Prime Minister’s bet on construction

Prime Minister’s bet on construction

Khaleeq Nazar Kiani
Last week Prime Minister presided over the 115th weekly meeting to see the progress in the construction/housing sector. It seems that our leadership has sufficient time to spend on unnecessary meetings. The two meetings in a week by the Prime Minister and Chairman NAPHDA with the civil bureaucracy of all the provinces on the same issue look somewhat odd. So what the officers do is call the time pass in the typical official language and as usual, give beautiful different imaginary presentations but the fact is that they are still stuck up in digitalizing the regulatory framework. Practically the situation is still the same. Every implementer is still talking in the future tense after thirty months and sometimes it feels that they are bluffing with the chair.
There was a liquidity issue in the construction sector and the Banks were reluctant to provide house financing due to the absence of foreclosure law which is now in place and a big hurdle is removed. SBP has issued the instructions to all scheduled banks for allocating 5% of their private sector credit to housing and construction loans but disbursement of Rs.24 billion against the demand of Rs.229 billion is disappointing. The irony is that the Private Banks, Standard Chartered, Meezan, and Bank Alfalah are more responsive to the house loan than the Government-owned National bank. Another bad performance of a public entity.
Initially, the ABAD organization announced 1.2 trillion worth of projects. To date, most of them are still on paper. Big builders from Karachi, Lahore, and Islamabad are more interested to dispose of their old stuck-up projects on good margins by taking the facility of mortgage financing which was not available in the past.
Punjab is a big province and huge market but the response is limited. At Government level, Lahore Development Authority and NAPHDA have started some projects which are still in the initial phase. The construction phase in Naya Lahore or Ravi Front project may not start in this PTI’s term.
Till now the authority has only finalized the consultant and the rest are mere MOUs.
Sindh Chief Secretary’s office deserves an award in dealing with the Prime Minister and PPP-led Provincial Government for the last 30 months. Sindh Government has no interest in the Prime Minister’s construction scheme, even opposed the handing over of Bundal Island for a new city. Every big builder wanted to invest in Karachi due to its big size and definitely the demand but the hurdles and problems are also immense. Investor has to face the Sindh building control authority like other Government departments where officials have long pockets.
The market of fancy houses in KPK province is limited to Peshawar. A 100 billion project was announced in Peshawar but practically it is still on paper. The political elite in Balochistan are least interested in the housing sector. They have many other projects to waste public money. The Balochistan bureaucracy always tries to show something on the screen and not on paper because has nothing to show. They take a sigh of relief after the end of the Prime Minister’s meeting.
The Naya Pakistan Housing and Development Authority was established like many other unnecessary government organizations. However, this organization has provided excellent employment opportunities to ex-servicemen. The role of the government departments is diminishing day by day.
The policy which looks good on paper has no guarantee of success in the implementation phase if not based on real data. The construction of five million houses is in the PTI’s manifesto which was a popular slogan created to attract the people but the data compiled in the 2017 census does not support the shortage of such a huge number of houses in the country. Banks have received requests for house loans to the tune of Rs. 229 billion which shows the demand of 46000 houses with an average cost of 0.5 million per house.
No one has any doubt that banks will not approve and distribute this small demand in the remaining two years of the PTI’s Government.
Construction is labor-intensive and 40 plus industries are attached to this sector. Soon after assuming the power, Government had announced the construction package which was a kind of amnesty scheme. It also got a waiver from the IMF. The expectations from the construction sector appear to be fading mainly due to low purchasing power and weak demand.
The construction cost has also gone up from Rs.1900 per square foot just two years back to now Rs.3300 per square foot beyond the reach of the middle class.
Prime Minister is losing the bet after each passing day. No one seems to be honest with the PM to tell the real picture. Asad Umer, Shoukat Tarin, Reza Baqir must be aware of the entire situation, but their silence is wacky and beyond comprehension.

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