Fitch: Pakistan Construction Industry to Grow 8.9% Yearly Over Next 5 Years

Fitch Solutions, a global company focused on credit, economic, and political research, says in its latest report that the China-Pakistan Economic Corridor (CPEC) will drive Pakistan's construction industry in the next decade, as the risks associated with CPEC projects recede. Fitch forecasts that the real annual growth rate of Pakistan's construction industry will average 8.9% over the next 5 years. "We will adjust our forecasts to account for possible positive ripple effects across the economy, including the construction industry, in the event an IMF bailout is secured", the report adds.





Fitch Solutions' report titled "Industry Trend Analysis - CPEC to Remain a Primary Driver of Pakistan's Construction Industry" says: "We expect debt concerns surrounding CPEC projects to ease after financial details are released. In addition, we believe political risks associated with CPEC projects have diminished since the 2018 Pakistani general election. These factors will reduce overall risk profile of CPEC projects."

The Fitch report acknowledges the completion of eleven CPEC projects termed "early harvest". It says that despite major media and political scrutiny regarding CPEC, this progress on projects highlights Beijing’s improving track record in project execution and its commitment to infrastructure development in Pakistan. As a result of CPEC progress, a total of 3,240MW of capacity has been added to the country’s national grid, constituting over 11% of total installed capacity in Pakistan. Also highlighted in the report is the 392 kilometer Multan to Sukkur section of the Peshawar-Karachi motorway, a key CPEC project which is over 80% complete and is slated to finish by August this year.

Fitch believes political risks associated with CPEC projects have diminished. "Previously, we noted that the transition in power from Pakistan Muslim League (Nawaz) to Pakistan Tehreek-e-Insaf (PTI) posed a downside risk to the Pakistani construction industry as new Prime Minister Imran Khan pledged to review Chinese-backed projects, which could potentially have led to project delays and cancellations. However, the political situation in Pakistan has since stabilized and Prime Minister Imran Khan has demonstrated willingness to cooperate with China on multiple issues including CPEC. As such, we are in the view that downside risks stemming from political uncertainty are diminishing, and bilateral projects spearheaded by CPEC, will receive a boost in terms of policy implementation and project continuity," maintained the report.

In another recent report, Fitch's competitor Moody's has acknowledged that rermittances from Pakistan diaspora rose by 10% year on year to $10.71 billion in the first half of fiscal 2019, while goods imports slowed sharply to around 3% year on year as non-energy imports contracted.

Moody's expects "the current-account deficit to narrow to 4.7% of GDP in fiscal 2019 and to 4.2% in fiscal 2020 from 6.1% in fiscal 2018, it will remain sizable and wider than in 2013-16, driving Pakistan’s external financing needs. The government has secured $12 billion in financing from Saudi Arabia and the United Arab Emirates – in each case amounting to $6 billion and divided equally between deposits and deferred oil payments – which is likely to largely cover the country’s net financing needs for fiscal 2019".

Construction industry is a major driver of economies. The sector creates new jobs, builds housing and infrastructure, drives economic growth, and provides solutions to address social, climate and energy challenges, according to the World Economic Forum. The construction industry has important linkages with other sectors such as cement, steel, energy, furniture, household appliances, etc.  The construction industry's impact on GDP and economic development goes well beyond the direct contribution of construction activities.

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Comments

Riaz Haq said…
For the critics of CPEC projcts' hiring practices, here's a Washington Post story of what Chinese workers have done in India:

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/23/AR2010102303956.html


Clad in blue overalls, 1,600 Chinese supervisors, technicians and other laborers work at the 2,000-acre site. The $1.7 billion factory, which also relies on Chinese technology, employs 5,000 Indian workers.

Skilled Chinese workers are helping India expand its infrastructure at a frenetic pace, even as the two Asian giants compete for economic dominance.

Their presence in a nation of more than a billion people with staggering unemployment may appear incongruent. But the government says Indian workers lack the technical skilled needed to transform the country into a 21st-century economic powerhouse.

Until the gap is bridged, companies are relying on the expertise of Chinese workers to build mega infrastructure projects. Chinese workers have worked on ports, highways, power and steel plants in India. Chinese equipment and expertise have also been used in a crude oil refinery, a cable-supported bridge, the telecommunication networks and even the glass facade of the new airport terminal in New Delhi.

"India may be an IT superpower and producing thousands of doctors, lawyers and MBAs every year. But the biggest gap is in the availability of skilled electricians, carpenters, welders, mechanics and masons who can build mega infrastructure projects," said Raghav Gupta, president at Technopak, a consultancy that released a report on skill development last year. "Most of these workers have to be trained on the job. And that often delays the projects and makes it more expensive."

As the center of economic gravity shifts from the Atlantic to the Indian Ocean, analysts say, the world's two fastest growing economies will transfer even more technology and skills.

