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Pakistan Construction sectors updates


Mar 21, 2007
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ABAD demands of govt to extend amnesty scheme

Recorder Report
23 May 2021


KARACHI: Association of Builders and Developers of Pakistan (ABAD) has demanded of the government to extend the amnesty scheme given to the real estate and construction industry for at least one year.

According to details, the industry is facing long delays in approval of building plans in Sindh and a large number of builders and developers remained unable to register their projects in the amnesty scheme due to Covid-19 situation hence the scheme needs to be extended for at least one year.

On the other hand, the price hike in cement, iron bars, paints, tiles, etc. has created new records hence in order to avoid interruption in the momentum of the economic growth, the government should extend the special package for real estate and construction industry otherwise the results achieved through this package would go in vain, ABAD said.

Under the extended package, source of income will not be asked for investment in real estate and construction up to June 30, 2021, fixed tax regime for builders and developers up to December 31, 2021, and the period for projects up to June 30, 2022.

Copyright Business Recorder, 2021.

The Government Launches a Package for the Construction Industry

To counter the dwindling economy, the government announced a Rs 100 billion relief package for the construction industry in April 2020. In many countries, the construction sector is considered the backbone of their economies and this is also true for Pakistan.

According to Hadi Akberali, COO Strategy, Amreli Steels (see his interview), “the construction industry is a major employer and comes with a lot of allied industries. It is a tried and tested way the world over for construction to kick-start an economy.” He cites Brazil, China and India as countries that improved their economies by means of increased construction activity.

Although formally, on average, the construction sector has contributed between 2.3% and 2.85% in the last five fiscal years to Pakistan’s GDP (it was valued at Rs 316 billion in the Pakistan Economic Survey 2019-20), most economists estimate its value to stand between 10 and 12% of the total GDP. This is because it provides stimulus to over 42 ancillary sectors including aluminium, brick, cables, cement, fixtures, glass, kitchen and bathroom fittings, marble, paint, steel, tiles, transportation, warehousing and wood. Therefore, it has a far-reaching impact on the overall economy as it employs eight percent of the total labour force.

What’s in a Package?

The package’s objectives are two-fold. The first is to bridge the affordable housing gap through the Naya Pakistan Housing Program (NPHP) which was initiated in April 2019 with the goal of building five million houses in five years (see A Question of Affordability) and second to jumpstart the economy by creating employment. To ensure these goals are met, the government set up the National Committee on Housing Construction and Development (NCHCD) in July. The Committee’s objectives include monitoring the construction sector and ensuring that any hurdles that arise are overcome to ensure that construction activities continue to increase rapidly.

Broadly speaking, the construction package includes tax incentives, waivers and subsidies for builders, developers and property owners (see Major Incentives in the Package below). To take advantage of the incentives, builders and developers have to register their projects on the Federal Board of Revenue’s (FBR) dedicated portal, Iris, by December 31, 2020 and complete ‘grey structures’ (basic structures without interior finishings) by September 30, 2022. In addition, a Construction Industry Development Board (CIDB) will be set up to “promote, encourage, facilitate the private construction industry and encourage investment.” (A Real Estate Regularity Authority [RERA] will be formed to regulate the sector with regard to property transactions among other functions.)

Incentivising Growth

According to the industry stakeholders Aurora spoke to, one of the most effective incentives is the one that does not require people to declare their sources of income before investing in construction related projects. “This is a key factor that will attract investment; if a buyer is interested in buying a property, all he has to do is put his money in a bank and make the payment,” explains Shafi Jakvani, CEO, Citi Associates.

This is a view that Mohsin Sheikhani, Chairman, Association of Builders and Developers Pakistan (ABAD) and Hamza Bhatti, General Manager, Pakland Builders, agree on as does Mohammed Adil Sami, Head of Marketing, Meezan Bank.

“The ‘no questions asked’ policy will encourage builders to invest their undocumented wealth in property and construction. This initiative, apart from providing legal cover for such individuals, will encourage people to invest in property. It will also encourage the expat community, who will be spared the cumbersome paperwork required to buy or build a home,” says Sami. He adds that the tax exemptions will lift investments in property and impact the construction sector and its allied industries in a positive manner.

In Jakvani’s opinion, the fact that there will be a 90% tax reduction for builders who invest in NPHP will also give a boost to the economy. “Even in the first stage, if 500,000 units are built, they will require labour, building materials so all related sectors will benefit. That is one area where I see a positive outcome to emerge.”

