The State Bank of Pakistan incentive package for construction and housing under the federal government’ Naya Pakistan Housing Program “will not help in substantially contributing to the reduction of 10 million housing unit gap in Pakistan”. The observation has recently been made by a private research firm Tabadlab which is based in Islamabad. The revelation not only raises questions on the viability of banking incentives and Construction Package 2000, but also promise of Prime Minister Imran Khan to build 5 million low-cost houses for poor in his 5-year regime.
Many experts already suspected and it is getting clear with each passing day, that the low-cost houses or housing for rural, poor, low-income support and houseless people have never been part of Naya Pakistan Housing Program. And, the research firm seconds that by stating the package, in fact, would help achieve financing targets of influential builders for high-end housing, but wouldn’t meet the policy objective of generating affordable housing units in the country.
Questioning the Performance
A survey in 2019 disclosed that Pakistan was facing an overall housing backlog of 10.3 million housing units. Of the total, urban housing shortage was estimated to be around 3.4 million, while rural housing was over 7 million units. That’s why Imran Khan once termed the low-cost housing project as a component of the PTI government’s planning for poverty alleviation. But above observation by Tabadlab’ research nullifies Prime Minister’ statement outright.
Also a leading economist writes in an article, ”arguably, 40% of Pakistan’s population comprising low-income and low middle income will remain deprived if we were to depend on the private sector. That is why we need the government to fill this gap and deliver”. However, according to a news report, after three years only 1,500 housing units have been delivered so far under Naya Pakistan Hosing Program. Whereas another 5,000 units in different cities are being built, in which provincial governments also contributing. Clearly, the pace is slow and the will is dubious.
A Suspicious Program & Superficial Package
To gear up construction and housing sector, the State Bank assigned lending targets to commercial banks for housing and construction sector, specially for low-cost units. The PTI-led federal government also reduced tax rate for the sector in general and more sizably on low-cost units. Besides, it announced subsidies and amended foreclosure law to support the housing projects.
However, it has been written in these pages that “many believes the Package doesn’t aim to benefit overall construction sector, but only to real estate developers to launch their posh housing schemes and illegal money hoarders to whiten their money under the umbrella of Package.” Even a leading businessmen correctly pointed out the reason behind giving the special package to the construction sector was that it was “close to premier’s heart” while “several donors of the ruling party belonged to the sector.”
Previous Housing Programs’ Failure
The Naya Pakistan Housing Program is primarily a developer-led model as the scheme aims to subsidize land for property developers to build more housing, including fixed percentages of low-cost housing. Almost some sort similar developer-led models of construction were earlier been tried out by various governments in Pakistan’s history.
Nawaz Sharif announced the Apna Ghar Housing Scheme in 2013, which planned on building 500,000 homes in five years through a similar public-private partnership model, which didn’t really lead to success. The PPP government too announced ambitious plans in 2008 to build low-cost housing all over Sindh through the Shaheed Benazir Bhutto Housing Cell, which also didn’t really materialize either.
Real Estate Regulatory Authority
Another important shortcoming pointed out by Tabadlab’ research paper is the absence of an autonomous Real Estate Regulatory Authority, which is vital for the promotion of consumer welfare and to bring transparency to the real estate sector. But it is also a reality builders and developers opposed introduction of RERA as it brought transparency and accountability to the real estate sector.
Meanwhile, Imran Khan’s promise requires a million homes to be built annually, but three years into his government, even the most optimistic reading of the unofficial data suggests that work is underway on less than few thousands housing units nationwide. Not a single project under Naya Pakistan Housing Program is yet to be completed. If Prime Minister Imran Khan wants to genuinely deliver on his ambitious promises, he will have to sincerely do much more in terms of performance.