Singapore plans to spend S$28bn

Singapore plans transport upgrade

By John Burton in Singapore

Published: January 31 2008 01:28 | Last updated: January 31 2008 01:28

Singapore plans to spend S$28bn ($20bn) on expanding its rail and motorway system in a move designed to boost the construction industry, raise property prices in outlying areas and burnish its image as one of Asia’s greenest cities.

The infrastructure project, one of the largest undertaken by the city-state, will include S$8bn ($5.6bn, €3.8bn, £2.8bn) to build a new motorway and S$20bn for the doubling of the light rail network by adding two new lines.
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The aim is to encourage motorists to switch to public transport and reduce road congestion, which has increased by 25 per cent since 1999, Raymond Lim, the transport minister, said on Wednesday.

“Singapore’s public transport system is one of the best in Asia but it is in danger of becoming inadequate due to the projected increase in the population,” said Kit Wei Zheng, an economist at Citigroup in Singapore.

Officials estimate that the population could rise from 4.5m to 6m people in the next 20 years.

The projects reverse a decline in state infrastructure spending since 1999 and will be a significant source of growth for the construction industry until they are completed in 2020.

Construction emerged as one of the main pillars of economic growth last year after recovering from a prolonged slump, with the building of two casino resorts and a central financial district. However, there have been worries that the industry could struggle once again when these mega-projects are completed over the next few years.

The expansion of the motorway and rail systems to north and west Singapore is expected to raise property prices in these fringe areas, which are at present inadequately served by public transport.

The government plans to add 100 rail stations, achieving a network coverage to rival cities such as Tokyo and cutting travel time for commuters.

The cost of purchasing a car in Singapore is among the highest in the world because of high taxes and charges designed to discourage car use. But, with one car for every five people, this has failed to prevent road congestion as many Singaporeans view car ownership as a sign of status.

With 12 per cent of Singapore covered by roads, the government will seek to cut the annual growth of car ownership by half to 1.5 per cent by expanding the electronic road pricing system outside the central business district.

Copyright The Financial Times Limited 2008