Sheikhani adds that the fact that taxes will be computed based on the property’s covered area (instead of the value) will be a major incentive for mid- and low-tier builders and developers as it will result in substantial savings. He is of the opinion that the fact that builders and developers will not be required to withhold tax on building materials, other than steel and cement, will prove to be beneficial as well. Bhatti adds that if taxes are waived on cement and steel, the construction sector would benefit even further. Muhammad Irfan Anwar Sheikh, Director Finance & CFO, Bestway Cement, agrees. “An important step that could lead to increased cement sales is to reduce the Federal Excise Duty (FED). Pakistan’s development is dependent on products such as cement and it should not be subject to FED.”

Sheikhani is confident that the incentives will bear fruit shortly, especially as all transactions will be digitised through Iris and approvals from various government entities (such as building authorities and utility companies among others) will now be, as per the government’s directives, ‘one window operations’ and be completed online within 45 days.

Furthermore, building bylaws will be updated in a uniform manner across the country through this system. This, he says, will reduce the number of illegal buildings as all projects have to be registered with Iris. He adds that prior to this, builders and developers used to show reduced profits in order to pay lower taxes and “this will bring much needed transparency to a sector that has been unregulated thus far.”

A Bumpy Road Ahead?

Not everyone shares Sheikhani’s optimism. A former ABAD chairman and developer, who spoke on the condition of anonymity feels otherwise. “Obtaining certifications and approvals from local authorities will prove to be a herculean task. Furthermore, the deadlines for registering projects (December 31, 2020) and for completing grey structures (September 30, 2022) are impractical, given the fact that approvals from various authorities take a long time to come through.” He adds that procuring the services of reliable contractors and workers, not to mention securing financing, will make it extremely difficult to meet the mandated deadlines.

Naeemuddin A. Siddiqui, Former Chairman, Constructors Association of Pakistan (CAP) and CEO, Ziauddin Ahmed & Company, has his own reservations. Although he believes they are a step in the right direction, he points out that formalising the industry was tried by the Nawaz Sharif government in the nineties but never materialised. “Even today, despite the talk about formalising the industry, we have yet to receive any notifications regarding this and what it will mean for the industry.” In his opinion, the major issue is that the majority of construction activities are not carried out by certified or professional companies and that regulating the industry to ensure that only licensed professionals should be allowed to work on registered projects should be a priority for the government.

Another issue is securing financing. Although there is talk about lower interest rates, no concrete steps have been taken in this direction. “Because the sector is not regulated, we are unable to receive financing and guarantees from banks. As a result, we are unable to meet our project deadlines, which further cuts into our margins.

Furthermore, no specific incentives have been announced for contractors, and they should have been brought on board prior to announcing the package and related incentives,” says Siddiqui. “We requested that the government establish a dedicated financial institution (like in other countries) that mandates the provision of financing to the industry through lending techniques that are different from those that regular commercial banks offer.”

He adds that when builders and contractors go to a bank to secure a loan, they are asked to provide collateral or liquid assets that they do not have as the requirements are too high. “If we had that kind of money, we would not need a loan the first place. The right model would be to issue a guarantee based on the project’s receivables. That is why we have requested that the government establish a Construction Infrastructure Development Bank, a common practice in many other countries.” He says that in other countries, such banks also serve as an intermediary body between developers and the people who buy property.

The bank safeguards the interests of both parties and ensures that developers complete their projects in the stipulated time, secure the services of licensed builders and contractors and do not increase property prices randomly. Similarly, to safeguard the developer, such banks ensure that the buyers pay their instalments on time.

Promoting Low-Cost Housing

As far as financing is concerned, the main incentive at the banking end of the spectrum is aimed at people who own five and 10-marla plots (see Building Dreams on Solid Foundations), who can now take advantage of reduced and/or competitive interest rates to build houses on these plots.

According to Muhammad Afaq Khan, Head of Islamic Banking, HBL, “a steering committee has been set up under the chairmanship of the Governor of the State Bank of Pakistan (SBP) and the Chairman of the Naya Pakistan Housing & Development Authority (NAPHDA). The presidents of six banks, including HBL, are members of this committee.” As a result, several banks including Bank of Punjab, HBL, Meezan Bank and UBL, are promoting home financing options such as the ‘Mera Pakistan Mera Ghar’ initiative.

Although it is too early to comment on the response to the initiative, Khan says “HBL will offer mortgages, including for low cost housing, through our Islamic Banking. We are gearing up to scale up the business and are committed to ‘Mera Pakistan Mera Ghar’.

Cautious Optimism

Given that the construction package was only announced five months ago, the full response remains to be seen. As of August 14, according to DAWN, 40 projects have been registered and 4,812 are drafted for registration. The Minister for Information and Broadcasting, Senator Shibli Faraz, expects that projects worth Rs 400 billion will be registered by the end of 2020. Furthermore, ABAD has pledged to invest Rs 1,370 billion in various construction projects, including residential ones specifically for the NPHP, in addition to 30 to 40 high-rise buildings in Karachi and at least 1,000 more projects across the country.

