Indonesia sand ban slows builders in Singapore

by Siti Rahil

SINGAPORE (Kyodo) Japanese construction companies in Singapore have been hit hard by skyrocketing concrete and granite prices due to supply disruptions caused by Indonesia’s ban on sand exports.

More than 20 Japanese construction companies are operating in Singapore and are involved in more than 20 percent of current construction projects in the city-state.

But since Indonesia banned exports of sand in January over environmental concerns, the price of sand in Singapore has jumped from 25 Singapore dollars (about $16.4) to S$60, while the price of concrete leaped from S$70 per cu. meter to a high of about S$200 at the end of last month.

Although Jakarta has not officially banned exports of granite, the Indonesian navy has detained more than 20 granite-laden barges and tugboats bound for Singapore on suspicion that they were smuggling sand.

Sand and granite are used in concrete. Singapore uses about 6 to 8 million tons of sand annually, most of which came from Indonesia before the export ban.

Some Japanese companies are complaining that they could lose S$20 million to S$30 million in current projects.

The Singapore government has agreed to shoulder up to three-quarters of the increase in construction costs of ongoing public-sector projects as a result of the hike in sand and granite prices, and is urging the private sector to do likewise.

But Japanese companies would like the government to shoulder more of the increase in construction costs.

The Singapore offices of the Japanese Chamber of Commerce and Industry and the Japan External Trade Organization wrote to the governmental Building and Construction Authority of Singapore to express their concerns earlier this month.

“It’s very serious,” said Noriyuki Fukuoka, an official for construction at JETRO’s Singapore representative office. “We are pushing strongly for the government to compensate 100 percent of the increase in the concrete price.”

Currently, construction contracts do not provide for fluctuation in the price of sand and other raw materials required for construction. In the wake of the recent sand ban, Japanese companies here will expect future construction contracts to take into account the risk of price fluctuations, he said.

Japanese contractors are currently involved in big projects, including construction of a commuter train line, while the private-sector projects involve residential and office buildings in Singapore’s currently recovering construction industry.

The ban on sand exports could not have come at a worse time. Singapore has just launched several big-scale projects to improve its attraction as a tourist destination and a financial and business hub in the region. This includes plans for its first two multibillion-dollar casino resorts.

Indonesia has said the sand ban was imposed due to environmental concerns over the effect of sand mining and fears that it could shrink Indonesia’s maritime borders.

But some Indonesian legislators had said it was also to put pressure on Singapore to sign an extradition treaty that Jakarta hopes would help it recover billions of dollars of state funds allegedly embezzled to the city-state by wealthy Indonesians.