Setting up a Construction Company in Singapore
The construction industry is one of the key pillars of Singapore’s economy. The country has witnessed a strong construction demand over the last few years owing to large scale public sector projects such as the construction of MRT lines, public housing projects, building of business parks as well as private sector projects such as the construction of private residential property, shopping malls, hotels, etc.
According to official figures, there was a 20% y-o-y increase in Singapore’s construction demand from S$27.2 billion in 2016 to S$27-34 billion in 2016. The authorities anticipate a total construction demand in the range of S$27.2 billion to S$27-34 billion for the year 2016.
This article provides information on how to setup a construction company in Singapore. Kindly note that the information provided here is for general guidance only and is not meant to replace professional advice.
Licenses for setting up a construction company in Singapore
License to Offer Professional Engineering Services
Who requires a license to offer professional engineering services?
Under the Professional Engineers Act, any firm that intends to supply professional engineering services in Singapore must be licensed by the Professional Engineers Board (PEB). The license is granted only to limited companies, unlimited companies, multi-disciplinary partnerships, and limited liability partnerships.
More specifically, construction firms that engage in the following types of business activities must obtain this license:
- Firms that carry out building completion work including:
- Curtain walling or cladding works;
- Glass and glazing works; and
- Joinery and wood-works.
- Firms that engage in building construction work such as:
- General contractors who specialize in building construction and major upgrading works;
- Renovation contractors who specialize in building renovation; and
- Structural repair contractors.
- Firms that perform building installation work such as:
- Electrical works;
- Installation and erection of building equipment (e.g. elevators, escalators, and travellators);
- Installation of awnings and window shades;
- Installation of building automated systems for remote monitoring;
- Installation of fire protection and security alarm systems;
- Installation of solar control films; and
- Installation of heaters, air-conditioners and other plumbing work.
- Firms that carry out mixed construction activities;
- Firms that specialize in construction work other than constructing buildings including:
- Construction of bridges, tunnels, viaducts and elevated highways;
- Communications and power line construction;
- Construction of dams and drainage systems;
- General contractors involved in “non-building” construction;
- Marine construction such as constructing harbours, piers, docks, wharves, etc.;
- Construction of roads;
- Water and gas pipe-line and sewer construction;
- Other non-building construction (e.g. playground systems).
- Firms that lease construction equipment;
- Firms that are involved in site preparation work including:
- Excavation and earth-moving work;
- Land reclamation;
- Soil investigation, treatment and stabilisation; and
- Wrecking and demolition works.
- Firms that execute structural repair works such as:
- Brick laying, stone setting and cementing;
- Laying building foundations;
- Producing structural pre-cast components;
- Roofing; and
- Other structural works.
- Firms that offer other specialized construction and related activities including:
- Sandblasting or shot-blasting works; and
- Scaffolding works.
Pre-requisites for License to Offer Professional Engineering Services
Business IncorporationPrior to applying for a Professional Engineering Services License, the business must be registered either as a limited company, an unlimited company, a multi-disciplinary partnership, or a limited liability partnership. Of these, incorporating a Singapore private limited company is the most preferred and recommended option owing to its numerous advantages such as legal entity status, limited liability, credible image, perpetual succession, and tax incentives. A foreign company can either opt for registering a Singapore subsidiary company or a Singapore branch office.
Licensing Criteria for ApplicantsThe Professional Engineers Board of Singapore has prescribed certain criteria for limited companies, unlimited companies, and partnerships in order for them to be licensed for offering professional engineering services. The scope of this guide is limited to licensing requirements for limited corporations only.
Criteria for limited companies:
- The Constitution of the company should state that the main objective of the company is to provide professional engineering services.
- The company must have a minimum paid-up capital of S$500,000.
- The Articles of Association of the company should state that a majority of the company’s directors shall be registered professional engineers or allied professionals.
- The company must be insured against professional liability.
- The professional engineering work that the company undertakes in Singapore must be under the control and management of a director of the company who is a registered professional engineer holding a valid practising certificate.
Approval of Premises
- If you plan to use a conservation building as your office premises and need to make additions or alterations to the building then prior approval from the Urban Redevelopment Authority of Singapore (URA) is required.
- Prior approval from the Building and Construction Authority (BCA) is required in order to display signs on your conservation building.
- If you plan to execute any fire safety works at your office premises, approval from the Singapore Civil Defence Force must be obtained. A Temporary Fire Permit (TFP) or a Fire Safety Certificate (FSC) must be procured from the Fire Safety Bureau of Singapore.