Fears of displacement

The Chinese workers in labor-surplus India prompted an outcry last year, and India clamped down by making visa rules stricter. About 25,000 workers had to leave dozens of projects midway and return to China because they were on business visas and not worker visas. Construction at 14 power plants was affected.

"We have no problems if . . . Chinese workers skilled in specialized functions come to India. We just don't want them to displace Indian workers by doing the jobs that Indians can do," said G. K. Pillai, India's home secretary, who said there are a little over 15,000 Chinese laborers in India now.

Diplomatic relations between the two nations, who have fought a war and have lingering territorial disputes, have remained testy. In recent years, Indian officials have expressed concerns about China's close ties with Pakistan, India's arch rival.

------------
The Chinese live in a row of air-conditioned pre-fab rooms and have Chinese cooks. Some say they find the Indian heat unbearable; others complain that the Internet speed is too slow for streaming Chinese movies. Sometimes, they go into the villages for an under-the-tree haircut or for the locally brewed toddy.
Riaz Haq said…
JPMorgan, CLSA vie for $2 billion #Pakistan #power sale of National Power Parks Management Co., state-owned firm that owns and runs #LNG-fired 1,230-megawatt Haveli Bahadur Shah plant and the 1,223-megawatt Balloki plant. #Privatization https://www.bloomberg.com/news/articles/2019-02-14/jpmorgan-clsa-said-to-vie-for-2-billion-pakistan-power-sale via @technology

JPMorgan Chase & Co., CLSA and Credit Suisse Group AG are among foreign banks pitching for a role on Pakistan’s biggest privatization in over a decade, which could raise around $2 billion, people with knowledge of the matter said.

The government’s sale of two LNG-fired power plants could draw interest from Chinese and Middle Eastern investors, one of the people said, asking not to be identified because the information is private. Pakistan received about 10 bids from groups seeking a financial advisory role and expects to pick banks by the end of March, another person said.




Citigroup Inc. and Standard Chartered Plc made their own separate proposals, while Lazard Ltd. is pitching with Pakistani brokerage Next Capital Ltd., the people said.

Prime Minister Imran Khan is pursuing a divestment that would rank as one of the biggest-ever mergers and acquisitions in Pakistan, as he seeks to bridge a financing gap of more than $12 billion and avoid a balance-of-payments crisis. The nation has secured loans from Saudi Arabia and the United Arab Emirates and is close to a loan agreement with the International Monetary Fund.

Privatization Push
Pakistan is selling National Power Parks Management Co., the state-owned firm that owns and runs the 1,230-megawatt Haveli Bahadur Shah plant and the 1,223-megawatt Balloki plant. Both plants started operations in the past two years. The government has said it aims to complete the privatization of the power assets in the financial year ending June 30.


The sale would rank as Pakistan’s largest privatization since 2006, when Emirates Telecommunications Group Co. bought a $2.6 billion stake in Pakistan Telecommunication Co. in the country’s biggest-ever M&A transaction, data compiled by Bloomberg show. The power plant divestment is set to become Pakistan’s largest privatization in the energy sector, according to government figures dating back to 1991.

Pak Brunei Investment Co. is also pitching for a role on the power plant divestments in a group with Zeeruk International Pvt, the people said. BMA Capital Management Ltd. and CPCS Transcom Ltd. have submitted a joint proposal, according to Salman Virani, head of investment banking at BMA Capital.

Habib Bank Ltd. and China International Capital Corp. are partnering with JPMorgan, a representative for Habib Bank said in response to Bloomberg queries. CLSA submitted a joint proposal with Bank Alfalah Ltd. and their local brokerage venture, while Credit Suisse is pitching together with Pakistan’s Elixir Securities Ltd., the people said.

A representative for the Pakistan’s Privatisation Commission said the government has no comment. Representatives for CICC, Citigroup, CLSA, Credit Suisse, JPMorgan, Standard Chartered, Elixir Securities and Next Capital also declined to comment. Representatives for Lazard, Bank Alfalah, Pak Brunei and Zeeruk didn’t immediately respond to queries.
Riaz Haq said…
#China Giving #Pakistan $3.5 Billion in #Loans, #Grants. #Beijing will soon deposit $2.5 billion in the State Bank of Pakistan (SBP), raising to $4.5 billion the total amount in commercial loans China has given Pakistan this fiscal year. #CPEC https://www.voanews.com/a/china-giving-billions-to-pakistan-in-loans-grants/4788478.html

Officials say the Chinese government has also promised a grant of $1 billion for education, health, vocational training, drinking water and poverty alleviation projects over the next three years.

Minister for Planning, Development and Reform Makhdum Khusro Bakhtyar said Chinese experts are due to arrive in Islamabad later this month to coordinate socio-economic development under the promised grant.

