Builders, developers upbeat after PM’s incentive package

Say private sector is being encouraged and bureaucracy curbed.

KARACHI: The prime minister’s incentive package offers everything positive for the housing and construction industry as it is among the four sectors where the government strives to attract hefty investments by giving scores of concessions.

“This is for the first time in decades that a government has come up with such incentives for the housing and construction industry,” Association of Builders and Developers of Pakistan (ABAD) Chairman Mohsin Sheikhani told The Express Tribune.

ABAD, with its head office in Karachi, is an association of over 700 builders and developers working in the country.

On Friday last week, the prime minister announced that no limit has been fixed for investment in green field industrial and expansion projects that also include captive power plants, low-cost housing, livestock and mining projects provided they are set up on or after January 1, 2014.



The incentive package has set minimum investment limit of Rs10 million to a maximum of Rs50 billion for most sectors where the government would not ask about the investor’s source of income but housing is among those where the limit has been scrapped.

Leading builders and developers say inclusion of low-cost housing schemes among top priority areas shows how much the government is keen to prop up the housing and construction industry.

“What is different in this package is that this time the private sector is being encouraged to do everything and the role of bureaucracy is restricted,” said the ABAD chairman. “This is why we are very much hopeful this time.”

Referring to the tax incentives that are part of the package, the builders and developers say this is one of the best policies as it will minimise corruption and make housing projects viable.

On its part, the government is also working on some schemes to build 500,000 houses in the next five years.

ABAD representatives are of the view that their members can assist the government in building most of these houses as they have large pieces of land for such projects. However, for that they need state support so that they can bring the most economical housing schemes for the middle and lower middle classes.

What analysts say

For economic experts, the move to give priority to housing and construction – one of the labour-intensive industries – is welcome.

“Construction activities in big cities have increased in the last few months. We know there is demand. But to fully realise the strength of the housing industry, the government needs to stabilise economic indicators like a stable rupee and large foreign exchange reserves, to win the confidence of investors,” Topline Securities Chief Executive Mohammad Sohail told The Express Tribune.

Analysts and economic experts are also giving importance to the government’s house building plans. For them, there is a huge demand for new houses, especially in large cities, which can only be met when the private sector is offered incentives.

“Recent incentives for the housing and construction industry are important for its growth. Looking at the government plans to build 500,000 new houses, one can safely say these moves will definitely bring more investments into the sector,” JS Global Capital analyst Atif Zafar said.

Published in The Express Tribune, December 3^rd, 2013.

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