- If you plan to make an additions or alterations to existing fire safety works in your proposed office premises, then prior approval from the Singapore Civil Defence Force (SCDF) is required.
- As a business operator you are required to find out the permissible uses for a property and obtain a ‘Change of Use Approval’ (if required) from the Urban Redevelopment Authority (URA) before you proceed to rent or convert the premises for your business operation.
Professional Engineering Services License Application Procedure
- The license application procedure consists of submitting the application form along with the following supporting documents to the Professional Engineers Board of Singapore:
- A certified true copy of the company’s Constitution;
- A list of the company’s members and directors along with particulars as to whether they are registered professional engineers, allied professionals or otherwise;
- A certified true copy of ‘Professional Liability Insurance Policy’ and written confirmation from the insurance company that the policy satisfies Section 24 of the Professional Engineers Act. Kindly note that the written confirmation should be addressed to the insured (applicant) and should bear the policy number;
- A certified true copy of the Incorporation Certificate of the company as well as of corporate shareholders;
- A certified true copy of the resolution passed by the board of directors on the appointment of a director who is responsible for the control and management of professional engineering work;
- Copy of documents lodged with the Singapore Company Registrar, Accounting & Corporate Regulatory Authority (ACRA), on the appointment of chairman, board of directors and on shareholdings;
- A certified true copy of the latest Annual Return lodged with ACRA;
- A statutory declaration by all directors in a prescribed format that all the criteria have been adhered to, which is dated less than two months before the date of submission of the application.
- On successful processing of applications a license will be granted.
- Licenses are usually valid for a one-year period. An application for a new license must be made two months before the date of expiry of the current license.
- An annual license fee of S$300 applies.
- Permit for Road Occupation Management: Professional engineers, contractors, or site supervisors must obtain a permit from the relevant land managing agency in order to carry out work such as soil investigation work, excavation work, parking vehicular cranes on roads for hoisting work, or any other work that requires occupation of a section of the road.
- License To Occupy And Operate Scheduled Premises: A license from the National Environment Agency (NEA) is required for any person to occupy and use any industrial premises classified as Scheduled Premises. Industries that have the potential to cause serious air pollution or that store large quantities of hazardous substances are classified as Scheduled Premises.
- Telecommunication Wiring Contractor’s License: This license must be obtained from the Infocomm Development Authority of Singapore (IDA) for providing installation, maintenance or repair of any internal telecommunication wiring work connected to the Public Switched Telephone Network.
- Advertisement License: For displaying outdoor advertisement signage such as sky signs and electronic billboards.
- General Radio Communication License: For transmitting or receiving messages by means of radio-communication.
- Localized Private Network License: For establishing and providing localized private network services such as use of walkie talkie services within a localized area.
- Localized Radio Communication License: For the operation of remote control devices, local area paging devices, transceivers (walkie talkies), telemetry or alarm systems, wireless data or voice systems (e.g wireless LAN) and any other radio-communication equipment.
- Wide-area private Network License; For establishing and providing wide area private network services such as use of walkie talkie services within a non-localised area.
- Non-Residential TV License: For operating a broadcasting apparatus that is capable of receiving broadcasting signals such as TV sets or PCs that are enabled to receive TV programs.
- License to Discharge Trade Effluents: For discharging trade effluents generated (if any) from your business activity into a watercourse such as an open drain.
Most construction firms in Singapore tend to hire a large number of foreign workers as there are limited number of Singaporeans who are willing to take up mid-skilled jobs in the construction industry. As at end-2010, 248,000 out of a total of 871,000 work permit holders were employed in the construction sector in Singapore.
Foreign workers who are deployed to work in the construction industry in Singapore require an appropriate Singapore Work Pass depending upon their skills and qualifications. The Employment Pass is meant for skilled workers with a minimum monthly salary of S$3,600. The S Pass is tailored for mid-skilled employees who earn at least S$2,200 a month while a work permit, also known as the R Pass, is required for hiring foreign unskilled labour. Please note that there are certain conditions and requirements that construction companies must satisfy in order to hire work permit holders such as adhering to a quota, sourcing labourers only from approved countries, paying a foreign worker levy, and so on.
For more details, please visit our guide to hiring employees in Singapore.
On a final note
As elucidated above, there are several permits, approvals and licenses that are required for setting up a construction company in Singapore. In addition, one needs to apply to the Ministry of Manpower for work permits in order to hire foreign laborers. In general, it is advisable to hire the services of a professional firm that will handle company registration, taxation, business licensing, work visa, and other ongoing administrative matters. Hawksford is at the forefront of offering Singapore corporate services and would be happy to assist you in setting up your construction business in Singapore.