Pakistan's foreign currency exchange remains under severe pressure, despite receiving around $2 billion from China and $4 billion from Saudi Arabia and the United Arab Emirates in commercial loan deposits.

SBP reserves stood at $8.2 billion last week, barely enough to cover two months' worth of imports.

China's CPEC

In the last six years, China has made significant financial contributions to direct investment, soft loans and commercial deposits to help its close ally, Pakistan, overcome severe economic challenges.

Under its Belt and Road Initiative, Beijing has invested $19 billion in Pakistan to build and improve road infrastructure and power plants and opened the strategic Arabian Sea port of Gwadar. Beijing has also given Islamabad concessional loans for some projects under what is known as the China-Pakistan Economic Corridor (CPEC).

The cooperation deal has created more than 70,000 jobs for Pakistanis and quickly resolved the country's chronic energy crisis. But investments from China had stopped because all major projects under CPEC will be complete by the end of this year.

Chinese and Pakistani officials say preparations are under way to launch the next phase of CPEC in coming weeks to construct nine special economic zones across Pakistan.

Beijing plans to relocate some of its industries by transferring technology to the new industrial zones to help Islamabad increase its exports to overcome its massive trade deficit and shore up cash reserves.

CPEC has "changed the image of Pakistan" and encouraged other countries to invest in the country, notes veteran opposition Senator Mushahid Hussain, who chairs the foreign affairs committee of the upper house of parliament. He praised China for being the only country to bring unprecedented, massive investments to Pakistan five years ago when other nations were reluctant to do so due to terrorism-related security concerns and political considerations.
Riaz Haq said…
#Malaysian Leader in #Pakistan to Sign $900M #Investment deals in #informationtechnology and #telecom sectors. . #MahathirMohamad will also be the chief guest at the #PakistanDayParade. #technology https://www.voanews.com/a/malaysian-leader-in-pakistan-to-sign-900m-in-investment-deals-/4841609.html

Malaysian Prime Minister Mahathir Mohamad arrived Thursday in Pakistan on an official three-day visit, where his high-powered delegation is expected to finalize investment deals worth nearly $900 million, officials said.

The Malaysian leader will also be the chief guest at the Pakistan Day military parade Saturday, the Foreign Ministry announced.

Pakistani Prime Minister Imran Khan's adviser on commerce told reporters that business leaders accompanying Mahathir would sign three memorandums of understanding on Friday covering up to $900 million worth of investments in information technology and telecom sectors.

The adviser, Razak Dawood, said the deals with Malaysia would also provide Pakistan a new opening toward membership in the Association of South East Asian Nations. He said Malaysian businessmen had also indicated they would like to invest in other sectors, including energy and textiles, to help Pakistan improve its exports.

Officials said that Malaysia's Proton carmaker signed an agreement late last year with a Pakistani partner to set up an assembly plant in the southern city of Karachi that would be its first facility in South Asia. Khan and his Malaysian counterpart are expected to officiate at a symbolic groundbreaking of the Proton plant Friday.

Looking for investors

Since taking office last August, Khan has approached nations that have warm relations with Pakistan, including China, Saudi Arabia, the United Arab Emirates, Qatar and Malaysia, to bring investment and financial deposits to help reduce a widening current account deficit and shore up foreign reserves.

Riyadh and Abu Dhabi have deposited or are in the process of depositing $6 billion in loans in recent months. The two countries have also agreed to allow Islamabad to import oil on deferred payments. China is expected to deposit more than $2 billion in the next few days.

Beijing has invested more than $19 billion over the past six years in energy and infrastructure projects under what is known as the China-Pakistan Economic Corridor, as part of its global Belt and Road Initiative.

Last month, Saudi Crown Prince Mohammad bin Salman visited Islamabad and signed investment agreements worth $20 billion, including a $10 billion refinery and petrochemicals complex in the southwestern port city of Gwadar.

Pakistani officials say they are also close to securing a deal with the International Monetary Fund for a bailout package reportedly of up to $12 billion.

Riaz Haq said…
#Lahore-Abdul Hakeem (near #Multan) Motorway (4-lane 230 Km M3) opens for general public . #Sukkur-Multan Motorway ( 6-lane 395 Km M5) to be operational by August 2019. #Pakistan #Motorways

https://www.pakwheels.com/blog/lahore-abdul-hakeem-motorway-opens-for-general-public/

The Government of Pakistan has finally opened Lahore-Abdul Hakeem Motorway for the general public from 1st April 2019. It was inaugurated by Governor Punjab, Chaudhry Sarwar on 31st March 2019. This new section of the motorway will reduce travel distance between Multan and Lahore making life easy for the commuters.

Note here that the total cost of this M3 section is around PKR 149 billion. It’s a six-lane motorway with eight interchanges over 40 bridges, 60 underpasses, three service stations, etc. The assigned speed at the newly opened motorway is 120 Km/h. It is also being termed as model motorway as Intelligent Transport System (ITS) has been installed on this new section.

