The government is required to take additional measures to boost real estate sector, including new incentives to Real Estate Investment Trusts (REITs), revision of Builders and Developers Special Procedures Rules 2019, availability of concessionary credit for construction industry and digitization/mapping of urban and all other landmasses of the country.
Talking to Business Recorder here on Saturday, Director ISE-Real Estate Investment Trust (REIT) Aftab Ahmed Ch said that the government should take some additional policy measures and initiatives which would result in making the country a hub of transnational infrastructure investments.
Firstly, there should be availability of concessionary credit for the infrastructure/ housing/ construction industries @5-6 percent. He said that already SBP has many schemes to promote export-oriented and SME industries through concessionary credit. He said that like these earlier schemes, the SBP should also provide cheaper credit to these industries.
Secondly, there should be digitization and cadastral mapping of urban and all other landmasses of the country. He stated that while the digitatization of the rural land record of Punjab and Sindh has already taken place with the support from the World Bank, there is an immediate need to start the gigantic work of digitization of the urban and all other land bank of the country.
Aftab said that due to the release of draft of special procedure for income tax, the construction related stocks are already showing a sign of reversal in the market, and the entire sector seems primed to take full benefit of the proposed measures. He said that from the next quarter onwards, the country may witness more positive results from the government's newer initiatives because the fiscal discipline related measures would also start showing stability to the country's overall economy.
He suggested changes in the Builders and Developers Special Procedures Rules 2019 of the Federal Board of Revenue (FBR) and proposed bringing the undocumented builders and developers into formal regime by registering them as REIT management companies.
The ISE REIT has shown confidence in the proposed fixed tax scheme for developers/builders, which should bring the undocumented builders and developers into formal regime by registering themselves as REIT management companies.
He proposed certain modifications in the Builders and Developers Special Procedures Rules 2019 should be taken up with the Federal Board of Revenue (FBR) and Securities and Exchange Commission of Pakistan (SECP). Due to some recent measures of the PTI government, the real estate economy is expected to see a sharp turn around, Aftab Ahmad Chaudhry said.
Aftab stated that the business people, the realtors and developers have not really fully grasped the potential impact of some of the most ambitious measure being planned by the current government. He enumerated the following seven pro-growth measures planned by the present government, which could propel the real economy of the country. He said even if the government succeeds in partial implementing of these wide ranging reforms, the sector would become a leading contributor to the country's overall development and lead to an uptick in the construction industry.
One, decision of the cabinet to grant status of 'industry' to the construction sector; he, however, stated that the entire real estate value chain should be considered as part of the industry.
Two, approval of the cabinet for the legislation on the establishment of Real Estate Regulatory Authority (RERA) in Pakistan; while welcoming this move, he said that without the establishment of provincial authorities on the subject and making them work with the federal RERA, the purposes of regulatory harmonization for the real estate sector may not be achieved.
Three, release of draft Special Taxation Procedures/Rules to rationalize/incentivise the construction sector. He highlighted that this initiative alone would have far-reaching benefits to jump-start the real estate economy in the country.
Four, the establishment of CPEC Authority; he, however, emphasized that along with CPEC, CAREC also has a tremendous developmental potential, and the proposed authority should be instead named as 'Economic Corridors Development Authority (ECDA)' so as to bring convergence on the work of both the economic corridors.
Five, under-development new framework for Real Estate Investment Trust (REIT) sector by SECP; he said that the current leadership of the Commission is speedily working to bring ease of doing business related improvements in this regard, and the newer framework may enable the country to witness the emergence of a vibrant REIT sector on the listing board of PSX.
Sixth is the establishment of Naya Pakistan Housing Authority for the construction of low-cost housing infrastructure in the country Seven is declaration of 23 years tax holiday for the development of Gwadar port and economic zone which will see tremendous spike in domestic and foreign developmental investment.
Copyright Business Recorder, 2019
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