According to Fahd K. Chinoy, CEO, Pakistan Cables, the incentives have induced a “somewhat positive sentiment in the market.” He says indicators such as rising cement and steel sales have given rise to “cautious optimism that the construction package will bring about a boost in downstream demand for building materials, including wires and cables.” He points out that “housing societies such as DHA are showing signs of activity as they roll out development plans for new phases in Bahawalpur, Lahore, Multan and Peshawar.

However, several projects are at very early stages and it will be some months before they reach the level of maturity where orders for cables are placed.”

A representative of a private cement company confirms that demand for cement has started growing, especially in northern and southern Pakistan and the All Pakistan Cement Manufacturers Association recently announced that the consumption of cement has increased by five percent and amounted to 3.5 million tons in August.

Sami too is cautiously optimistic. “SBP has played an immense role in aggressively cutting interest rates and stimulating the economy and signalling intent to make low-income housing finance easier. Furthermore, the government has encouraged banks to allocate five percent of their portfolio to the construction segment.”

In Jakvani’s view “these incentives will be of most benefit for mid-tier and small developers and builders. That said, the incentives will also affect the real estate sector in a positive way and given that property prices have started to rise, I foresee almost 100% growth in property transactions within six months.”

Given all the above, it is too soon to judge whether or not the construction sector will be able to revive Pakistan’s economy. Nevertheless, if the December 31, 2020 deadline for registering projects is extended and if the formation of RERA, CIDB and ‘one window’ operations for approvals are expedited, the chances are fairly good that the impact on the economy will be positive.

Major Incentives in the Package

  • Investors, developers and builders will not be questioned about their sources of income.
  • Taxes will be computed according to the size of the property (per square foot or per square yard) instead of the price of the property (the case previously) and as a result will be substantially lower.
  • Builders and developers will not be required to withhold tax when purchasing building materials (except steel and cement) and on certain services (such as plumbing).
  • If builders and developers take on a project related to low-cost housing under the Naya Pakistan Housing Program, taxes will be reduced by 90%.
  • Sales tax and excise duties levied on construction materials will be reduced.
  • Owners of five- and 10-marla residential plots will receive subsidised house building loans.
  • People constructing, buying or selling their first houses are exempted from several taxes and fees, including Advance Tax, Capital Gains Tax, Stamp Duty Tax and Registration Fees.
Additional reporting by Uzma Khateeb-Nawaz.
Pakistan’s construction industry

Pakistan’s construction industry has always been of economic and social significance to the country. However, the share of construction industry in Pakistan’s economy is not as big as we see in other countries, whereas we see a lot of demand for new houses, apartments, and many other related structures in Pakistan.

Present federal government has promised to construct 5 million new houses in its five years term, out of which almost 2 years have gone, which means 5 million houses in next 3 years. Besides others, one of the attractive features of construction industry these days is government commitment to construct 5 million new houses which gives hope to the people associated with the construction industry.

Globally, construction industry is regarded as one of the largest fragmented industry. The construction industry is also a prime source of employment generation offering job opportunities to millions of unskilled, semi-skilled and skilled work force.

The housing and construction sector in Pakistan can play an important role in developing aggregate economy and reducing unemployment. It provides substantial employment opportunities as it contributes through a higher multiplier effect with a host of beneficial forward and backward linkage in the economy.

The sector through linkages affects about 40 building material industries, support investment and growth climate and helps reduce poverty by generating income opportunities for poor household. It provides jobs to over 6 percent of the total employed labor force or to over 3 million persons. Unfortunately the construction sector is also one of the most neglected sectors in Pakistan. Even with the opportunity for growth the challenges are also extensive.

The government has decided to provide special tax relief and incentives to businesses/industries related to construction sector and support low-cost housing projects such as Naya Pakistan Housing Project (NPHP). Tax authorities are also working on simplifying fixed tax scheme for developers and builders, offering a 90 percent reduction in tax for low-cost housing schemes, particularly the Naya Pakistan Housing Authority (NPHA).

Signing of the China-Pakistan Economic Corridor (CPEC) agreement and improvement in the country’s security situation has been the key to giving boost to not only the construction industry, but Pakistan’s image abroad. This sector can be an important recipient of foreign direct investment (FDI).

Locally, investment can also boost by government policies such as reduction in duties and taxes on building materials like steel, construction machinery and equipment and computerization of land ownership records.

The construction industry is an important sector of the economy and has multiple backward and forward linkages with other sectors. This industry contributes significantly to socio-economic development and employment. Pakistan is a developing country that has a potential of relatively strong growth in construction activities.