It will ensure smooth traffic flow on the motorway, moreover, will handle all the emergencies occurring on the motorway. LED screens have been placed throughout the section, additionally, weigh system, and electronic toll collection has been introduced. Cameras have been deployed for monitoring vehicles.

Previous:

The Government of Pakistan has decided to open Abdul Hakeem-Lahore Motorway (M3) on 31-3-2019.

According to the details, the total length of the motorway is 230 kilometers which will cut down your commute time by two hours from Abdul Hakeem to Lahore and vice versa. PakWheels contacted an official of Motorway, and he confirmed that the Lahore-Abdul Hakeem motorway section would open for vehicles on 31 March 2019. Previously, it was scheduled to open in January; however, due to unknown reasons, it was delayed.

This project was started back in 2015 and was officially inaugurated by previous Prime Minister Shahid Khaqan Abbasi in 2018. According to a security analyst, this particular project is significant keeping in view the objectives of the China-Pakistan Economic Corridor (CPEC).

Read Also: 12 Driving tips to keep you safe on the motorway during fog

Moreover, an official of the National Highway Authority (NHA) while speaking to the local media said that with the completion of over 70 percent of the total work, Sukkur-Multan Motorway (M5) would get operational by August 2019. This 392 km long project started back in August 2016. When completed, this project will be a huge step towards developing a stronger Pakistani economy keeping in line with CPEC goals.
Riaz Haq said…
China’s CPEC Is Leading To Hot Real Estate In Pakistan’s Special Economic Zones

https://www.valuewalk.com/2019/07/pakistan-special-economic-zones/

According to Beijing, the provision of such extraordinary facilities aim to provide these countries; including Kazakhstan, Ethiopia, Armenia, Siri Lanka, Jamaica, Nigeria, Sudan, Malaysia, and Pakistan (which occupies the center stage for CPEC’s execution), with a coherent and productive real estate, energy, agricultural, and business infrastructure.

With massive infrastructural developments underway, the economic corridor project has already supplemented real estate demand in Pakistan. And investors in the country foresee a continual expansion of road and rail network, development of special economic zones, as well as power projects under the CPEC umbrella.

Similarly, real estate agents have become more optimistic about the speculative value of land in Gwadar and other parts of the country. Moreover, numerous local property portals have recorded an increase in property demand across the country in recent years – a trend which serves to highlight the positive impact of the CPEC initiative on Pakistan’s property market.

Facilitating the creation of an efficient infrastructure

Both the countries have pledged to pursue multiple energy and infrastructure projects on a joint venture basis. To help solve the energy crisis in Pakistan, China is working on 21 power plants and hydropower projects, some of which include:

1,320MW fuel power plant in Rahim Yar Khan, Punjab
1,320MW coal-fired power plant in Hub, Balochistan
2x660MW coal-fired power plant in Sahiwal, Punjab
2x660MW coal-fired power plant at Port Qasim in Karachi, Sindh
Kohala Hydel Project in Kohala, Azad Jammu & Kashmir
Suki Kinari Hydropower Station in Naran, Khyber Pakhtunkhwa
Moreover, China is becoming increasingly involved in the construction of a state-of-the-art network of roads in Pakistan to facilitate the good transport activities. Many of these projects were recently completed and inaugurated, including:

Karakoram Highway Phase II
Peshawar-Karachi Motorway
Expansion and restoration of Pakistan Railways’ Mainline-1
Upgradation of Dera Ismail Khan–Zhob Road
Quetta Mass Transit
Greater Peshawar Region Mass Transit
Karachi Circular Railway
Orange Line Metro Train - Lahore
Similarly, the projects planned exclusively for Gwadar include:

New Gwadar International Airport
Free Zones
Gwadar East-Bay Expressway
Gwadar University
Pak-China Friendship Hospital
Technical and vocational institutes
While the plans on development of special economic zones in the country are also extensive:

Special Economic Zone in Mirpur, Azad Jammu & Kashmir
Marble City in Mohmand, Khyber Pakhtunkhwa
Special Economic Zone in Moqpondass, Gilgit-Baltistan
ICT Model Industrial Zone, Islamabad
Allama Iqbal Industrial City in Faisalabad, Punjab
China Special Economic Zone in Dhabeji, Sindh
Rashakai Economic Zone in Nowshera, Khyber Pakhtunkhwa
By providing an efficient infrastructure, China aims to create an enabling environment for global trade connectivity. But, these ambitious plans have also invited scepticism from several countries, with the US particularly critical of Beijing’s ‘debt diplomacy’.

