The Housing and Construction Industry, which is
being eyed as the engine of economic growth by the present government,
has not yet yielded the desired results despite overwhelmingly support
by the National Housing Policy 2001.
The objective of the national housing policy was to
activate the construction industry to achieve certain targets
including activate more 80 industries allied to the construction and
housing sector, create job opportunities for skilled and unskilled
workforce and speed up the pace of development in the country.
The policy of the government massively supported by
the financial sector had the potential to click and produce the
desired results, yet the usual lack of coordination among the relevant
departments and ineffective follow up which is the conventional
characteristic of the society creating obstacles restraining it to
take a kick start.
It is interesting to note that the banking sector
which has opened its doors for the housing sector pumped in over two
hundred billion rupees in the housing finance in 2003-04 which is a
record itself, but by and large the activity in this sector has been
confined to the up country. According to the zonal chief of a leading
private bank, the prices in the real estate sector have jumped four
times as compared to real estate prices in Karachi.
This is an interesting development as Lahore and
Islamabad have left Karachi much behind in terms of activity in the
construction sector. When asked to comment on the situation, Babar
Mirza Chughtai, Chairman of Association of Builders and Developers (ABAD)
said that it is unfortunate that construction industry has been
rendered almost paralyzed in Sindh particularly in Karachi by imposing
an embargo on the construction activity as a vast land has been
declared as frozen by the provincial government some three years ago.
The ban on the frozen land had its own implications especially in the
form of mushroom growth in slums and katchi abadis in the urban
centers of Sindh.
If you look seriously into the matter, you will
find that a large chunk of electricity, water, gas and other civic
facilities are being grabbed by these katchi abadis depriving the
legally organized localities of their civic rights. You just take the
example of electricity, the KESC is offering electricity connections
at the cheapest rates to these illegal dwellers and consumers while it
is denying the access of the organized sector to the electricity by
asking exorbitant price for electricity connections. Consequently, a
large number of housing projects are lying deserted for want of
electricity for over three to four years in Karachi. What is the logic
behind offering electricity connections at subsidized rates to the
illegal consumers and the decision makers must now demanding huge
price from the legally organized consumers.
Despite a single digit mark up offered by the
entire banking and the financial sector for house financing scheme,
the housing and construction industry was unable to respond desirably
due to the constraints which have blocked its way to take off in the
Interestingly, the activity in the housing and
construction sector was more briskly taking place in the up country as
compared to Karachi, which has always the center of economic activity
in the past.
Despite the fact that the financial sector under
the policy of the government has come out with easy access to the
housing finance at an affordable markup rate, yet no major project
financing has taken place all over the country.
Babar Mirza Chughtai while commenting on the
situation pointed out certain areas which need immediate attention of
the people at the helm of affairs to give a kick start to this highly
labor intensive industry which as a matter of fact has been rendered
into an state of stagnation despite the desire of the government to
use it as a driving force for economic growth in Pakistan.
Highlighting the issues confronted to the
construction industry Babar Mirza said that on one hand the federal
government has generously offered incentives to the allied industries
like cement and steel by reducing duty and taxes while liberalization
of the financial sector to provide fuel to generate economic activity.
It is, however, unfortunate that lands which
provide basis for all sort of activity in the housing and construction
industry has been frozen for over three and half years ago.
Consequently no transaction, registration, sale and purchase,
construction is taking place in the areas where the lands have been
frozen. The decision to freeze lands allotted by the chief ministers
of the previous government was taken in view that the lands were
allotted on political considerations below the market prices.
Actually, the land allotted by the previous chief
ministers to different people was no more possessed by the original
allottees. Such lands have been sold out many times and were purchased
by the individuals and the builders at the current market prices.
Since no new housing project is being launched on
the frozen lands, the industry has come to a standstill and this state
of inactivity entailing serious economic repercussion to the economy
and causing unemployment at a massive scale.
Due to prevailing state of inactivity in the
housing and construction sector, over 30 percent of the capital
especially from Housing and Construction industry has been moved out
of Pakistan as the builders and the developers are more interested in
launching commercially viable Shopping Centers and Housing projects in
Dubai, United Kingdom and the United States.