Today, construction is the second largest sector in Pakistan’s economy after agriculture. Roughly 30-35 percent of employment is directly or indirectly affiliated with the construction sector. In order to capture the potential of construction sector in Pakistan, the Government of Pakistan is planning extensive infrastructure expansion programs. All of these programs will have the potential to lead the local Industry to establish scale, status and international recognition.

Till 1971, there were very few private developers/constructors in Pakistan thereafter local developers started developing housing schemes especially state owned big corporations (WPADA, KDA, LDA etc.). During 90s and especially in the first decade of 2000, we see private sector very active in construction activities. After nationalization, federal government also allocated massive funds to Housing Building Finance Corporation (HBFC), a number of entrepreneurs, industrialists, businessmen, importers, consultants, etc, also entered in the construction industry. Some of them had experience in building construction while others had neither enough managerial capability nor sufficient technical knowledge.

When the construction industry got a boost, the builders and developers gathered to form associations such as Association of Builders and Developers (ABAD) with the objectives of improving the state of the industry as well as to provide a platform to showcase and address pertinent issues.

Construction activities and its output is an integral part of a country’s national economy and industrial development. The construction industry is often seen as a driver of economic growth especially in developing countries. The industry can mobilize and effectively utilize local human and material resources in the development and maintenance of housing and infrastructure to promote local employment and improve economic efficiency.

The construction industry on the economy occur at all levels and in virtually all aspects of life. This implies that construction has a strong linkage with many economic activities and whatever happens to the industry will directly and indirectly influence other industries and ultimately, the wealth of a country. Hence, the construction industry is regarded as an essential and highly visible contributor to the process of growth.

Construction industry is also highly labor intensive sector and a strong growth in this sector generates a variety of jobs. Pakistan now offers a growing market for the construction industry. In coming years, we see more dams and other projects to be announced for the feasibility and construction. Construction of mega projects such as dams has been announced. Other projects like motor ways and several other infrastructure projects are in progress.

There is a tremendous need for application of professional construction project management, tools, skills and techniques, which cannot be achieved unless efforts are not extended toward educating the industry, regulatory bodies and owners as well as improving and strengthening the construction industry practices. Successful implementation of construction project management in Pakistan construction industry can be achieved through hands-on leadership, upfront preparation and continuous maintenance with a sensible plan.

Major obstacles to improving the performance of Pakistani construction industry were found to be lack of expertise/resources in construction project management and its applied areas.

A rigid attitude and behavior toward quality, safety and risk management can bring a lot of improvement in the construction sector.

A lot of R&D is going on in the construction industry worldwide, where Pakistan should also adopt new techniques in this sector.

A change in the views and attitude through awareness programs can bring a prominent and distinctive change in the project management status in Pakistan not only among stakeholders/owners but also in the entire construction industry.

Considering the significance of the construction sector, it is necessary to identify the major issues affecting the efficiency of the sector and take corrective action for increase in economic growth and development of Pakistan.
As a result of Govt's initiative to promote construction activity & affordable housing, the construction sector which accounts for 2.6% of the GDP showed a growth of 8.34% in
2020-21 & housing services which accounts for 6.97% of the GDP had a growth rate of 4%.

6 real estate investment trusts worth Rs38bn expected this year

The Newspaper's Staff
July 21, 2021 -

REITs collect money from investors and deploy it in real estate projects. — Photo courtesy Sana Agboatwala/File

REITs collect money from investors and deploy it in real estate projects. — Photo courtesy Sana Agboatwala/File

KARACHI: After six years of radio silence from over half a dozen companies with a licence to manage real estate investment trusts (REITs), as many as six transactions worth up to Rs38 billion are likely to take place within 2021-22.

Speaking to Dawn in a recent interview, Arif Habib Dolmen REIT Management CEO Muhammad Ejaz said his company will soon launch four REITs in addition to the two schemes that the company announced earlier this month.

REITs collect money from investors and deploy it in real estate projects. They operate like any other company but offer more transparency to investors as trustees control all assets and the entity must list on a stock exchange within three years. Small investors can then take exposure to an otherwise capital-intensive and illiquid real estate market by publicly trading REIT units just like ordinary shares.

Mr Ejaz’s REIT management company – which is a joint venture between Arif Habib Group and Dolmen Group with equal shareholding – created the country’s first REIT that securitised and sold Dolmen Mall Clifton and the adjoining Harbor Front building in a Rs22.2bn transaction back in 2015. The REIT sector remained dormant for the next six years as unfavourable changes in the tax and regulatory regimes discouraged investors, Mr Ejaz said.

Changes made by SBP, FBR and SECP hailed for bringing investors back
“Key changes by the State Bank of Pakistan, Federal Board of Revenue and the Securities and Exchange Commission of Pakistan played an important role in bringing investors back to REITs,” Mr Ejaz said.