As per a BBC report, China has repeatedly tried to address the concerns and criticism surrounding its OBOR project; saying that the sweeping infrastructure initiative doesn’t contain an agenda for geostrategic supremacy; rather it focuses on efforts to develop a global community with a shared future for mankind.
Riaz Haq said…
#Pakistan #cement sales go up by 2.56pc in first quarter of FY 2019-20. In September, total dispatches increased by 11.51 percent to 4.270 million tons. Domestic sales increased to 9.116m tons from 9.063m tons while #exports grew by 12.54pc to 2.017m tons https://nation.com.pk/20-Oct-2019/cement-dispatches-go-up-by-2-56pc-in-first-quarter

Pakistan’s total cement dispatches during first quarter of the fiscal year went up by 2.56 percent to 11.133 million tons. Out of total sales, local dispatches increased to 9.116m tons from 9.063m tons while exports grew by 12.54pc to 2.017m tons from 1.792m in the last fiscal year. In September, total dispatches increased by 11.51 percent to 4.270 million tons compared to the corresponding period last year. During the month, domestic consumption reached 3.472m tons from 3.114 million tons during the same month last year. Exports rose to 0.798 million tons last month as compared to 0.715 million tons in September 2018. Local consumption in the northern region during the month under review swelled by 22.4pc to 3.027m tons from 2.47 million tons in September 2018. The southern region witnessed 30.48pc drop in dispatches to 0.446m tons from 0.64 million tons in September 2018. Industry experts said the lopsided consumption pattern has benefited plants located in the northern region while those operating in the south have entered the red zone in view of over 32 percent drop in uptake during the first quarter of this fiscal year. They said the country has the potential to produce about 60 million tons of cement per year. Recently, a cement company has closed its old plant, which had production capacity of 3,150 tons per day. The government has given tax benefits on the introduction of new technology in cement plants. At present, the interest rate in Pakistan is so high that no one is considering starting a new business.
Riaz Haq said…
PM #ImranKhan: PROMOTING #CONSTRUCTION WILL BOOST #PAKISTAN’S #ECONOMY. INDUSTRIES LINKED TO CONSTRUCTION WILL PROSPER AND RESULT IN GREATER #JOB OPPORTUNITIES. Rs. 25 billion allocated for Pakistan #Housing Authority #cement #steel #transport #engineering https://www.newsweekpakistan.com/promoting-construction-sector-will-boost-pakistans-economy-p-m-khan/

Chairing a meeting about the construction sector in Islamabad, Khan designated its promotion yet another “topmost” priority of his government—he has already designated tourism, children’s rights, eradication of polio, and corruption, among others, ‘topmost’ priorities—adding that this would boost 40 linked industries and spur job creation. Khan said he was aware that people were experiencing financial difficulties due to rampant inflation, but said the government was making efforts to offset this by accelerating economic and business activities.

The prime minister said the government had decided, in principle, to accord the construction sector with the status of ‘industry,’ claiming this would increase the facilities available to it. He also directed the Competitive Commission of Pakistan to take measures to halt the creation of cartels that set unrealistic prices of raw materials related to the construction industry.

Adviser to the P.M. on Finance Abdul Hafeez Shaikh informed Khan during the meeting that sufficient progress had been made to address problems of the construction sector following meetings with the Association of Builders and Developers (ABAD) and other stakeholders. Shaikh said the government had also, as a first phase, allocated Rs. 25 billion for the Pakistan Housing Authority to promote the construction sector even further.

The meeting was also informed that consensus had been achieved on the future policy regarding fixed income tax for industries. In light of P.M. Khan’s desire to see a vertical growth in Pakistan’s cities, the meeting also reaffirmed that a policy on construction of high-rise buildings had been formulated and endorsed by the federal cabinet. Regarding the valuation of immovable properties, officials said the Federal Board of Revenue would appoint a regional valuation committee next week that would include the expertise of ABAD and the real estate sector.

The prime minister also directed the adviser on finance to request the superior judiciary to constitute a special bench for quick disposal of pending cases regarding real estate and construction sectors. He endorsed a proposal to promote a compliance regime instead of the existing No Objection Certificate system.

Discussing a proposal concerning the provision of state land for construction purposes, Khan declared it an important part of the government’s policy to utilize government property for construction projects targeting the low-income sector. He also agreed with a proposal to include the representatives of ABAD in regulatory bodies related to construction.

In addition to the prime minister and finance adviser, the meeting was also attended by Naya Pakistan Housing Authority Chairman Anwar Ali Haider; a representative of the Association of Builders and Developers, and other senior officials.
Riaz Haq said…
PM #ImranKhan announces incentives for #construction sector in #Pakistan: Rs 30 billion cash subsidies, no questions on #investment money source, lower #taxes, create jobs amid #coronavirus #lockdown. #NayaPakistan #housing #cement #steel #economy https://www.dawn.com/news/1546154/pm-imran-announces-incentives-for-construction-sector-elevates-it-to-industry

All the people investing in the construction sector this year will not be questioned about their source of income.

