singapore Registrar of Companies of the Accounting and Corporate Regulatory Authority regarding the chairman’s appointment, board of directors and shareholdings;
      • Certified copy of latest Annual Return filed with ACRA;
      • Statutory declaration from all directors in the prescribed format that all criteria have been adhered to. It must be dated less than two months before submission date of application.
    • License shall be granted on the successful processing of the application.
    • Usually, the licenses are valid for a period of one year. An application should be made for the new license, two months before expiry date of current license.
    • There is a license fee of S$300 per annum.

     

    Other Licenses

    • Road Occupation Management Permit: The professional engineers, site supervisors or contractors must obtain this permit from the relevant agency of land management so that they can carry out work like soil investigation, excavation, parking the vehicular cranes on the roads for hoisting, or other tasks that require the occupation of section of road.
    • The license to occupy and operate the scheduled premises: A license from the National Environment Agency is needed for anyone to occupy and to use the industrial premises classified as the Scheduled Premises. The industries that have the potential of causing serious air pollution or the ones that store large amounts of hazardous materials are classified as the Scheduled Premises.
    • License for Telecommunication Wiring Contractors: The license should be obtained from Singapore’s Infocomm Development Authority for providing the installation, repair or maintenance of internal telecommunication wiring works connected to a Public Switched Telephone Network.
    • The Advertisement License: This license is required in order to display advertising signage outdoors like sky signs and electronic billboards.
    • License for General Radio Communication: For receiving or transmitting messages through radio-communication.
    • License for Localized Private Network: In order to establish and provide a localized private network service like walkie-talkie service within the locale.
    • License for Localized Radio Communications: For operation of remote control devices, transceivers, local area paging devices, alarm or telemetry systems, wireless voice or data systems (for example LAN) and other types of radio communications equipment.
    • License for Wide-Area Private Network: In order to establish and provide wide area private network service like walkie-talkie service within non-localized area.
    • License for Non Residential Television: In order to operate broadcasting apparatus capable of receiving broadcasting signals ,like TV sets or PCs enabled to receive the television programs.
    • License for Discharging Trade Effluents: In order to discharge the trade effluents generated from the business activity into a watercourse.

     

    Hiring Staff:

    Construction firms operating in Singapore mostly hire large numbers of foreign workers due to the limited number of Singapore residents looking to do jobs that are mid-skilled in  the construction industry. At the end of 2010, the construction industry hired 248,000 workers out of total 871,000 workers having a work permit.

    The foreign workers deployed to toil in Singapore’s construction industry require the appropriate Work Pass of Singapore depending on their qualifications and skills. The pass is meant for the skilled workers with minimum monthly salary of s$3,300. S Pass is made for the mid-skilled employees earning at least S$2,000 per month. There is a requirement for the work permit, also known as R Pass, for hiring unskilled foreign labor. Note that certain requirements and conditions exist that the construction companies have to satisfy before they can hire the work permit holders, like adhering to quotas, paying the foreign workers’ levy, sourcing the laborers only from the approved countries.

     

    In Summary:

    As we have explained above, several permits, licenses and approvals are required in order to set up a construction company in Singapore. Additionally, there is a need to apply to the Ministry of Manpower for the work permits to hire foreign laborers. Generally, it is advised that you hire the services of a professional firm that will handle the company registration, business licensing, work visa, taxation and other administrative matters. 3E Accounting is at forefront of offering these Singapore corporate services and will happily assists you in setting up your construction business in Singapore.