Address of Welcome by Mr. Asif Ibrahim, President, Dhaka Chamber of Commerce and Industry (DCCI) at the Seminar on Regional Planning & Governance to Support the Land Development and Real Estate Sector of Bangladesh, March 6, 2012, at 11 a.m. Venue: DCCI Auditorium. Bismillahir Rahmanir Rahim, Advocate Abdul Mannan Khan, M.P. Honorable State Minister, Ministry of Housing & Public Works, GoB and our today s Chief Guest; Mr. Md. Nurul Huda, Chairman, RAJUK and today s Special Guest; Keynote Paper Presenters: Emeritus Professor Brian Roberts, International Expert on City Competitiveness and; Mr. Khairul Majid Mahmud, Director, DCCI & Managing Director, Caldwell Development Ltd; Designated Discussants; Mr. Nasrul Hamid, MP, President, REHAB; Mr. Amirul Islam Chowdhury, Former Vice Chancellor, Jahangirnagar University; Mr. Salim A. Khan, Managing Director, Asset Development & Holdings Ltd; Mr. Monwar Hossain, Managing Director, Anwar Group of Industries; Prof. Nurul Islam Nazem, Dept. of Geography, University of Dhaka; Distinguished Former Presidents and Directors, DCCI; My Colleagues of the Board; Distinguished Guests and Participants; Representatives of the media both print and electronic; Ladies and Gentlemen; Assalamu Alaikum and very good morning I have the privilege to cordially welcome you all to our today s seminar on Regional Planning & Governance to Support the Land Development and Real Estate Sector of Bangladesh. On behalf of Dhaka Chamber of Commerce & Industry (DCCI) and on my own behalf, I would like to take the opportunity to welcome Hon ble State Minister for Housing & Public Works, GoB, Advocate Abdul Mannan Khan, M.P. for gracing the occasion as the Chief Guest. I would also like to welcome our today s Special Guest Mr. Md. Nurul Huda, Chairman, RAJUK. 1
I am also thankful to Emeritus Professor Brian Roberts, International Expert on City Competitiveness and through him to the ADB for supporting us in organizing the seminar. I would also take the opportunity to thank Mr. Khairul Majid Mahmud, Director, DCCI & Managing Director, Caldwell Development Ltd for his consent to present two important keynote papers on Real Estate sector. I also cordially welcome today s Designated Discussants: Mr. Nasrul Hamid, MP, President, REHAB; Mr. Amirul Islam Chowdhury, Former Vice Chancellor, Jahangirnagar University; Mr. Salim A. Khan, Managing Director, Asset Development & Holdings Ltd; Mr. Monwar Hossain, Managing Director, Anwar Group of Industries and Prof. Nurul Islam Nazem, Dept. of Geography, University of Dhaka; Distinguished Gathering; The main objectives of the seminar among others are to: identify areas of intervention for proper land development to exploit the huge potentials and prospects of the Real Estate sector of Bangladesh, identify existing problems and impediments in the growth of this sector and determine the initiatives that need to be taken by both the government and the private sector for bringing a suitable solution of the problems and making the Real Estate sector a successful one for Bangladesh. Growing urbanization in Bangladesh is an outcome of both population growth and at the same time rural-urban migration. Urbanization has been tremendously burdening the city as more and more people are becoming city dwellers. The ever-increasing urban population is catering an increasing demand for shelter. The right of shelter is a fundamental right, which is ensured by both UN declaration and the constitution of Bangladesh. But it is very difficult on the part of the government of Bangladesh alone to ensure housing for all. Here comes the need of private sector real estate development. In Bangladesh Real Estate sector started emerging in Dhaka in late seventies. During 1970s there were fewer than 5 companies engaged in this business. In 1988 there were 42 such developers working in Dhaka and now there are more than 1000 companies engaged in this business. From the beginning of the 20th Century the growth of Dhaka city and urbanization is marked with sheer lack of proper and far-reaching planning. The impact is now being felt at the end of the century. Every year there is huge loss of agricultural land as a consequence of the growing trend in housing demand and the uprooting of rural people because of construction of brickfields. These uprooted people, are creating pressure on Dhaka city, which continuously expanding in all directions. This expansion process is stimulated by the construction of roads and infrastructure. If housing is provided in such an arrangement that it becomes difficult to get into or out from them by the residents, it cannot be termed desirable. There is a need to harmonize the national housing need with the habitation requirements. On this issue, there is a need for legal and regulatory framework and oversight organizations. To remedy this state of affairs all aspect of development have to be 2
brought into discussion because housing development in Bangladesh is clearly related to social development, environmental sustainability and power, gas and water supply issues. If strengthening is the purpose, middle and low-income groups should be targeted. In such cases inclusion of low-income people should be done through introducing crosssubsidy. If 70 per cent of land is developed for upper and middle-income people at least the remaining 30 per cent should be allocated to low-income people who would not otherwise be able to have access to that land. If necessary, regulatory reforms should be made in this regard. Distinguished Gathering; REHAB figure shows that the number of Apartment units Delivered by the Developer in last 20 years is more than 100,000; number of Apartment units Delivered by REHAB Members per year is about 9,000-10,000 Units and number of Plot units Delivered by the Developer per year is 5,000-6,000 Units. Approximate turnover of this sector per year is about BDT 28,000 million and revenue to the government is about BDT 2,000 million. The direct employments in the Real Estate Sector are: Architects-500, Graduate Engineer-3,000, Diploma Engineer-10000, Management Officials-20,000, Direct Labor skilled & unskilled is about 12-15 % of total labor of the country. This sector is also a very important contributor to the GDP of our country. In the fiscal year 2010-11 this sector has contributed about 500 billion to GDP which is about 6.55% of total GDP of Bangladesh (Source: Bangladesh Bureau of Statistics). Research on the housing sector is