The tax rate will be fixed for the construction sector, and constructors will be charged tax per square foot or square yard.

People carrying out construction in the Naya Pakistan Housing Scheme for the poor will only have to pay 10 per cent of the fixed tax.

Withholding tax will be waived off for all construction sectors except the formal sectors of steel and cement.

Sales tax will be reduced in coordination with provinces.

Any family selling their house will not have to pay any capital gains tax.

A subsidy of Rs30 billion to be given for the Naya Pakistan Housing Scheme.

Construction sector to be given the status of an industry.

Construction Industry Development Board to be set up to support the sector.
Riaz Haq said…
Pakistan is facing a shortfall of ten (10) million housing units growing at a rate of 0.35 million per year.

https://www.tabadlab.com/wp-content/uploads/2019/05/Tabadlab_Mortgage-Design-Low-Cost-Housing_Working-Paper-02.pdf


The
government has announced the Naya Pakistan Housing Program (NPHP) to facilitate the construction of
five (5) million units. To assist buyers with home ownership, the State Bank of Pakistan (SBP) has relaxed
the prudential regulations that govern lending in the housing sector. The SBP policy allows for low-income
households to purchase housing units against a self-amortizing fixed rate mortgage (FRM) for a period of
12.5 years. Khalil and Nadeem (2019b) have shown that announced prices for housing units under NPHP
(Phase I), and the prevailing income levels amongst the low-income target segments, the SBP policy is not
likely to achieve its objectives.
This paper reviews international literature analyzing various mortgage designs, followed by an overview of
two options that may provide the optimum model of mortgages for low-cost units in Pakistan. A proposal for
a low-cost housing finance scheme, in light of local characteristics, is then presented along with a
framework for managing and measuring the scheme.
Instead of encouraging self-liquidating fixed rate mortgages for low-cost housing units (as recommended by
the SBP policy), the government should provide outside equity in the form of shared equity mortgages
(SEMs) to assist prospective buyers to become home owners. The joint equity in this proposed path forward
will maximize initial down payment and thus reduce the amount to be financed by banks. This will limit the
debt incidence for the borrower. Studies show that such mortgage structures increase affordability, and limit
the losses of borrowers, as well as losses to the wider economy under recessionary conditions. Additionally,
based on practices in developed mortgage markets, the amortization period of the mortgage should be
doubled from 12.5 years to 25 years. The paper concludes with a discussion on implementation modalities
and discussion points pertaining to the proposals presented.


Riaz Haq said…
Homeownership is the Top Contributor to Household Wealth

http://www.mortgagenewsdaily.com/08282019_homeownership.asp



In 2015, 37 percent of households did not own a home and 47.1 percent did not have a retirement account.  For those who had both, the home equity and savings accounted for 62.9 percent of the household's net worth. Equity provided 34.1 percent and retirement accounts made up 28.8 percent

From there, the percentage of assets contributing to wealth drops off sharply. The third and fourth categories, stocks/mutual funds and bank accounts made up about 8.5 percent each.  Some of the most commonly held assets made up only a small portion of wealth, for example, 91 percent of households hold those fourth-ranked bank accounts while the largest contributor to wealth, home ownership was the third most commonly held asset. While the median amount of home equity was $95,800, the median value of assets at financial institutions was $4,600.

There were significant differences in worth within categories of age, gender, race, education, and employment. Having health insurance also appears to be a factor although it would be a result rather than a cause.

Unmarried female householders between the ages of 35 and 54 had a median wealth of $14,860.  That was 39.5 percent of the median wealth held by unmarried males of the same age.  That difference, however, disappeared in the 55- to 64-year old group; both unmarried women and their male counterparts had grown their net worth to about $60,000.

Non-Hispanic white and Asian householders had more household wealth by far than black and Hispanic householders.  Non-Hispanic whites had a median household wealth of $139,300 and Asians $156,300 compared with $12,780 for black and $19,990 for Hispanic householders.

Households in which the most educated member held a bachelor's degree had a median wealth of $163,700, compared with $38,900 for households where the most educated member had a high school diploma.

Not surprisingly, those households in which at least one person had a full-time job for the entire year had a higher net worth ($101,000) than those where all members had a part-time job ($61,690) or were unemployed ($22,100). Households in which people were without health insurance all or part of the year had dramatically lower median wealth: $16,860, compared with $114,000 for households in which all members had health insurance for the entire year.
Riaz Haq said…
#imrankhanPTI: over 70,000 #housing projects worth Rs1.4 trillion have been approved, which will have an overall impact of Rs 7.3 trillion on the #construction industry, and 1.2 million new #jobs will be created. #Pakistan #NayaPakistan https://www.brecorder.com/news/40153680

Prime Minister Imran Khan said that over 70,000 housing projects worth Rs1.4 trillion have been approved, which will have an overall impact of Rs7.3 trillion on the construction industry, and 1.2 million new jobs will be created.

