PM’s idea to build 5m houses seems impossible without private sector

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–Govt should provide land and tax incentives to builders

–After Ashiana Housing Scheme in Punjab, most of the builders refuse to work with govt

When ancient rulers and empires came into power, they ordered for the construction of huge Forts and Palaces so that local industries could be flourished and jobless people of the areas could get employments.  Similarly, in Pakistan newly elected premier Imran Khan is thinking on the same way — to build five-million houses that will definitely boost more than 40-42 different industries.

The decision of the Prime Minister is seemed to be good as there is a need of 400,000 units per year and shortage of 2.4 million houses, but the PM’s idea seems to be little impossible without the involvement of local private sector.

According to a report of the State Bank of Pakistan (SBP), the yearly estimated housing demand is 400,000 units, while the actual supply is only 150,000, leaving a shortfall of 250,000. If we calculate from the last 10 years, there could be a shortage of 2.5 million units in the country.

The main idea of Low Cost Housing Scheme was introduced by the members of Association of Builders and Developers (ABAD). Arif Jeewa, former Chairman of ABAD, before the election 2018, informed Imran Khan regarding a proposal of one million low cost houses project at ABAD house and after six months deliberations, the PM Imran Khan himself announced to build five-million affordable houses in next five years in another visit to ABAD house before general election 2018.”

After becoming the premier, Imran Khan formally announced the road‐map for the construction of five million houses. He asked the concerned authorities to finalize a comprehensive plan for early roll out of the ambitious plan.

Prime Minister directed to make a Naya Pakistan Housing Authority to ensure the construction and form a 17-member task force to look after housing affairs.

He said that a land bank, which will only cater to loans and financial dealings of properties, will be formed too. To gauge the demand for housing, the government will hold a registration drive in different districts of Pakistan.

The government has decided to provide houses to the people on easy installments. It will build 2.5 million houses in the first phase, and another 2.5 million in the second phase.

PM has promised in its election’s manifesto to construct five-million houses during his five-year tenure means that his government has to construct one million houses in a year. He said in the meeting that he would personally look after the initiative to ensure smooth implementation of the project and removal of any administrative bottlenecks.

Local builders and developers planning to build their own projects:

Construction industry is like a ‘Golden Egg’ for above 2,000 members of ABAD, who wants to build their own colonies in different cities of Pakistan. The members of ABAD are looking towards the government to get their share from five-million houses, but reluctant to work with the government following the failure of Ashiana Housing Scheme in Punjab and officers’ consequences after investigation conducted by NAB and FIA etc.

They were of the view that the government should provide us government’s land, give tax incentive, and status like Gwadar zone etc to build low cost housing projects.

Out of top five Pakistani prominent and successful housing schemes Bahria Town and Royal Residencia are being run by private parties like big names Malik Riaz and Mohammad Yousaf Shaikh, while Defence Housing Authority (DHA), Askari Housing Scheme and Fazaia Housing Scheme were being run by retired Major and General of Pak Army and Air Force etc.

A prominent businessman Aqeel Kareem Dhedhi, who had constructed a number of housing schemes in Karachi, said, “we can contribute 7,500 houses in Karachi in two-year period if the government asks him to do so and he can provide a 80sq yard single story house in Rs 2 million near Northern Bypass Karachi.” I will purchase my own land but there should be a tax incentive for us on this scheme, he added.

He totally refused to be part of the government scheme because of the eyes of National Accountability Bureau (NAB), Federal Investigation Agency (FIA) and Federal Board of Revenue (FBR) Etc. The corruption is the main element in government schemes and if tax incentives were not given the agencies will also ask for its share in it.

“ABAD will independently launch affordable housing scheme if the government neglects private sector in its much-publicized National Low Cost Housing Scheme (NLCHS),” said Arif Jeewa Chairman of ABAD.

On a telephonic conversation, Arif Habib, Chairman of Arif Habib Group welcoming the government’s decision said that if government will ask him so he will also be ready to share it, but depend on the tax incentives.

Khashif A. Habib, son of Arif Habib and also board member of Arif Habib Group, said, “the government should give these housing projects a status as it has given to Gwadar Port areas and other Exports Processing Zone in Pakistan, where no sales tax and regulatory duty etc are being charged.”

No honey without money: who will do this project?

Imran Khan has announced to provide low cost houses for the poor people, but he did not mention how much low cost it will be.

The industry sources said that making one million houses in a year is not an easy task and nobody will loss his business because of this project where he will not gain a single penny. At least minimum profit should be a right of the financer on this scheme and it should be permitted.

“Earn profit and corruptions in the project are two different things and the government should initiate these projects by involving the private sector with ‘no profit and no loss,” one of the builder said. The federal government with the help of provincial governments should allocate lands to the private builders or ABAD to construct low cost houses and these projects should also be given tax incentive, he added.

He said that the flattering hope of low income group under NLCHS could only be materialized if the participation of private sector in this project was ensured.

He said that ABAD would not go to the government until they were invited for NLCHS and this project would meet the same fate like Aashiyana Housing Scheme without the participation of private sector as no government scheme was successful for last couple of decades.

NLCHS could only be viable, if tax relief would be allowed on steel and cement, withdrawal of Regulatory Duty (RD) on construction materials, ensure provision of infrastructure development and provide housing finance at 4 percent or less markup, said Muhammad Hassan Bakshi newly elected chairman of ABAD.

Moreover, he said that World Bank (WB) was showing interest in ABAD’s affordable housing scheme hence its senior commercial officer had visited ABAD house this month.

Impact of Supreme Court verdict:

Decision of the Parliament not to allow the non-filers to purchase properties in Pakistan will hurt the Housing sector which was already stopped for last three months. In last and 6th budget of PML-N government, the finance minister Miftah Ismail has imposed condition to be a filer to purchase house and new car.

On the other side, the Supreme Court (SC) had also banned the construction of above 6 stories building in Karachi owing to the water and other infrastructure shortage. After this decision of the SC, the prices of commercial land in Karachi had declined. The Sindh Building Control Authority (SBCA) in May 2017 stopped giving permission of high-rise buildings in Sindh province.

The builders had allegedly built 12 to 16 story buildings on 400 to 500 square meters plots after giving huge bribes to SBCA. In this connection, former SBCA chief Manzoor Kaka who was also close aide of Asif Ali Zardari and others have been dismissed from their posts.

The apex court allowed the builders to construct only six-story buildings in Karachi and warned that the prescribed limit should not be breached. According to a rough estimate, construction on almost 400 plans with a total investment of Rs 900 billion for high-rise buildings in Karachi are waiting approval of the Sindh government.

ABAD initiative:

ABAD had taken initiative by launching its low cost housing project in Islamabad area. ABAD already identified 500 acres of land in Islamabad for the project. The cost of the houses will range approximately Rs 2 million. More than 50,000 applications had been received so far against the announcement of 5,000 units in Islamabad only,” he informed.

The chairman further complained about the non-cooperative attitude shown by the provincial governments. “No government was ready to give us land for these projects. We conducted several meetings with the chief ministers of the provinces of the previous government but all disappointed us,” the ABAD officials said.

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