ISLAMABAD, Dec 5: The federal cabinet on Wednesday approved the National Housing Policy 2001, outlining the government’s role as of a facilitator and regulator to stimulate economic activity and employment generation.

The meeting, presided over by President Gen Pervez Musharraf, also decided to help harness individual and private potential for generation of resources.

The policy outlines inputs required for revitalizing the housing sector including financial and legal measures, indigenous production and use of building materials and construction techniques. It also specifies policy guidelines for low-cost housing, slums and katcha Abadis, rural housing and institutional and legal framework with clearly defined roles of the federal, provincial and local governments in the housing sector.

The policy, which had earlier been approved, in principle, by the chief executive features the following:

(i) Stamp duties/ registration fees are being rationalised by the governments of Punjab and Sindh.

(ii)Duties on construction machinery, ship-building scrap and coal-fired cement plants have been reduced.

(iii) Mark-up on housing loans have been made tax deductible upto 25 per cent of income tax.

(iv) The provincial governments have been asked to identify “Shamlat deh” lands which could be transferred to individuals and families residing on them. A committee constituted by the Ministry of Housing and Works, which includes representatives from provincial governments, architects and Ministry of Environment, Local Government and Rural Development, will shortly submit recommendations on the issue.

(v) The State Bank has allowed Housing Finance Institutions (HFIs) to float long-term bonds for housing finance.

(vi) The State Bank has issued revised instructions to commercial banks allowing them to provide mortgage financing for construction of houses to the extent of Rs5 million for a maximum period of 15 years. The HBFC has been authorized to undertake activities for raising funds through commercial papers, redeemable capital (PTCs & TFCs) etc.

(vii) The banks have been allowed to have an exposure under housing finance to the extent of 5 per cent of their net advances which is a substantial amount keeping in view net advances of Rs886 billion of commercial banks as on 31-12-2000.

(viii) The State Bank has conveyed no objection to the promotion of Housing Finance Institutions to encourage savings and provide credit from community-based finance and other sources. Further, the banks/HFCs are being advised to devise procedure for the same. (ix) The State Bank has also conveyed its no objection to increase in the annual disbursement of HBFC loans from the present Rs1.2 billion to Rs7 billion over the next 5 years, provided the HBFC is able to raise resources enabling it to disburse the amount to the extent of desired level without any credit line from the State Bank.

(x) The HBFC has informed that since the State Bank’s credit line to HBFC is stopped since 1994, it will have to raise funds from the market to enhance its annual disbursement to Rs7 billion for which the restructuring of the corporation is a pre-requisite. They have taken up the issue with the finance ministry.

(xi) The State Bank has conveyed its no objection to the reintroduction of bridge financing and bulk financing of housing projects through escrow accounting together with appropriate safeguards by the HBFC subject to the condition that the corporation is able to raise resources enabling it to disburse the amount to the extent of desired level without any credit line from State Bank.

(xii) Housing has already been declared a category ‘C’ priority industry and is entitled to concessionary rate of 10 per cent import duty on machinery not manufactured in Pakistan.

(xiii) The Ministry of Housing and Works in coordination with the provincial governments should develop a package for improving the living conditions in katcha abadis and slums.

The dangerously located slums should be shifted to alternate locations on state land within the cities under a smooth and organized manner. For this purpose low-cost housing schemes should be developed.

(xiv) The master plans under the housing policy should be prepared for the metropolitan and major cities by the provincial governments within three years and development plans for district level cities/towns and union councils should be prepared by the local governments and union councils within two years.