Hong Kong looks to improve payment practices in construction sector with bill in works to fix cash-flow problems along supply chain
- Industry stakeholders, including contractors, subcontractors, consultants and suppliers, have long experienced payment problems, studies show
- Outstanding payments can account for as much as 12 per cent of total business receipts with longest delay for money lasting more than six months
Hong Kong lawmakers have welcomed proposed legislation to improve payment practices in the construction industry, while calling for dispute-resolution procedures to be shortened.
The government has proposed the Construction Industry Security of Payment Bill to improve the cash-flow problems encountered by stakeholders along the supply chain.
The bill’s major proposals include improving contract payment terms, introducing a mechanism for speedy resolution of interim payment disputes, and empowering the claiming party to suspend or reduce the rate of progress of the work under specific circumstances of non-payment.
“There may be some payment disputes, which cause the payment process to be interrupted from the payer to the payee,” Undersecretary for Development David Lam Chi-man told a meeting of the Legislative Council’s development panel on Tuesday.
“This affects cash flow throughout the supply chain, which is not ideal.”
He added: “We have proposed the bill, hoping to make the payment ecology of our entire construction industry more sound, which will be more beneficial to our long-term development.”