Most of the commercial and the housing projects
currently coming up on the ground and being sold like hot cakes in
Dubai are being raised by Pakistani builders. In fact, it was the
complexity of the system, lack of coordination between various
government departments, conditions of seeking NOCs, freezing of land
and a culture of non-compliance to the good economic policies and
decisions altogether forcing the active players in the construction
industry to relocate in a business-friendly environment.
While admitting the fact that under the policy of
making the construction and the housing industry as the engine of
economic growth, the present government had come out with a package of
attractive incentives besides opening the doors of the banking and the
financial sector for the first time at a massive scale, yet the usual
culture of non-compliance to the decisions proved as a major irritant
in the way of the construction industry to take off and to deliver
Despite sufficient water available, more than 13000
tankers have been allowed to supply water at exorbitant price instead
of supply the same through the pipeline network. You cannot do away
with the tanker mafia culture because this lucrative business enjoy
the support of highly influential people who are receiving their share
out of this illegal business, he remarked.
Although, the condition of seeking NOCs from
various utility services like electricity, gas, and water etc were
abolished, yet the decision was still waiting for implementation as
the committee formed to look into the matter was sitting on the
problem instead of resolving the issue.
Similarly, Sindh government in early 2000 had
frozen all the pieces of lands allotted in the province during the
year 1985 to 1997 by various chief ministers of Sindh by exercising
their discretionary powers conferred to them by the Constitution.
The core of the issue is that the lands under
reference were purchased by builders and developers and common people
of Sindh as well, during the period 1985 to 1997 on payment of market
prices in good faith from original allottees and further paid all
taxes, dues and levies etc, contemplating that these lands hold good
titles for construction purposes. In the year 2001 by virtue of an
Ordinance 2001 called cancellation of allotments, conversions and
exchange III-2001, the government of Sindh had started the exercise of
de-freeze of these lands on payment of "Malkano" i.e. price
differential between allotment and market prevailing of the time of
allotments. And constitute a committee under the chairmanship of
Justice (R) Syed Abdul Rehman to oversee the whole process and
de-freeze the lands. Although the cabinet meeting of Sindh government
had given go ahead signal to start process of the de-freezing exercise
and directed the committee to de-freeze all the frozen lands on
payment of differential.
However, the matter was still lingering on one
pretext or the other. Consequently, the construction industry has
become paralyzed and the inactivity in the sector compelling the
builders towards other venues. Actually, if the penalties were
justified on the allotted lands, the authorities that were responsible
to allot the government land and the allotees should have been
penalized not the buyers who had paid the price at the market rate.
Consequently, over 30 percent of the builders have
relocated their business to other countries while some 20 percent have
switched over to other business interest.
Another adverse social and economic impact of the
ban on construction activity on the frozen lands was emerging in the
established localities where the people are converting old housing
units from 400 sq. yards to 1000 and on ward into multi-storied
apartments. A large number of such housing units have been converted
into flat sites, which would have their serious repercussions on the
existing localities. For example, the sewerage lines were designed in
accordance to the need of a single housing unit, similarly power load
and water supply was given accordingly to cater to the need of a
single housing unit. But now instead of a single family, that plot has
been converted into an apartment were 10-12 families are now housed.
Due to ban on construction on the frozen land, such conversion is
taking place rapidly within the city, which turned into a civic and
social chaos sooner or later, ABAD Chairman warned. The existing
infrastructure in the existing localities was not sufficed to
accommodate such conversion at a massive scale.
REGULARIZATION OF BUILDINGS
Another problem, which is lying unresolved over the
years, was the regularization of buildings in Karachi, which is not
taking any shape, and the matter was lingering on for unknown reasons.
Since the government has declared housing sector as
an industry, the composition rates for regularization of commercial
and marketed buildings should be at par with the rate offered to the
industrial areas in Karachi.
Referring to the 7-point Agenda of President Gen.
Pervez Musharraf, he said that this agenda for our crisis-ridden
nation has made many strides ahead to steer the country out of the
inherited mess. The President had reaffirmed in the meeting with the
industry people held on April 15, 2004 that the full impact of the
7-point agenda should remain a dream unfulfilled if a crucial sector
of national economy that is construction and housing was left in
It is really disgusting that despite being
recognized at the highest level, the construction industry has been
rendered almost paralyzed and chained in the bureaucratic system at
different stages of the Federal, Provincial, District and City
It is the high time that the government to take
practical measures to resolve the issue if it was really serious to
accelerate economic activities through the highly labor intensive
construction industry in Pakistan.