Housing finance in Bangladesh

Topics: Real estate, Affordable housing, Public housing Pages: 19 (6978 words) Published: December 30, 2013
FINANCING OF URBAN HOUSING IN Bangladesh
Problems and Prospects of Public Private Partnership (PPP)

Abul Baker Md. Touhid
Senior Assistant Chief, Physical Infrastructure Division
Planning Commission
Sher-e-Bangla Nagar, Dhaka, Bangladesh.

1. Introduction
1.1 Background
Bangladesh is one of the populous countries in the world. It has a population of around 144.50 million on only 147,570 sq km land. Per capita income estimated at current price in the country is only US$ 848 (Bangladesh Economic Review-2012), which is one of the lowest in the world. Despite of its poor economic condition, it earned significant improvement in some socio-economic indicators i.e. infant mortality rate, maternal care and nutritional status during last decades. But the country faces infrastructural deficiencies i.e. transport, electricity etc. Housing is also an unfulfilled sector against demand. Though, housing is one of the fundamental rights mentioned in the Constitution of Bangladesh, still thousands of people are floating, who do not have any houses. Present statistics show that, 30-50% of the urban poor do not have any access to housing (Nayeema, 2004). In rural areas, about 30% people do not have houses (Nayeema, 2004). Each year the country has a demand of 0.5 million housing units in urban areas (Nayeema, 2004). The National Housing Policy, 2008 (NHP-2008) has reported that only 5% of the total houses in Bangladesh are built by formal institutions and mostly in urban areas. The rest are the efforts of people by their own savings, loan and informal sources. From the government side, National Housing Authority (NHA), House Building and Finance Corporation (HBFC), Municipal Authorities, City Corporations and City Development Authorities are constructing shelters (apartments/plots) for different income groups mostly in urban areas. Several other rural housing programs are also in place under Local Government and Engineering Department and Ministry of Food and Disaster Management. Exactly no figure is found how many housing units are delivered all around the country by the government agencies each year. Lack of proper housing planning and financial constraints appeared the government inefficient in providing housing for the people in the country. Several non-government organizations (NGO) are involved in rural housing. There are no definite figures also how many housing units are contributed by the NGOs in rural areas and by real estate developers in urban areas. But it is believed that around 2000 units (Nayeema, 2004) of apartments are built each year by them which are predominantly in Dhaka and Chittagong. As private investors are obliged to make profits, these apartments are predominantly built for the rich and upper middle class of the society. Middle and lower income groups can not afford these houses. There are also problems of tax structure, legal obligations for the real estate developers, which they think not favorable for providing shelter efficiently. However, one study (Nayeema, 2004) shows that, in Dhaka city about 2 million housing units need to be delivered from 2008-2013. That means 40,000 housing units are required each year. Another statistic shows that Dhaka city is in need of 80,000 dwelling units per year (Kamruzzaman and Ogura, 2008). So there is a huge gap between demand and supply. Merely the government or private developers alone can not solve the problem in foreseeable future because of the usual practice and legitimacy of the private sector and financial constrains of the government. So the country is in immense need of a proper approach for housing provision along with a well defined ‘national housing plan’. Public Private Partnership (PPP), in its different forms, has been proved to be a solution to collect huge amount of money and invest in appropriate manner for expected output in different infrastructure sectors all around the world. Particularly, in the field of housing in India, China, Malaysia,...

References: Annual Development Plan (2010-2011), Planning Commission, Bangladesh.
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Bangladesh Economic Review-2012, Ministry of Finance, Bangladesh. [US$1 = 78 BDT, June, 2012]
http://bdpc.org.bd/dloads/earthquake%20zone.GIF (viewed on 18.06.2010)
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K. Nayeema (2004), Public housing and women’s participation, Paper presented in International Research Conference, Adequate and Affordable Housing for All, Toronto, June 2004.
Kamruzzaman, Md. and Ogura, N. Housing for the Middle Income Group in Dhaka, Bangladesh: With a focus on affordability and option, J. Archit. Plann., AIJ Vol. 73, No. 627, 947-954, May, 2008
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