How Realistic and Practical is Imran Khan’s 5m Houses, 10m Jobs Initiative
The housing with jobs plan could become a stronger one than the CPEC in the short run and definitely as strong in the long run concurrently
IRSHAD SALIM (Sep 4, 2018): The PTI-led government under Prime Minister Imran Khan has jump started efforts to construct 5 million low cost and affordable houses which could resolve housing shortage in the country, specially in major cities while at the same time generate job opportunities for the unemployed and the youth and help promote economic growth.
The mega initiative is part of the party’s National Affordable Housing Policy. PM Khan has constituted a committee under Secretary Housing & Works to prepare the plan along with initial recommendations and submit to him within one week.
The policy paper was prepared by former House Building Finance Corporation (HBFC) chairman Zaigham Rizvi — HSFC is the country’s only state-owned-and-state-run mortgage company — last year a mortgage company in the private sector was launched by real estate tycoon Riaz Malik of Bahria.
The country has a huge demand for 12 million houses, which the West lacked and therefore the model of economic revival through affordable houses was applicable here, Khan said.
Also, “Pakistan’s biggest problem is unemployment. Pakistan has the second largest youth population after Yemen. Unemployed youth either leave the country to find employment elsewhere and those who are unable to leave get involved in unsocial activities. The youth that could have been a boon for the country has become a burden,” Khan had said while talking about PTI’s policy at the Association of Builders and Developers (ABAD).
So the housing and jobs combo is a good start provided legal and institutional framework including declaring construction as an industry are undertaken without delay.
Such a huge public policy initiative with mammoth positive financial and economic beneficial trade-off is what the US and other European nations continue to thrive on.
The process of establishing five million houses would have an immense spillover effect on more than 100 industries, which all provide inputs in one way or the other for construction business.
PM Khan expects the mega housing initiative — estimated to be in the range of $20 to $30 billion dollar “Marshall Plan” will generate over 10 million jobs in the next 5 years. If so, it could generate over 5 year cycle employment worth $10 billion to $15 billion. Between the two initiatives, it’s a $30 billion to $45 billion at $6 billion to $9 billion annually.
According to the Planning Commission data, the CPEC projects will create half a million jobs for Pakistanis in the next 5 to 7 years while the CPEC projects could value over $20 to $30 billion during the same period. How much of these projects would generate revenue for local businesses and construction companies remain an ongoing debate.
Comparing the two “Marshall Plans”, the difference in PTI vision and the CPEC is highly differential and socio-economically a qualitative boost for average Pakistani and for local business and the overall economy in the housing plus employment plan — more potent than the CPEC in the short run though, if looked at both concurrently.
However, CPEC features, advantages and benefits over the long run far exceed the housing and employment initiative. If the two can run simultaneously in a mutually exclusive form and substance over the next decade or so, it could be a double whammy for the economy.
Opportunities and challenges exist. Primarily how to fund the housing initiative. International players, overseas Pakistanis and local investors we believe alongwith a viable mortgage company or companies backed by government like in the West is the way to go forward.
Since over the years, there has been a mismatch in the demand and supply of houses in Pakistan, therefore the two initiatives if packaged well in public-private partnership could bring about a “new industry” in the country enabling fairly balanced socio-economic growth across the board.
There had been a huge demand for low-cost houses, but development had been going on for high-cost homes only and in the major cities countrywide thereby lagging inclusiveness for the poor and having failed to provide affirmative-based residency for the have nots in these cities — therefor the slums and the katchi abadis.
According to a research conducted by Ansaar Management Company, only 1% of the housing units developed annually cater to 68% of Pakistan’s population, comprising people who earn a maximum monthly income of Rs30,000.
It is also said that 56% of the housing units constructed during a year cater to a market that represents only 12% of Pakistan’s population, who earn above Rs100,000.
Therefore, the need for low-cost housing units is greater than ever before and increasing yearly.
While official estimates put the shortage at 12 million units, which increases every year, funds required to finance the gap are a whopping $180 billion – almost half the size of Pakistan’s economy. It assumes Rs2.1 million for each low-cost housing unit. However, PTI’s initiative presupposes land to be owned and provided by the government with units built on them made available on easy-to-pay mortgage or fully paid by residents. That brings down the cost tremendously and makes the unit really affordable.
The key to success is however not to burden it with bureaucratic vicissitudes, establish legal and institutional frameworks, facilitate formation of consumer and business credit industry, mortgage industry and a transparent corruption-free ecosystem. For this to happen a quantum shift in the way we do business and conduct ourselves are required. More than the race for dollars and cents, it’s a matter of how we can jump start and sustain the goodies with sense and sensibility.
(The author is a business and construction consultant, analyst, and Editor-in-Chief of PKonweb, DesPardes and BE2C2 Report)
Money Whitening Scheme on Property Purchases Documents Black Money Worth $1.9 Billion
SEP 25, 2018: A money whitening scheme allowed on property purchase has documented black moneyRead More
Saudi Arabia to Become Partner in CPEC, PM Imran Offers Same to UAE
SEP 20, 2018 (BE2C2): Minister for Information and Broadcasting Chaudhry Fawad Hussain on Thursday saidRead More