“It is our government’s huge achievement that out of the total 80,000 applications, 35,420 applications amounting to Rs130 billion have been approved. A total of Rs46 billion has been disbursed to 13,407 applicants so far,” he said, while chairing a meeting of the NCC on Housing, Construction and Development, here on Thursday.

He added that applications worth Rs7 billion are being received weekly out of which Rs4 billion are approved and Rs2 billion is being disbursed every week, which shows that the devised system is working efficiently. “PTI’s government has achieved huge milestones regarding provision of low-cost housing to lower and middle-income class,” he added. He further said the government’s biggest challenge was to change the elitist mindset of financial institutions and ensure facilitation of common people in getting loans.

Average loan worth 36 lakhs in the approved and disbursed loans figure shows that the biggest beneficiary of subsidized loans is the middle- and lower-income class, he said.

In the last three years of the government, a 148 percent increase in housing finance and expected approval of Rs517 billion till December 2022, reflects the steps taken by the government to facilitate low-cost housing and construction industry, he added.

Housing Finance: Growth, but!

The prime minister said that in line with the manifesto of the PTI, the government is moving in the direction to add one percent every year in the housing finance against our GDP that will result in a construction boom and provision of houses to the lower and middle income class.

The meeting was briefed that for the very first time in the history of Pakistan, a sustainable ecosystem for low-cost housing has been developed and implemented, which has enabled the sector to achieve exponential growth.

The Foreclosure Law has been implemented in letter and spirit and long-term loans (up to 20 years) with subsidized mark-up (as low as only two percent) are being given. In addition to that a cost subsidy of Rs300,000 for low-income housing schemes and 90 percent tax waiver has resulted in encouraging the private sector, which is actively participating in the construction of housing units under the schemes.

The projects include urban, peri-urban, urban regeneration, government-funded and private sector projects.

The meeting was also briefed about the transparent and automated process to receive and process the applications, which has resulted in targeting the needful lower and middle-income class.

This is being ensured by the development of one-window digital portal with automated application tracking system by development authorities.

The meeting was also briefed on figures regarding the total low-cost housing construction activity so far after 2018. A total of 161,924 low-cost housing units were approved, out of which 45,191 units are under construction and 20,898 units have been completed, which is significant, bearing in mind that before the subsidies by the government, foreclosure law and low-cost housing schemes by the PTI’s government, the sector was in a shambles.

A break-up of the government financed low-cost housing projects was also given according to which 4,000 units in Farash Town, 4,000 units in LDA City, 1,320 units in Jalozai, 245 units in Raiwind, 324 units in Sargodha and Chiniot, and 1,800 units at Angoori Road are being constructed with completion deadlines before the end of 2022.
Riaz Haq said…
Pakistan allocates Rs800 billion for FY23 PSDP
June 11, 2022

https://pkrevenue.com/pakistan-allocates-rs800-billion-for-fy23-psdp/

The country presented the federal budget 2022/2023, which envisages PSDP worth 800 billion rupees for the next fiscal year.

It has been centered on improvement in sectors such as water resources, transport and communication, energy, higher education, health, science and technology, and balanced regional development.

The emphasis of PSDP is also on revival of CPEC and related projects for inter-provincial and regional connectivity with equal importance to Special Economic Zones to promote trade, industrialization and create job opportunities.

The major thrust in the Information and Communication Technology sector including establishment and operations of Special Technology Zones.

Under the PSDP, the government has allocated 44.179 billion rupees including foreign aid of 1.3 billion rupees to the Higher Education Commission for implementation of 151 development projects.

The allocation indicates an increase of one hundred percent over the last year.

An allocation of over 197 billion rupees has been made for 117 power related projects.

These include hydro power generation projects such as Diamer-Bhasha, Mohmand, Nai Gaj and the fifth extension of Tarbela. Initiatives like developing water storages, automatic telemetry system, rainwater harvesting, decreasing water losses, ground water regulation and management would be undertaken in consultation with the stakeholders.

Over nine billion rupees have been earmarked for Ten Billion Trees Tsunami Programme Phase-I to achieve the target of planting 500 million trees.

Similarly, over 563 million rupees and over 1.2 billion rupees have been allocated for installation of weather surveillance radars at Multan and Sukkur respectively.

The Federal PSDP has also proposed an amount of 1.5 billion rupees to complete the emergent nature of small flood schemes all over Pakistan.

An allocation of 227 billion rupees has been made for strengthening efficiency of transport and logistics for domestic commerce and regional connectivity.

