SMEs hit after rail contractor goes bust
The Business Times
JUST months after a Downtown Line main contractor went bust, a sub-contractor working on another part of the rail network has also become insolvent.
This has left a handful of small and medium-sized enterprises (SMEs) in Singapore holding some $2 million in bounced cheques.
The Korean company in question, Samdaiyang Development, was the sub-contractor for Hyundai Engineering & Construction, which in turn was awarded the $188-million Contract 931 for the construction of MacPherson Station, to link Downtown Line 3 to the Circle Line.
Eight SME contractors that BT spoke to said they had stopped work in September, after post-dated cheques issued by Samdaiyang bounced and workers from Samdaiyang did not turn up at the site.
They have not been paid since April, and are owed amounts ranging from $4,280 to $1.14 million.
When they turned to Hyundai for help, they were told to file their claim submissions with the Seoul Central District Court, as Samdaiyang had filed for insolvency.
Hyundai could not be reached for comment.
This is not the first time that cheques issued by Samdaiyang have bounced, according to the contractors that BT spoke with.
In one case, Samdaiyang said it would retract its original cheque and reissue a post-dated cheque for the entire sum owed to one local contractor, after the SME approached the Korean firm for payment. The second cheque also bounced, leaving the SME with a $202,800 hole in its pocket.
One of the creditors said the issuance of post-dated cheques is not common in the industry, but they accepted it "based on trust", given that the job was ultimately commissioned by the Land Transport Authority and the fact that Hyundai is a big player in the local market.
Downtown Line 3 is the final stretch of the 42km Downtown Line. When completed in 2017, Downtown Line 3 is expected to enhance rail connectivity in the eastern corridors to the Central Business District and developments in the Marina Bay area. It comprises 16 stations, including three interchange stations: MacPherson, Tampines and Expo.