Transcript Regional Project on Pro Poor Housing Finance in Asia and

Regional Project on Pro Poor
Housing Finance in Asia and the
Pacific
A Compendium of Select Countries
of the Region
1
Objectives of the Project
• To review state of the housing finance system with a focus on pro-poor
housing in countries across Asia and the Pacific including India,
Thailand, Mongolia, Indonesia, Sri Lanka and others;
• To bring together the formal and CBO on a common platform to
identify, replicate & upscale innovative approaches;
• To bring out a compendium on housing finance based on country
reports on the state of housing finance and innovative experiences in
providing housing finance for the poor;
• Promote a regional knowledge sharing forum by establishing a regional
network on pro-poor housing finance involving institutions and
stakeholders.
2
Implementation Strategy
• Preparing and publishing individual country reports highlighting the
state of its housing finance sector with a focus on pro-poor housing
initiatives;
• Organizing National level workshops in each country for reviewing
and analyzing the country reports in the presence of various
stakeholders as well as promoting dialogue and knowledge sharing
at all levels;
• Strengthening regional networking and linkages through such
National level workshops;
• Preparation of a comparative analysis on the state of pro-poor
housing finance in the Asia and Pacific.
3
SEQUENCE OF EVENTS
S.NO.
EVENT/DATE/PLACE
PURPOSE & OBJECTIVE
1.
Convening of the Regional Policy A brainstorming session to discuss the
Dialogue on January 30-31, 2008 at need for the establishment of a regional
New Delhi, India
network on pro-poor housing finance.
2.
First Meeting of the Country Reporters To review and finalize the draft guidelines
on January 31-Feb 1, 2008 at New for preparation of the country reports.
Delhi, India
3.
Second Meeting of the Country Peer-Review of first drafts of the country
Reporters on March 18-20, 2009 at report and discuss the preparation of the
Chiang Mai, Thailand
regional comparative analysis as also
finalizing the time frame for the next
steps of the program.
4
SEQUENCE OF EVENTS
4.
National Workshops on Pro Poor Housing
Finance conducted at Thailand, Indonesia,
Mongolia and India
Understand and outline the key
challenges in providing finance for Propoor Housing, review and finalize the
draft country reports and discuss the
outline of the regional level initiatives.
5.
Regional Meeting of Housing Finance
Institutions on October 15, 2009 at
Bangkok, Thailand
Discuss the formation of a regional
network on pro-poor housing finance
and launch of Special edition
Government Housing Bank (GHB)
Journal on pro-poor housing finance
6.
Regional Symposium on Pro-Poor Housing
Finance on April 19-20 at New Delhi, India
Discuss challenges and highlight
innovative approaches towards propoor housing finance in different
countries of the region. Discuss the
creation of a Regional Network on ProPoor housing finance.
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COMPENDIUM STRUCTURE
 CHAPTERS
 Pro-Poor Housing & Housing Finance – A Primary Issue
 General situation and housing conditions in select countries
 Government housing policies and programs
 Housing Finance system in select countries
 Constraints in the provision of housing finance
 Innovations in Pro-poor housing finance
 Conclusion and Recommendations
 Regional Support Mechanism
 Figures, Boxes and Tables on various aspects of Pro-Poor Housing Finance
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Housing & Housing Finance
• Housing a basic and fundamental right;
• A key driver of a country’s economy;
• Critical role in GDP growth;
• Market Housing & Social Housing;
• Pro Poor Housing is at the bottom of the pyramid of social housing – major
share of housing shortage and affordability concerns.
–
–
–
–
Land costs
Infrastructure
Building materials & Supply
Finance
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Housing Scenario in Asia and Pacific
•
•
•
•
Urbanization trends
Population growth
Depletion of existing stock
Cultural changes
•
Over 500 million or 45% of all urban residents of the region live in sub-standard
housing, slums and squatter settlements;
Increasing growth rates in urban settlements creating pressure on land and
infrastructure availability in urban areas leading to increasing housing costs.
Land-to-income ratios are the highest in Asia and the Pacific, when compared to
other regions.
Limited access to housing finance, particularly for the poor and economically
weaker sections. Mortgage Debt/GDP ratio is very low when compared to western
countries.
•
•
•
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Key Indicators
Country
Total
Population
(mn) 2007
Urban
Population % of
total
Urbanization
growth
%
1,125
29
2.5
Pakistan
162
36
3.3
Sri Lanka
20
15
0.2
Thailand
64
33
1.6
Mongolia
26
57
1.3
Indonesia
225
50
4.3
Bangladesh
158
27
3.7
India
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OBSERVATIONS
 Most of these countries have a majority or an increasing percentage of their
population residing in it’s urban areas and increasing urbanization and growth in
economic activity have led to increasing influx of people towards the urban areas;
 Increasing population pressure on urban areas has led to severe housing and
infrastructural deficiencies;





One out of every three people living in cities of the developing world lives in slums.