With a fund size of Rs3bn, Arif Habib Dolmen REIT Management has recently launched Silk Islamic Development REIT in Surjani Town, a low-income area in the northern part of Karachi. The second scheme, to be launched under the name of Silk World Development REIT in the same area, will have a fund size of Rs5bn.

As for the other four schemes, the CEO said they will have a collective fund size of Rs30bn and be located in more than one city.

Transaction structure

The REIT management company led by Mr Ejaz is one of the five equal shareholders in Silk Islamic Development REIT. Other investors include Yunus Brothers, Arif Habib Group, Liberty Group and Fatima Group.

As its trustee, the Central Depository Company (CDC) is currently holding Rs3bn in an account on behalf of the five shareholders. The REIT management company will use this money to purchase the 60-acre piece of land from a group of sellers led by Silkbank.

According to Mr Ejaz, land sellers will get a partial payment upfront and receive the rest of dues from the proceeds of the project. “The deferred payment arrangement has made the project more viable,” he said.

Noting that the project design details have not been finalised, Mr Ejaz said the scheme will likely have 12,000 two- and three-bed-plus-lounge residential units. “I can’t give you any price range right now.

Construction costs are too volatile,” he said, adding that the scheme will start selling flats in 16 to 18 months. Allottees will get possession within four years of the project launch, he added.
“We’re building flats for middle-class families with household incomes ranging from Rs80,000 to Rs250,000… those who stretch themselves and buy a Corolla are middle-class people,” he said when asked what he meant by the middle class.

The second REIT scheme, to be located on an 86-acre piece of land, has only one shareholder: World Group owned by Mehmood Trunkwala. This scheme will have 1,500 villas and an equal number of apartments in addition to 600 low-cost residential units to be sold under the Naya Pakistan Housing Programme.

Both REITs will have to go public within three years. Sponsors will offer at least 25 per cent of their shareholding to the general public through a listing. Alternatively, the existing shareholders can issue new units or shares to raise fresh cash for project needs.

Published in Dawn, July 21st, 2021
August 3, 2021

Rawalpindi: /DNA/ – The three day exhibition on interior, construction, electrical and electronics (ICEE 2021) being organized by the Rawalpindi Chamber of Commerce and Industry (RCCI) ended on a high note.

The exhibition which was held at Pak-China Friendship Center Islamabad in collaboration with Naya Pakistan Housing Authority, more than 25 companies including marble, sanitary, tiles, cables, electronics and state-owned banks set up stalls.

A conference was also held on the occasion. In a detailed presentation, Deputy Chairman Naya Pakistan Housing Authority Major General (r) Aamer Aslam Khan briefed about the latest developments on the housing project under the authority. He said that so far more than 37,000 applications have been received for loans amounting 127 billion. So far, loan applications worth Rs 46 billion have been approved.

He said that construction of low cost houses is an important task of the authority and an effective strategy has been adopted to implement it. We are also in touch with the private sector to meet the growing demand for building materials such as cement, tiles, sanitary ware, plastic pipes and cables.

Addressing the closing ceremony, Chamber President Nasir Mirza said that the Expo Center was the hour of need for the promotion of exports and products. Instead of privatizing the convention center, convert it to an expo center, he suggested. Industrial zones should be set up along the Rawalpindi Ring Road to promote the industry which can be helpful in meeting high demands in the construction sector.

Prime Minister Imran Khan who was chief guest of the closing ceremony of the Expo, lauded RCCI on the successful exhibition on the subject of construction. “I have visited the stalls and taken feedback on the spot,” Khan said. He welcomes the RCCI’s proposal to convert the convention center an expo center. The city of Rawalpindi has also been converted into concrete structure. More and more trees will have to be planted to eliminate pollution.

A master plan is being drawn up for each city and any construction in the future green areas will be prohibited, the PM added. Chairman NAPHDA General (r) Anwar Ali Haider also spoke on the occasion and shared the progress and strategy of housing authority on Naya Pakistan Housing Project.
The citizens have shown great interest in the exhibition. Minister for Railways Azam Khan Swati, Special Assistant Shahbaz Gill, Chairman Commerce Committee in the Senate Zeeshan Khanzada and Ambassador of Nepal Tapas Adikari also visited the exhibition and appreciated the quality of the products.
When the construction, transportation, house appliances etc. show real growth rate it means GDP in fact is growing for the common folks! In comparison, India and BD are both showing contractions in these sectors…..
Promotion of construction sector top priority: PM

Mon, 23 Aug 2021, 11:38 PM


ISLAMABAD, Aug 23 (APP):Prime Minister Imran Khan Monday said promotion of the construction sector especially progress in building of affordable and low cost housing was the top priority of the government.

He was chairing a meeting to review the prices and demand and supply of essential items of daily use and construction material.

