THE government is taking an initiative to unlock the potential of millions of acres of state and private land for industrial, commercial and housing use under a pre-defined land-acquisition and disposal mechanism. The Economic Coordination Committee (ECC) would look into the question of creating a ‘land bank’ that would also feature unutilised state land, including land in possession of military, railways, ports etc.

For acquisition of land, separate criteria would be put in place for different projects like for dams, hotels, wholesale investors, agricultural enterprises and other industrial investments, and their pricing structures would be based on respective productivity levels of each sector.

All these efforts are being made to facilitate the private sector which faces difficulties in acquiring large chunks of land for investment because of multi-owner titles of land and also because, in most cases, such sales result in litigation under the Land Pre-Emption Act.

According to a study carried out in 2005, the World Bank has identified five major barriers to foreign investment in Pakistan. These are land acquisition, financial regulation, tax administration, business registration and labour regulation. In which about 79 per cent investors identified land acquisition and site development regulations as barrier to investment. By introducing this policy, state land in all cities would be made part of a 'land bank' for utilisation by the private sector for investment.

Compulsory acquisition of land under ‘land bank’ has become a vital part of the overall development strategy of the state, particularly in the context of competition to attract investments. State industrial development agencies compulsorily acquire land, develop it and build up land banks from which they could readily offer consolidated tracts to industries that come in.

No doubt the government’s ‘land bank’ initiative is without merits. The stated aim of the scheme is to simplify the process of land acquisition for foreign investors. Any type of foreign investment is a harbinger of national progress and, no doubt, effective in terms of generating employment, income, infrastructure development and its contribution towards social welfare. However, at the same time, the scheme is endemic with an opportunity for graft, nepotism and unfair treatment of owners of private land whose land is forcibly acquired by the government, in most of the cases, by giving them a little compensation.

In Pakistan, from the development era of 60s till date land may well emerge as the major resource of contention between the government and the private landowners over the issue of fair and just compensation. By using its eminent power state acquires land, develops it and sells or leases it to other private parties, the issue of the state favouring one section over another comes to the fore.

Eminent domain is used in all over the world and is recognised as a legitimate instrument to promote economic development. Yet, there is something intrinsically unfair in the state taking property from `A’ against his will and passing it on to ‘B’, another private person who can put it to more profitable use. Most cases of land acquisition offend the principles of equity as they involve the compulsory acquisition of land from the weaker section at low prices for transferring it to industries and builders who reap huge gains from the appreciation in land values after development.

The Land Acquisition Act on paper provides for fair compensation: in addition to the market value (the price at which a willing seller would sell to a willing purchaser), it provides for damages to the land from acquisition, the resettlement costs. In practice, this process is riddled with corruption and is dilatory. The market price is frozen as on the date of publication of the notification of acquisition and as the time gap between the notification and the actual transfer is long — at times even 20 years — and prices rise several-fold meanwhile, the affected persons are invariably left with a sense of having been cheated.

The existing example for this is Mangla dam affectees, a substantial number of families settled in Punjab and Sindh have not been able to get possession of their allotted lands so far and thus numerous cases are pending in courts as their lands have been grabbed by local influential people.

Another section of affected people is those settled in Jhang and Khushab districts. Even after three and half decades they are still without ownership rights. In the Terbela dam case, provincial governments of Punjab and Sindh were directed to allocate 60,000 acres. Only Punjab could provide the land asked for in that meeting whereas the government of Sindh allocated only 10,667 acres.

Out of the 667 families who were issued allotment letters in the late 1970s by the Sindh government, over 250 families have not been given possession despite the fact that most of them had already made payments. The affected people who went to Sindh province to get possession of land had to face retaliation from the local people. Similarly, in Punjab a majority of those who were allotted land were either forced by the influential people of the area to vacate the land, or were compelled to dispose of their allotted land, as it is difficult to utilise or cultivate it.

Along this, optimal use of land is also a major concern given for private landowner, because mainly industrial units may be allotted prime agricultural land, especially in Punjab. A case in point is the Punjab government’s decision last year to acquire some 1,200 acres of rich agricultural land near Sheikhupura for a Mercedes-Benz assembly plant.

The owners were being paid a pittance and it also transpired that only 600 acres were required by the automobile manufacturers, with the rest earmarked for a luxury hotel and golf and race courses. In another case by using the Land Acquisition Act, the Government of Punjab Employees Housing Foundation acquired rich fertile private lands of Bahawalpur, Multan, Faisalabad, and Gujranwala for building houses for retired, serving employees, here the notion of ‘public purpose’ for acquiring a land should be debated.

Meagre amount of the land for the land compensation is also not a new concern for the private landholders, in Multan the Lahore High Court for the construction of Judicial Complex acquired lands, and notification sent by under the Land Acquisition Act in October 2003. The land price set by a middleman about 5,000 per Marla, which after the intervention by the senior member of B.O.R. the price of land was fixed at 9,000 per Marla, instead of the present market price 1,00,000 per Marla. Even Supreme Court has given a verdict reported in PLD 2004 SC 512 that any price for the value of land till announcement of award being a potential value of land must be taken into consideration. Then the High Court reduced the land from 919K-2 M to 719K-1 M and has yet to deposit the balance amount so that the district authorities issue the award and payment to the landowners.

But still the affected people are waiting for three-and-half years for payment, where possession has also been forcibly taken away since 14 June 2005. Similarly, there is a danger that both state and private land may be parcelled out at nominal prices to favoured parties, which may then put portions of the acquired property to whatever use they see fit.

Land Bank must not only be assessed comprehensively for their social costs but must be implemented if they also serve the purpose of equitable distribution of resources, wealth and opportunities. For this the first and the immediate imperative, therefore, would be to drastically overhaul the system of paying compensation.

The very philosophy of the Land Acquisition Act denies the affected people any potential increase in the value of the land from conversion to industrial or residential use, allowing only State government corporations, builders and developers to reap the benefits of the appreciation. Unless the gains from land development are shared with the landowners in a substantial measure, the system would remain unfair and would be unsustainable politically. There is strong need to change the compensation process.

The second task would be to develop efficiently functioning land markets, combined with an effective and imaginative system of land use planning to enable orderly development and the preservation of open and green spaces.

It is suggested that the federal and provincial governments should amend Land Acquisition Act 1894 and 1983 immediately on issue of first notification under section 4 till the award time should be maximum 120 days otherwise section 4 will lapse automatically. While determining the market price of land, the district price assessment committee should include the affected people so that they agree at the price and 15 per cent compulsory land acquisition charges are increased to 100 per cent, this will help the rehabilitation of the dispossessed.