The high impact infrastructure projects to be completed under Public Private Partnership mode include Sukkur-Hyderabad Motorway, Sialkot-Kharian Motorway, Kharian-Rawalpindi Motorway, and Karachi Circular Railway. Under the CPEC, D I Khan-Zhob section is under discussion with the Chinese side for financing and it is expected to be launched in the next financial year.

The concessional financing agreement for landmark ML-1 project is to be finalized in the second quarter of the next fiscal year and subsequently arrangements will be made for groundbreaking of the project.

A comprehensive National Action Plan for agriculture modernization has been prepared in terms of capacity building, agricultural product processing technology extension, fishery science and technology, aquaculture and aquatic products processing.
Riaz Haq said…
CPEC Results According to Wang Wenbin of China

https://twitter.com/bilalgilani/status/1677391745112477696?s=20

Bilal I Gilani
@bilalgilani
CPEC projects are creating 192,000 jobs, generating 6,000MW of power, building 510 km (316 miles) of highways, and expanding the national transmission network by 886 km (550 miles),” Foreign Ministry spokesman Wang Wenbin told reporters in Beijing."


Associated Press of Pakistan: On July 5, Prime Minister Shahbaz Sharif while addressing a ceremony to mark a decade of signing of the China-Pakistan Economic Corridor (CPEC), said that CPEC has been playing a key role in transforming Pakistan’s economic landscape. He also said that the mega project helped Pakistan progress in the region and beyond. What is your response?

Wang Wenbin: The China-Pakistan Economic Corridor (CPEC) is a signature project of China-Pakistan cooperation in the new era, and an important project under the Belt and Road Initiative. This year marks the 10th anniversary of the launch of CPEC. After ten years of development, a “1+4” cooperation layout has been formed, with the CPEC at the center and Gwadar Port, transport infrastructure, energy and industrial cooperation being the four key areas. Projects under CPEC are flourishing all across Pakistan, attracting USD 25.4 billion of direct investment, creating 192,000 jobs, producing 6,000 megawatts of electric power, building 510 kilometers of highways and adding 886 kilometers to the core national transmission network. CPEC has made tangible contribution to the national development of Pakistan and connectivity in the region. China and Pakistan have also explored new areas for cooperation under the framework of CPEC, creating new highlights in cooperation on agriculture, science and technology, telecommunication and people’s wellbeing.

China stands ready to work with Pakistan to build on the past achievements and follow the guidance of the important common understandings between the leaders of the two countries on promoting high-quality development of CPEC to boost the development of China and Pakistan and the region and bring more benefits to the people of all countries.

https://www.fmprc.gov.cn/eng/xwfw_665399/s2510_665401/2511_665403/202307/t20230706_11109401.html
Riaz Haq said…
The mega undertaking (China-Pakistan Economic Corridor or CPEC) has created nearly 200,000 direct local jobs, built more than 1,400 kilometers (870 miles) of highways and roads, and added 8,000 megawatts of electricity to the national grid, ending years of blackouts caused by power outages in the country of 230 million people.


https://www.voanews.com/a/top-china-official-visits-pakistan-marking-cpec-milestone/7204256.html


Chinese Foreign Ministry spokesman Wang Wenbin told reporters in Beijing earlier this month that CPEC projects "are flourishing all across Pakistan," making a "tangible contribution" to the national development of the country and to regional connectivity.

But critics say many projects have suffered delays, including several much-touted industrial zones that were supposed to help Pakistan enhance its exports to earn much-needed foreign exchange.

The country's declining dollar reserves have prevented Islamabad from paying Chinese power producers, leading to strains in many ties.

Pakistan owes more than $1.26 billion (350 billion rupees) to Chinese power plants. The amount keeps growing, and China has been reluctant to defer or restructure the payment and CPEC debts. All the Chinese loans – both government and commercial banks – makeup nearly 30% of Islamabad's external debt.

Some critics blame CPEC investments for contributing to Pakistan's economic troubles. The government fended off the risk of an imminent default by securing a short-term $3 billion International Monetary Fund bailout agreement this month.

Security threats to its citizens and interests in Pakistan have also been a cause of concern for China. Militant attacks have killed several Chinese nationals in recent years, prompting Beijing to press Islamabad to ensure security measures for CPEC projects.

Diplomatic sources told VOA that China has lately directed its diplomats and citizens working on CPEC programs to strictly limit their movements and avoid visiting certain Pakistani cities for security reasons.

"They [Chinese] believe this security issue is becoming an impediment in taking CPEC forward," Senator Mushahid Hussain, the chairman of the defense committee of the upper house of the Pakistani parliament, told VOA in an interview earlier this month.

"Recurring expressions of concern about the safety and security of Chinese citizens and investors in Pakistan by top Chinese leaders indicate that Pakistan's promises of 'foolproof security' for Chinese working in Pakistan have yet to be fulfilled," said Hussain, who represents Prime Minister Shehbaz Sharif's ruling party in the Senate.

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