quite inadequate. Extensive studies on the issue of housing for the low-income people should be carried out, in which those have expertise in dealing with the problem should be involved. National Housing Authority can play a key role in this regard so that a planned housing sector can be developed in Bangladesh. We have a land use policy but because of lack of appropriate institutions, skilled manpower and proper operational mechanisms its proper implementation is not possible. Last year the Board of Directors of DCCI called on honorable Prime Minister where we expressed our support to the Detailed Area Plan (DAP) of the government. The government has to take steps to allocate land for housing projects. It should ensure lands for new housing projects under the Detailed Area Plan (DAP). In the mean time care should be taken so that no harm or destruction of the existing structures and business grounds of Dhaka is taken place. Bangladesh National Building Code (BNBC) should be followed by all the developers. If the developers properly followed the BNBC it would be quite beneficial to the society. While dealing with urban problems, rather than being limited to Dhaka City we have to concentrate on the other urban centers such as divisional centers, district centres, upazila centres, union centres as well. 3
Growth of the Real estate sector is not possible without proper financing being available to both the developers and purchasers. Cost of funding and cost of borrowing are major issues in this regard. Contribution of the financing organizations to the sector as a whole is quite inadequate and this is holding back its growth. Access to credit and delays in decision-making are the main problems of the developers. The most critical issue is financing for the purchasers. The interest rate is so high that it is extremely difficult for a purchaser to pay the installments of the loan from the rental income. So there is a need to restructure the housing loan. Computerization of the land recording process and updating of information for input in this process is very important. Under a framework of computerized land recording and documentation system the financing process will be more efficient. There is a strong need to take zoning permission at the early stage for development in a particular place in any locality and after that; housing, schools, colleges and clinics may be established as per requirements which is in practice in Switzerland, Rome, Brussels, Paris, Canada and many other places in the world. The developers face difficulties in getting utility connections from different authorities due to non-cooperation of the officials concerned, which is partly responsible for delay in handling over the apartments. To stop unplanned development, the major cities of the country should be brought under a proper zone planning. The government earlier created a Tk 5 billion revolving fund for financing purchase of houses for middle income people, but it was not re-initiated. The government should initiate steps to develop the infrastructure and utility development which will play a significant role in smooth completion and enhancing the qualitative standard of housing projects. August Gathering; Our policy makers and economic advisers should focus on policy that stimulates real investment in sectors like real estate. Ideally, local colleges and universities should offer real estate certification courses that provide students a practical knowledge of all aspects of the real estate business- from real estate economics, finance and law to community planning and urban development. Real estate is a large and important sector in Bangladesh. Though Real estate is considered a huge employment generating sector contributing a lot in meeting country s ever growing housing demands, the sector has been confronting various setbacks including legal and policy related issues. Besides lack of government s policy support, the major barriers include non-availability of land in major cities like Dhaka and Chittagong has been acute causing sky-rise land price. Land is available in distant locations but its commercial value is less. This problem can be resolved through setting up of an effective communication and mass transport network in and around the capital as many people would like to dwell in the outskirt of the city if they had easy and comfortable commuting arrangement. The sector also faces shortage of skilled workforce. An integrated effort should be taken to develop efficiencies of the workers. Besides, reducing tax is a very important issue. Because of high taxation, many developers are losing interests in investing intensively in this sector. I think the government should take initiative under Public Private Partnership (PPP) for ensuring 4
sustainable development of the sector. It is therefore necessary to analyze the overall situation of the business with a view to maximize the benefit. Real estate developers opened a new horizon for the small families and the people of moderate income. Owning a house in Dhaka city is not a dream anymore. Easy installments and lower prices compared to build a house made it easier to fulfill lots of people s lifelong dream. It is very encouraging that Real Estate Developers are organized as REHAB and coordinating their efforts to solve the housing problems for the city dwellers. So far as I know REHAB is working closely with the Government to create a sound housing policy for the country. We would like to see active and coordinated role of both public and private sector to resolve the important national issue which is the constitutional demand of the mass people. Real estate sector is an industry that boosts economic development across the world and so it is an indicator of economic growth and prosperity of a country. A large number of industrial units related to commercial, residential and other utility aspects are depending on this sector. It is a challenging but creative sector. So, both public and private sector should come forward for the development of this sector as well as for the development of the country. I don t like to speak further. There are lots of experts on this sector who will give their prudent views for the growth of the sector. I hope you will participate in the open discussion session and deliver your views & comments. I hope today s seminar will be an effective seminar. Thank you all once again. Allah Hafiz, Asif Ibrahim President, DCCI March 06, 2012 5