Minister for Finance Shaukat Tareen, Minister for Industries and Production Makhdoom Khusro Bakhtiar, Chairman Naya Pakistan Housing Authority Gen (R) Anwar Ali Haider and other senior officials attended the meeting.

The participants considered the situation regarding demand and supply and prices of edible oil, cement, steel and other items.

The prime minister directed that all possible steps should be taken to ensure supply of raw material used in the construction sector. He instructed that the supply of basic items like edible oil according to demand and the stability of prices should also be ensured.
PM to inaugurate three-day Property, Construction and Housing Expo 2021 on Friday

PM to inaugurate three-day Property, Construction and Housing Expo 2021 on Friday


8:29 PM | September 01, 2021

Prime Minister Imran Khan will inaugurate the three-day Pakistan Property, Construction and Housing Expo 2021 being organized by the Islamabad Chamber of Commerce and Industry (ICCI) here on Friday.

The Expo, being held at Pak-China Center, will help highlight the various business and investment opportunities in diverse areas of the country’s economy with a particular focus on the construction industry.

Keeping in view the important role of the construction industry and over 50 allied sectors in economic development, the present government had announced an amnesty package, which helped to start mega construction projects in the country.

The mega construction projects were not only providing employment to thousands of people but also promoting the development of allied sectors.
PM Imran launches Property, Housing and Construction Expo 2021

September 3, 2021

Prime Minister Imran Khan addresses a ceremony at the Property, Housing and Construction Expo 2021 in Islamabad. — PID

Prime Minister Imran Khan addresses a ceremony at the Property, Housing and Construction Expo 2021 in Islamabad. — PID

Prime Minister Imran Khan on Friday kicked off the Islamabad Chamber of Commerce and Industry's (ICCI) Property, Housing and Construction Expo 2021.

Addressing the launching ceremony in Islamabad, the premier said the construction sector was the biggest provider of job opportunities because it had numerous industries attached to it.

"This is one way of providing employment, wealth creation, increasing revenues to meet expenses and repaying loans. We will repay loans when the economy grows and more than anything, it grows on the basis of construction," he said.

The prime minister called upon the construction sector to fully try and depend less on imports, saying that "all raw material is available in Pakistan."

"I assure you that we will fully help you. It is the government's job to manufacture more things in Pakistan," he added.

According to Prime Minister Imran, a "construction boom" was coming to the country due to the great demand by the 220 million people for low-cost housing.

He lamented that the common man, daily wager or government servants never had the opportunity in the past to build their homes because of a lack of mortgage-financing options but that obstacle was now removed due to the government's efforts to pass the foreclosure law.

"Banks will give money to people for mortgage financing and then this population of 220m of ours will become an asset because it will generate demand and then construction and related industries will start running."

The premier told the event that he had called the chief of the International Monetary Fund to gain concessions for the construction industry during the Covid-19 pandemic.

He also said that over the course of numerous meetings, "we realised ... our entire system has evolved in such a manner that it puts obstacles instead of facilitating and encouraging industry and wealth creation."

When a society begins to decline, the premier said, its bureaucracy too devolves and becomes self-serving instead of encouraging growth and prosperity. "It takes time to change the system," he added.

Prime Minister Imran said many meetings had been held to remove obstacles for the construction industry and while they hadn't been eliminated fully, there were more incentives for the industry than before and the government would continue increasing them.

Speaking about problems within the Federal Board of Revenue (FBR), he said the government was "continuously trying to bring reforms" in the body, pointing out that Finance Minister Shaukat Tarin hailed from the private sector and was familiar with its issues.

He said the true potential of Pakistan's population would be realised when the industry, particularly the export industry, was encouraged.

"It is necessary that we help ourselves, facilitate you and the government creates ease of doing business for you but then you too help the government by paying tax," he emphasised.

He said until taxes were paid, the country's wealth wouldn't increase and the government wouldn't be able to facilitate the construction sector so "it is a two-way system."

"We have to help you so your wealth increases. You have to help us through paying tax so we can improve infrastructure and fulfil basic requirements of people."

The premier said the government would continue to work with the ICCI and resolve its issues.
Construction package: Total declared investment comes to Rs493bn

Recorder Report
Updated 11 Sep 2021


ISLAMABAD: Total declared investment made in 2,125 registered projects by 1,321 persons under the prime minister’s relief package for the construction industry comes to Rs493 billion.

The Federal Board of Revenue’s Policy Wing gave a detailed briefing to the Chairman Federal Board of Revenue (FBR), Dr Muhammad Ashfaq Ahmed, about the progress made on the Prime Minister’s Relief Package for Construction Industry.

