Construction Permits and Housing Loans – Webinar Brief 58: 2021

Introduction

The webinar highlights  the difficulty  of doing business in Pakistan specifically in the construction and  housing sector.  It  further  highlights  the concept of sludge  and the  cost  associated  with   it.  Sludge   is  the  hindrances or  obstacles in doing business and  they impose a  high cost on the economy as it mainly delays the investment and  lowers productivity. The  webinar mainly discusses the sludge involved  in  obtaining  construction  permits of  single-unit  residential  construction  as  well  as  for high  rise  with   housing   loans.  The   objective  of  the sludge  series  is  to  highlight  the  sludge  involved  in different activities  and  to pin  down areas  where it  can be  reduced.

Key Messages

Nadeem ul Haque:

■    The   name   of  Pakistan   should   be  “Permissionistan”   or

“NOCistan”  as one  is stuck  in  a  lethal  process or  sludge of   NOCs   and    permissions   while   doing   a     business investment.

■   In  Pakistan  still,  the system  poses  a  cost on the  economy in  terms  of delayed working.  One  has  to wait  for long

hours  and   has  to  visit the  offices  time  and   again  for the  NOCs.  In  the  rest of the world,  the  cost or  ease  of doing business is enhanced as the system  is mostly run online.

Ahmed Waqar Qasim:

■   The  sludge  involved   in  high-rise  construction   permits from  the   capital   development  authority   summarized the three points i.e. the time,  monetary cost,  and  stress involved  in  getting  the  permit.  The  total  time  is  four and  half years  and  the  financial  cost is  more than  two million.

■   Obtaining    NOC   from   the    environmental    protection agency is the highest time-consuming  step  followed by NOC  from the civil  aviation  authorities. The   sludge   involved   in   single-unit   residential   construction   permits   from  the capital  development authority  requires  a  total  time of nine  months  and  financial cost is more than one  hundred and  eighty-five  thousand  rupees.

■   The steps  involved  in processing residential  construction  permits from CDArequire a  total  time of 15  to 20  working days  as per  the  official claim  as there  is  a  stark difference  between  the  official claim  and  the  time people experience.

■   Getting  housing  finance from banks  takes more than  four months  and  costs  more than  15,000  rupees.

Faisal Jamal:

■   A  lot  of time  is  consumed  in  getting   permission for the  camping   facilities  and approval of all  maps  and  designs  from the CDA,  civil  aviation,  and  other  security agencies.

■   Another  restraint  is  the long  duration  of the  review by  Design Vetting  Committee arrangement  by  CDA,  usually  multiple  projects  piled  up  to be  reviewed together which delay the overall  progress.

■   All  projects  coming  under Prime  Minister  Amnesty  scheme  have  now  a  deadline to complete  it  before July  2023  otherwise  they  will   not be  able to  benefit from this scheme, such  an amnesty scheme where the project completion deadline is in place definitely  will be  ramped up  quickly.

Engr  Khizar Hayat Asghar:

■    Most  projects   were  delayed  due   to  changes   in   regulations   and   requirements by  CDA.   Public   office  staff  should   be  held  accountable  for wasting   contractor and  employer time and  there  should  be  internal  audit  mechanisms,  checks,  and weekly report analysis by the administration of these Public offices to track down performance and  targets.

■    Secondly,   processes   related   to  utilities   and   services   connections   provided  to construction  sites  need  to speed  up,  most projects  are  not occupied as completion certificate   issuance  from   ministry/CDAis   delaying   overall   project   completion status.

Mian Muhammad Faraz Khalid:

■   The time concerned for the gathering  of information: all the information  is available on  the   website   of the   bank   for the   housing  construction   for the   customer  to save time.  But  as the  customers  are  new  they  prefer  to visit the  bank.  Customers can  download  the application  form as well.  The  photograph  is  not  a   mandatory requirement  as well as the  reference’s  signature.

■   The  approval  of the  loans  is  not  delayed  as customers  complain  while the  main problem that the  banks  or  customers  face  is the  identification  of the  properties and  the  documentation  related  to the  properties.

Conclusion: The stakeholders interviewed portrayed a very different situation than  what was  present in  the  actual market.  The  lengthy  documentation  process   involved  in  the construction  of  high  rise  results  in  limiting  the  new  investors,  however,   the  sector has a lot of potential to grow  and  provide  jobs.  The  housing   finance  information  is  readily available  online   but due  to  the  lack  of familiarity and  ease  of our  people,  this  process also  becomes a lengthy  one.