October 26, 2003	Sunday	Sha’aban 29, 1424

KARACHI, Oct 25: No significant headway is being made in the construction industry even when as many as 14 financial institutions are reported to be offering housing loans on easy terms.

All big nationalized banks, privatized banks, private banks, foreign banks and House Building Finance Corporation (HBFC) are offering housing construction, housing purchase, housing renovation and expansion loans with maturity period of 20 years. Maximum limit of the loan being offered is Rs7.5 million in most cases and average rate of return ranges between seven and nine per cent.

A few foreign and private banks have been in the housing finance for the last several years but their operations are limited to their clients only.

HBFC too came out with “Shandar Ghar” and “Aasan Ghar” schemes. Its website informs disbursement of Rs1 billion with no further information. The Corporation was desperately looking for funds from the market and financial sources report HBFC has picked up a loan of Rs300 million on 3.6 per cent from a local financial institution.

Finance Minister Shaukat Aziz in one of the presentations advised the Corporation to clean its balance sheet. Efforts made to obtain information of HBFC operations from its chief executive proved futile. He promised to fax all the relevant details but he never did. Telephonic reminders too failed to get any response.

Finance Minister Shaukat Aziz in his budget speech in June had announced the abolition of central excise duty on cables and wires, 25 per cent reduction in excise on cement and a host of other measures to give a boost to the construction business because “it stimulates 140 other industries”.

Radical changes were proposed in the regulatory environment to encourage housing finance. Measures, including tax incentives, relaxation in debt equity ratio, increase in per party limits, enhancement in loan repayment period, increase in lending limits and refinement in foreclosure laws were proposed.

HBFC was instructed to provide housing loans to government employees. Steps were to be taken to rationalize stamp duties and encourage proper documentation.

Two committees are reported to be operating to streamline the construction business in the country. One committee or advisory group is operating at the State Bank of Pakistan, which meets virtually every month. This group now plans to hold next meeting on November 5. The other committee works under the