Member IR Policy, assisted by Chief IR Policy, informed the chairman that so far 1,321 persons have registered themselves through the online system of FBR in 2,125 projects. Out of these registered projects, 1,775 are new projects whereas 350 are existing ones. The total declared investment made in these registered projects comes to Rs493 billion.

The PM’s Construction Package was introduced through Tax Laws (Amendment) Ordinance, 2020 on April 19, 2020. The salient features of the package include fixed tax for builders and developers, immunity from probe and concessions from withholding of taxes.

The FBR has provided all the required facilitation to the beneficiaries of the package which include establishment of a dedicated web page, a dedicated email to address inquiries and an online step by step guide for the builders and developers.

Besides, a comprehensive set of FAQs for potential buyers and investors was developed which is available on FBR website. Moreover, wide publicity through media campaigns was also done to maximise the gains of this relief package.

The chairman FBR directed that ease of doing business must be ensured to the registered projects under the package. He further desired that regular update on the progress be communicated through media on weekly basis.

Copyright Business Recorder, 2021
A Riyadh-based engineering and construction firm has signed an investment agreement in a $12 billion real estate project in the eastern city of Lahore with a Pakistani business consortium, officials said on Monday.

An MOU between Sarh Attqnia Company (SAC) and the Pakistani party, Javedan Corporation, was signed in Karachi on Sunday for the construction and development of the first phase of upcoming ‘Ravi City’ project to be built on 2,000 acres of land along the banks of the historic river Ravi.

The agreement comes hot on the heels of the recently held Riyadh investment conference during the three-day visit of Pakistani Prime Minister Imran Khan to Saudi Arabia last month.
“Investment conference was held in Riyadh where large Saudi companies participated...

Fortunately, we got in touch with one of the big developers’ company- Sarh Attqnia- which was looking for some opportunities for development here (in Pakistan) as a partner,” Arif Habib, Chairman of Arif Habib Group of which the Javedan Corporation is a subsidiary, said at the signing ceremony of the agreement.

Habib said the Saudi company would contribute “financially and technically as well.”
It is not yet clear what the investment contribution of SAC will be. The total project value, according to Ravi Urban Development Authority (RUDA), is approximately $12 billion.

The new project will be developed on both banks of the Ravi alongside a 46 km stretch contiguous to Lahore district’s northern and western boundaries through RUDA.

In May this year, RUDA had auctioned the first phase of the project, Sapphire Bay, to a consortium of 10 business partners consisting of large corporate groups of Pakistan.

Habib, whose group owns majority shares in the project, and is responsible for the land’s development and marketing, told Arab News that the final agreement would be signed in a matter of weeks.

“The definite agreement will be signed in two weeks’ time after completion of their (SAC’s) internal process,” Habib said.

Speaking at the signing event on Sunday, SAC chairman Khalid Abdulaziz AlMogbel expressed his confidence in Pakistan’s economy and vowed to invite other Saudi investors to Pakistan.

“We are really very confident about Pakistan’s economy and we would like to invite other Saudi investors to join us,” AlMogbel said and added: “Pakistan and Saudi Arabia are brothers, and we are working for long-term strategic cooperation for other projects.”

AlMogbel said his company was also looking for other investment opportunities in sectors including health care.

“We have other objectives in Pakistan to help in the health care services sector,” he added.

The Saudi company is active in the fields of infrastructure projects, building projects,
manufacturing, and real estate development. The company has also commenced projects in the energy sector including oil services and gas projects both on and offshore.
Financing by banks to construction sector jumps 85pc in 2021

Shahid Iqbal
January 7, 2022 -

KARACHI: Bank lending to the housing and construction sector increased by an unprecedented 85 per cent during the calendar year 2021 while the loan disbursements under the Prime Minister’s low-cost housing scheme also rose to Rs38 billion.

The State Bank of Pakistan (SBP) on Thursday reported very high growth in financing to the housing and construction sector but it was still not up to the mark as the government wants to build 5 million houses during its tenure ending next year.

“Recording an unprecedented growth of 85pc, banks’ outstanding credit for the housing and construction sector increased by Rs163bn to Rs355bn during 2021,” said the central bank in a circular.

In October 2020, the government introduced a Markup Subsidy Scheme, commonly known as Mera Pakistan Mera Ghar (MPMG), aiming to boost the housing sector by extending cheaper loans to low-income families to build their homes.
Disbursements under Mera Pakistan Mera Ghar surge to Rs38bn
“Within the housing and construction portfolio, disbursements under the MPMG increased by Rs38bn,” said the SBP.

Since the end of the amnesty scheme on June 30, 2021, the inflow of investment in the housing and construction sector has significantly reduced. Builders have been demanding to extend the amnesty scheme but the government looks determined not to extend it. The amnesty scheme allowed black money to join the industry which artificially increased the property prices manifold across the country.

