:: Malaya - The National Newspaper ::

:: Malaya - The National Newspaper ::

Tax breaks may ease
2.6M housing backlog


Government will continue giving incentives to mass housing projects to encourage property developers to invest in this segment and therefore meet the country’s housing backlog, according to trade secretary Peter B. Favila.

Favila said government could only provide a third or 1.145 million units of the 3.756 million units required by the country by 2010.

He said the remaining 2.6 million units of shortfall should be left to the private sector for the development of socialized and low-cost housing.

To make this attractive, Board of Investments (BOI) managing head Elmer C. Hernandez said incentives like income tax holiday should be made available.

Hernandez that based on estimates, developers should launch 2,754 projects, at an average of 426 units per project to be able to build 1.2 million low-cost housing units.

"Incentives would encourage more real estate developers to do affordable housing projects using new and innovative housing technology and materials," said Favila, who is BOI board chair.

This way, he said, more low-cost housing will be made available to low-income earners especially overseas Filipino workers, who account half of the buyers of house and lot in the country.

Favila said that based on the 2004-2010 Medium Term Philippine Development Plan, the country will need 3.756 million units.

The government would be assisting in making available the 1.145 million through programs being implemented by the Housing and Urban Development Coordinating Council (HUDCC) the National Housing Authority, Home Development Mutual Fund, National Home Mortgage Finance Corp., Government Service and Insurance System, Social Security System and the Development Bank of the Philippines.

The (2.6 million) shortfall, which would not be covered by the government’s housing assistance package, is an opportunity for the private sector to participate in socialized and low-cost housing finance and construction, Favila said.

The BOI also wants to encourage property developers to tap other, yet less profitable modes of development in the sector. The BOI has observed in the past that most developers concentrate their investments on more profitable vertical developments in highly urbanized areas and practically abandon horizontal development in the outlying areas.

The BOI wants to ensure that incentives given to developers of mass housing projects translate to affordable cost of housing units.

Based on its own study, the BOI said incentives translate to about 12 percent cost savings in a housing unit. By estimate, the incentives enjoyed by a developer for each P1 million worth of unit should translate to about P120, 000 in savings. By definition, a unit costing P3 million is still considered low-cost while any unit that costs P300, 000 and below is socialized.

Hernandez said that the BOI registered 97 mass housing projects between 2005 and 2007.

These projects constructed 42,258 low-cost housing units or 32 percent of the total 133,183 units built during the period.

He said most of these units were marketed to the middle and low-income families.

In 2007, property developers Robinsons Land Corp., Filinvest Land Inc., the DMCI group and Phinma Property Holdings registered the most number of mass housing projects.

According to Hernandez, more housing projects also translate to more jobs and other multiplier effects to allied industries from cement to steel to manufacture of electrical fixtures, paints, wood panels, appliances and furniture.

Quoting a study by the Center for Research and Communication, the BOI said housing has a 16.6 multiplier effect, so that every P1 million investment in housing would generate P16.6 million worth of economic activity.

Hernandez said mass housing projects in 2005 to 2007 generated 23,373 jobs. HUDCC estimates that one housing unit would require 8.3 persons to work for three weeks.

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