Steps taken to re-activate the stalled business
By AMANULLAH BASHAR
May 21 - Jun 03, 2001
The business activity in the construction industry
and the Real Estate sector, once used to be described as the engine for
generating employment and a haven for the investors, has come to a
Consequently, over 40 allied industries are also
suffering and are forced to lay off a large number of workers associated
with these industries. These industrial units play an important role in
supplying building material including steel bars, cement, wood craft,
glass and other fixtures, electric material, paints, ceramics, marble
tiles etc and many other related units which are lying idle.
Spelling out various reasons for this inactivity,
sources in the real estate business said that beside the overall
economic recession faced by the economy there are other factors which
proved disastrous for this sector. For example, sources said that the
House Building Finance Corporation (HBFC), the only source for financial
back up to this sector has stopped disbursement of loans for house
financing for the last one year. As a result, over 350 incomplete
housing complexes and apartments are lying held up for want of finances.
The HBFC has stopped disbursement of loans on the ruling of the court
endorsed by the Supreme Court of Pakistan that only loans should be
disbursed in accordance with Shariah. Now the HBFC is waiting for
Islamization of the Banking System. Another major factor, which proved
disastrous for business activity in the housing sector, is the campaign
launched by the present government for housing survey and distribution
of tax forms. This campaign spread uncalled for panic among the buyers
or investors. Generally speaking most of the investors now find it save
to buy and sell dollars where no declaration is required as compared to
purchase or invest in the housing units.
Another factor was the high rates of property
valuation fixed by the provincial governments. In some cases, where the
official value of a residential plot of 400 sq. yard has been fixed at
Rs.10 lakh and the buyer has to pay stamp duty on that rate, the actual
market value of that plot is not more than Rs 5 lakh. Such rules are
adding to the confusion in this industry.
Sources suggested that government should remove the
doubts among the people that the housing survey was meant for
documentation purposes and not for taking any punitive measures against
the plot or householders.
Meanwhile, the Chief Executive, Gen. Pervez Musharraf
has approved a national employment strategy, targeted to create nearly
two million additional job opportunities during the next financial year.
The employment strategy emphasizes to reactivate
construction and housing industry in view of its high employment
Reviewing the employment strategy presented by the
Planning Commission, the Chief Executive has stressed upon the need for
major supporting policies by the government to maintain the present
employment levels and generate additional job opportunities in the
He has endorsed that construction and housing sectors
as areas carrying the dual benefit of providing housing to the
shelter-less besides generating major economic and manufacturing
activities leading to creation of skilled and unskilled jobs.
The Chief Executive has also accorded approval to the
launching of major low-cost housing projects both in the urban and rural
areas. He has also directed that consideration be given by the
provincial governments to the possibility of allowing ownership rights
to small houses built on state land in the rural areas on nominal
payment. He also directed the ministry of housing to draw up housing
program for the urban areas and in particular for dwellers of the katchi
abadi to enable their shifting to cleaner and healthier environment.
Gen. Pervez Musharraf also directed the ministry of
finance to work together with the State Bank to generate special funds
for the housing sector to be disbursed as loan at affordable cost to the
middle and lower income groups.
Pakistan is estimated to require 400,000 additional
housing units every year against the 160,000 units being added annually.
The Board of Revenue, Sindh has also notified a
downward revised valuation table in respect of urban properties located
The minimum value per square yard of open residential
plot under category A-1 is Rs4050 for category 1, category II Rs 2,250,
category III Rs1350, category IV Rs900, category V Rs540 and category vi
Open commercial plot minimum value per square yard
category A-1 Rs 9,000. Rs. 6500, category II, Rs4050, category III
Rs2700, category IV Rs1440, category V Rs900 and category VI Rs630.
Built up commercial property minimum value per square
yard of covered area of ground flour plus covered area of additional
floors if any: Category A-1 Rs10,800, category-1 Rs9000, category II
Rs5, 850, category III Rs3, 600 category IV Rs, 430, category Rs1, 620
and category VI Rs1, 080.
Built up industrial property value per square yard of
the entire plot as per item 3 plus Rs. 160 per sq. ft of covered area.
Built up Flats. Minimum value per square foot of
covered area Category A-1 per square ft of covered area Category A-1
Rs675, category-1 Rs585, category II Rs405, category III Rs270, category
IV Rs225, category-V Rs135 and category VI Rs70.