A lost opportunity that can be turnaround to benefit the economy
The government should solve the housing problem of the hard-working young couples. Its not rocket sciences, just average capability with goodwill is enough to turn things around.
Government wanted to use the growth of the housing sector to spur the economy. Unlike the developed world which is now spiraling down because of the sub-prime loans mostly in the housing sectors, the market in Bangladesh was mature to use this sector as a strategy to boost the domestic growth. To aid the market forces in the right direction, Bangladesh Bank created a 300 crores fund over three years to underwrite the long-term loans to the middle class. There was also promise to increase the funding if things go well. There were some conditions attached - which was probably too stringent resulting from being too focused on demand side but ignoring the readiness of the demand side. Our initial thought was that if BB relaxed some of the the stringent conditions, market could consume at least 1000 crore per year. However, with the stringent conditions, absorbing 100 crores should not be a problem - if the stakeholders play by the rules.
That was before the two floods, one Sidr, international food crisis that hit Bangladesh badly during 2007. With all these challenges, government did not have time to focus on one of the major projects that it initiated.
So, it exactly happened what is usually the case if the market is left with proper regulatory oversight.
The market forces (businessmen in control of the politics of yesterday) decided that its not the time for middle class Bangladeshis to become homeowners. So they did their job.
They changed the cost equation of building a house or an apartment. The nexus decided to push the prices of one of the major building material up; i.e. so the prices of rod that is absolutely necessary to build high-rise apartments went up. And this all happened without any significant changes in the international prices of the materials. Moreover, there have been newspaper reports of under-utilized capacity.
With that upward trend of rod, the hope for middle class Bangladeshis to become homeowners went down. So, did the governments goodwill gesture for the working class young couples whose household earning is less than 30,000 taka per month.
So far, this is all conspiracy theory. What the government can do? Or should the government do anything?
Government could do several things.
It could ignore this article and do nothing.
It could react hastily and take some more businessman into custody to examine whether the conspiracy theory is correct.
It could actually relax some of the restrictions (such as remove the salary cap and let the market players start at the top and go down sequentially) so that the real estate sector can grow within the high cost situation. At the same time, government should use this allegation of conspiracy (which happened during an emergency period and during a dire situation of the entire economy) as an opportunity to examine whether there were actually anything that could be proved in the court of law and also, if there is anything like that found, issue an arrest warrant from the court first before showing up to catch someone - thats a practice that law enforcement should get used to (It is not to say that the news of arrest warrant issuance has to be published in newspaper giving the alleged culprits a chance to flee!). The real investigators like to keep the alleged culprits out in the open for sometime, that often gives the investigators with evidence to move in.
If you thought some of the ideas are worth of your reading time, please forward it to others. If you have an ear to the columinsts in regular traditional media, please forward it to them. If you have an ear to the journalists and news editors of the electronic media, discuss it with them. Hope they would look at the suggestions and give due diligence.
Thanks for your time,
Innovation Line
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Note: This is a freelance column, published mainly in different internet based forums. This column is open for contribution by the members of new generation, sometimes referred to as Gen 71. If you identify yourself as someone from that age-group and want to contribute to this column, please feel free to contact. Thanks to the group moderator for publishing the article.
Dear readers, also, if you thought the article was important enough so it should come under attention of the head of the government please forward the message to them. Email address for the Chief Advisor: feeedback@pmo.gov.bd_ or at http://www.cao.gov.bd/feedback/comments.php . The more of you forward it to them, the less will be the need to go back to street agitation. Use ICT to practice democracy. It is already proven that this government responds to the feedback.
You can also send it to Bangladesh Bank at this email: gm2combb@bangla.net_
Don't forget to send it to the NBR man himself (most important): bdnbr@mail.com_
And to the Ministry of Finance info@mof.gov.bd_
OR
http://www.mof.gov.bd/contact/email.html
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