Daily Times

The prime minister’s idea of a construction sector led revival of the economy is an interesting one, since the sector does breathe life into 40-plus associated industries once it gets going, and in this way income and employment can be generated pretty much across the board. Yet the idea of sprinkling a Rs30 billion subsidy on the Naya Pakistan Housing Program (NPHP), that too for the first 100,000 houses constructed only, might leave just a little to be desired as far as the bigger picture is concerned. And it’s good that banks have been instructed to give concessional loans for the project, but that too might run into a couple of roadblocks in the future. For one thing, a lot of the people that these low-cost houses are meant for are unbanked and simply do not qualify for bank loans under the present conditions.

For another, banks are still going to have problems with advancing loans for this project considering that our country remains one of the few, even in the region, without proper foreclosure laws. Banks usually have no problem with lending for such a landmark program, but with the likelihood of a large number of people eventually defaulting on their loans — which their risk management systems are bound to factor in – and the fact that there is no way they can claim the property because the courts won’t allow them, their position does become a little difficult. And that is precisely what has made them hesitant about lending too much to the housing sector in any circumstances. Even Asian countries like Vietnam, Indonesia, Bangladesh and India have made a lot of progress with their own housing projects because they put the necessary laws in place at the right time. Yet Pakistan has lagged behind, to the point that there are more houses being constructed in New Delhi alone right now than the whole of Pakistan.
The last thing anybody, especially the government, would want is for the usual buyers-sellers to take advantage of the NPHP just because it was always out of reach of the really deserving people. That way all these subsidies and special loans would only go to further bloating the players that have exploited this market since forever. So, while the government’s special attention is always welcome, and there is indeed nothing like construction to give the whole economy a good push, it is still hoped that a little more proper work will be done before the money is thrown around. *