WITH everyone looking towards the government to do something to trigger business growth, the policymakers have come up with an idea which is nothing new and would in fact stall growth further in the only sector where business potential is available in Pakistan, ie the real estate sector.
We lag too far behind the world in technology infrastructure to cover the gap in manufacturing or industrialisation in the near future. Real estate development is one area which can stir economic activity but the government has come up with a plan to make sure we lag behind there as well.
The formation of the Real Estate Regulatory Authority (Rera) has been recently approved by the cabinet. As per the initial details of Rera’s powers, it is proposed that private real estate developers would not be able to sell plots, advertise their projects and start development work unless they have a clean chit from Rera. One wonders how it would be different from various development authorities which are already there and are known for promoting a culture of taking bribes.
This essentially means that the proverbial ‘file on wheels’ — a euphemism used in Pakistan to denote the use of bribery to ensure the smooth approval of proposals through a government department — would have to travel, with new — perhaps bigger — wheels to pass through yet another government department.
Creative thinking can revive real estate.
The need of the hour was to think out of the box to inject a new spirit into the real estate sector but those in the box seat in this government seem to be unable even to think, let alone think outside the box. Still, one wishes and hopes that the following can be taken into consideration while forming the terms of reference for Rera.
Why do defence housing authorities not face issues with issuance of NOCs? Because they have the patronage of one of the most powerful institutions in Pakistan, the army. Whether it is desirable or not is a separate debate, but for now the government can pick up the same model. The federal or provincial government should become a facilitation partner to the extent of, say, 10 per cent in all real estate development projects and do away with the existing taxes on the sector.
Such an arrangement would not only generate revenue but also help in creating millions of jobs as it would trigger a boom in the real estate industry because of reduced red tape, greater transparency and investor confidence.
The real estate developers would welcome such an arrangement as they already pay around 10pc of the project revenue to various government functionaries as bribes in order to obtain approvals and NOCs in one form or the other, even though the outcome of their applications remains far from certain.
What getting into such a partnership would do is to shunt out the middlemen — read the civil servants — serving at important positions in the development authorities. These government officials delay decision-making in order to coerce the businessmen, who have already risked it all, to pay further bribes. In the process the government kitty gets a lot less than it should, while their pockets get deeper and deeper.
Furthermore, the projects are delayed, sometimes becoming unviable due to time delays and lack of public interest as the news of rejected NOCs or an illegal housing scheme spreads like wildfire in the investor market and the general public stays away from such projects even after they have been cleared. In fact, development authorities jump the gun in declaring housing societies illegal in order to create pressure on the developer to pay up. The transformation from legal to illegal and back to legal is usually a matter of bribe.
The government should empower Rera to make it mandatory for concerned departments to make a decision on the issuance of NOCs within 10 working days, and in case of denial, the reason/s for the rejection should be stated clearly and defended in front of a high-level cabinet committee headed by the prime minister himself where the aggrieved party should also be allowed to present their case.
Why should this go to the level of the prime minister? Firstly, it would create deterrence against denying or delaying NOCs on flimsy reasons which government functionaries use as leverage for taking bribes. Secondly, the issue directly impacts the bread and butter of so many poor labourers and the investment of hard-earned money by this country’s working class, the very people who voted the prime minister into power.
Lastly, a word or two on another matter. I get emails from many readers asking whether I really think that the ideas I keep churning out in this space will ever be taken up or make a difference.
Kya haal poochtay ho meray karobar ka,
Ayenay bechta hoon andhon ke sheher mein
How’s my business doing, you ask? Let’s just say, I sell mirrors to the blind.
The writer is a former civil servant.
Published in Dawn, November 17th, 2019