Policy draft against the withholding of construction payment approved by ExCo: sources

Sources said the Executive Council (ExCo) has approved the draft to prevent the construction industry from delaying payment, which will be handed to the Legislative Council in the short term for the first reading.

There are often cases of withholding payment in the building industry, and the government is drafting the Security of Payment Legislation for the Construction Industry to effectively solve the issues, along with improving the cash flow of the various stakeholders in the industry. 

A draft was expected to be passed to the Legislative Council in the first half of the year.

The Development Bureau proposed standardized contract terms in November 2023, including the banning of conditional payment terms, creating an independent third-party adjudication mechanism, and requiring the paying side to respond to the claimant within 30 days and provide payment within 60 days once the claimants have submitted their claims.

If they fail to do so, the contractors have the right to slow down the work progress or temporarily stop work.

The Bureau held a meeting in April to report on the outcomes of the suggested guidelines, and most stakeholders supported handing the draft to the Legislative Council as soon as possible.

It was learned that ExCo has approved the contents of the draft, and there is not much difference with the previously raised framework suggested by the government.

The legislation discussion has lasted for more than a decade since the government launched a consultation on the legislative work in 2015, but there has been no response for many years.

The Bureau stated that it is making final preparations based on the framework content of the proposed "Security of Payment Legislation for the Construction Industry" and strives to submit the bill to the Legislative Council in the short term.