“Financing to housing and construction and particularly under the MPMG has witnessed impressive growth on the back of many enabling regulatory measures introduced after extensive consultation with stakeholders,” said the SBP.

The SBP said it advised the banks to increase their housing and construction finance portfolios to at least 5pc of their domestic private sector advances till December 2021. The central bank has also introduced a set of incentives and penalties to ensure compliance.

Habib Bank, Meezan Bank and Bank AL Habib were the top three contributors to the significant growth in housing and construction financing. These banks also made significant progress in the provision of financing under the MPMG.

Financing under MPMG picked up momentum in 2021 as approvals for financing by banks grew from near zero to Rs117bn in 2021.

“The banks have received requests of financing of Rs276bn from potential customers, which indicates that approvals and disbursements will keep growing in coming months,” said the SBP.

Bank Alfalah emerged as the leading bank with the highest disbursement of Rs3.3bn followed by nine banks with disbursements of over Rs2bn each. These include Meezan Bank, BankIslami, National Bank, Standard Chartered Bank, HBFCL, United Bank, MCB Bank, Bank of Punjab and Habib Bank.

The SBP said it has taken a number of steps to create an enabling regulatory environment for banks to increase financing to the housing sector. Key initiatives include allowing acceptance of third-party guarantees during the construction period, waiver of Debt Burden Ratio (DBR) in case of informal income and the introduction of standard facility offer letters by the banks.

The SBP has also advised banks to develop and deploy income estimation models for borrowers with informal sources of income.
Moreover, the construction sector has been declared an industry. This brings tax relief to firms in the industry through the amendments to the tax ordinance. Reforms to tax policies provide numerous incentives to builders and developers as well as contractors. These include lower tax rates and the removal of numerous taxes previously hampering the ease of doing business in the sector.

Published in Dawn, January 7th, 2022

Govt lowers markup for housing finance

Shahid Iqbal
February 13, 2022

KARACHI: The government has decided to revise downward the markup rates for housing subsidy scheme with the aim to give the sector another chance to emerge as a leader in economic growth.

A latest circular issued by the State Bank of Pakistan (SBP) on Saturday said that in view of the feedback received from various stakeholders, the government has decided to revise pricing (markup rates and subsidy payment period) under Tier-I housing scheme which is used to finance housing units in the Naya Pakistan Housing and Development Authority (NAPHDA) projects.

The government has provided a number of incentives and took a series of measures to give a boost to the housing sector but growth remained much below the expectations.

However, the housing and construction collectively showed better growth in the calendar year 2021. An SBP report issued this year said the credit to housing and construction has increased by 85 per cent during the year 2021. The credit for Prime Minister’s Housing Scheme also attracted Rs38 billion for financing, while the credit for housing construction increased by Rs163bn to Rs355bn in 2021.

The subsidised markup financing for one to five-year tenor will now be 2pc. Similarly, the subsidised markup financing for six to 10 years will be 4pc, while the same financing for 11 to 15 years will be charged at 5pc.

Earlier, the rate was 3pc for five years, 5pc for next five years and KIBOR plus 250 basis points for 15 to 20 years.

However, the bank pricing will be KIBOR (Karachi Inter Bank Offered Rate) plus 2.5pc. The SBP further said that for loan tenors exceeding 15 years, market rate – bank pricing – will be applicable.

Earlier, the SBP had advised the banks to increase their housing and construction finance portfolios to at least 5pc of their domestic private sector advances till December 2021, introducing a set of incentives and penalties to ensure compliance.

Financing under the Mera Pakistan Mera Ghar (MPMG) picked up momentum in 2021 as approvals for financing by banks grew from near zero to Rs117bn in 2021.

Till end of 2021, banks received requests of financing of Rs276bn from potential customers, indicating possibility of higher approvals and disbursements in coming months.

The SBP claims that it has taken a number of steps to create an enabling regulatory environment for banks to increase flow of financing to the housing sector. Key initiatives include allowing acceptance of third party guarantee during the construction period, waiver of Debt Burden Ratio (DBR) in case of informal income and the introduction of standard facility offer letter by the banks. The SBP has also advised banks to develop and deploy income estimation models for borrowers with informal sources of income.

The government has already declared the construction sector an industry. With this brings tax relief to firms in the industry through the amendments to the tax ordinance. Reforms to tax policies provide numerous incentives to builders and developers as well as contractors. These include lower tax rates and the removal of numerous taxes previously hampering the ease of doing business in the sector.

Before the beginning of FY22, the Pakistan Banks’ Association (PBA), through a consultative process, developed and circulated among banks a baseline income estimation model.
The SBP believes that this estimation model is expected to ease difficulties being faced by general public in availing housing finance under MPMG.

Published in Dawn, February 13th, 2022
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