UNHABITAT estimates that more than half of the world’s slum population resides in Asia
Poor infrastructure access to basic services in all countries
Natural calamities – Tsunami, earthquakes and floods
Majority of the poor – informal sector
 Significant Developments in Political and Economic Conditions
The above presents a major challenge to the planners and a great
opportunity for the financial sector
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HOUSING POLICIES AND
GOVERNMENT INITIATIVES
• The National Governments in these countries have been
taking various measures over the years, in meeting the
housing needs for the poor through various programs,
missions, etc. Constantly responding to the need to provide
pro-poor housing solutions;
• The pro-poor housing initiatives form a major part of the
policy formulation of these Governments;
• A wide spectrum of solutions have been adopted including
provision of serviced land, subsidies be it on interest rate or
infrastructure, participatory approaches in planning etc.
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HOUSING INITIATIVES: REGIONAL COMPARISON
COUNTRY
KEY INITIATIVES
INDIA
• Announcement of National Urban Housing and Habitat Policy in 2007.
•Launch of urban infrastructure development programs like JNNURM .
•Cash subsidy scheme like Indira Awaas Yojana (IAY) for rural poor.
•Interest subsidy scheme (ISHUP) for the urban poor.
•Project Finance assistance for housing initiatives through NHB & HUDCO.
•Slum eradication programs like Rajiv Awas Yojana.
THAILAND
•Approval of National Housing Strategy and establishment of National
Housing Policy.
•Initiation of community housing programs like Baan Eua-Arthorn (BEA)
program by NHA and the Baan Mankong (BMK) Program by CODI.
•Existence of an integrated model involving GHB, NHA and CODI to facilitate
home ownership among low income communities.
MONGOLIA
The Housing Finance Sector Program (HFSP) has contributed towards
establishing a sustainable, market-based housing finance system for the
delivery of housing finance to meet the borrowing needs of low- and middle12
income households. The launch of “40,000 Houses Program” in 2005.
HOUSING INITIATIVES: REGIONAL
COMPARISON
COUNTRY
KEY INITIATIVES
INDONESIA
•Subsidized Home Mortgage (KPR) program, a housing assistance scheme for
low income communities, was initiated in 1976.
•National Movement for One Million Houses, with its objective to provide
affordable housing and improving quality of living environment, was initiated
by the government in 2003 – focus is on improving coordination amongst
stakeholders in housing development.
SRI LANKA
•Post 1970, a series of significant legislative enactments were introduced to
regulate the housing sector which ushered in reforms related to tenancy, rent
control, house property ceiling, etc.
•Under the Janaudana Housing Programme, new houses are constructed with
the enabling approach and participation of beneficiaries in direct
construction. The Government provides land, infrastructural facilities and
utilities in new housing complexes and provides housing loans at affordable
rates to prospective buyers.
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HOUSING FINANCE SYSTEMS - Stakeholders
• National and
State Governments
• Public Sector Institutions
•Private Sector
•Retail Lending Institutions
•Microfinance Institutions/Community Based Organizations
•Individuals, Self Help Groups, Community Networks
•Multilateral Institutions/Donors
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Housing Finance System
India
Central & State Government
Housing Boards & Development Authorities
Apex Level Housing Finance Institution
Banks, HFCs, Cooperatives
MFIs, CBOs/NGOs
Thailand
Government
Apex Level/Specialized Housing Institutions – GHB, NHA, CODI, GSB
Retail Level Institutions – Banks and Community Network
Mongolia
Government – Primary Supplier of Housing
Apex Level/Specialized Housing Institutions – HFC, MMC
Commercial Banks - Limited
Indonesia
Government
Apex Level/Specialized Housing Institutions – PERUMAS, BTN
Commercial Bank and MFIs
Sri Lanka
Government
Apex Level/Specialized Housing Institutions – SMIB, NHDA, HDFC, NSB
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Banks, MFIs, RDBs
CONSTRAINTS IN PROVIDING HOUSING
FINANCE TO THE URBAN POOR
• Existing
Programs not ‘affordable ‘ for the poor;
• Reach
•Meeting the total borrowing needs
•Sensitive to rise in interest rates
•Construction costs/land costs
•Terms and Conditions for mortgage
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EXISTING PROGRAMS NOT ‘AFFORDABLE’ FOR THE POOR
• In India, although public sector institutions like Housing
Boards and Municipal Corporations have supplied houses
to the poor, however, over the years, the supply of houses
to such segments has declined.
• In Thailand, the increase in interest rates has resulted in
affordability programs under the Baan Eua-Arthorn (BEA)
program.
• In Indonesia, the lack of supply of serviced land and
tedious “permitting” procedures has made it unprofitable
for developers to use available land resources for middle
and lower-middle income houses.
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EXISTING PROGRAMS NOT ‘AFFORDABLE’ FOR THE POOR
• In Mongolia, despite the launch of Housing
Finance Sector project, a majority of moderate
and low income families, could not afford
mortgage loans on the terms of commercial
banks.
• In Pakistan, the actual supply of houses under
different housing schemes announced by the
Government falls dismally short of the target.
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IMPEDIMENTS RELATING TO THE TITLING AND REGISTRATION
PROCESSES
• In Mongolia, the land registration and titling are somewhat
problematic as the process is disjointed. The titling process is also
confusing as it involves four sequential legal certificates.
•
In Thailand, large amounts of farmland are either leased from the
Royal Forestry Department (RFD) or otherwise have no titles. True
title deeds are only found in the developed parts of the country and
account for only a small part of the livable land in the country.
• In Sri Lanka, It was observed that unless the urban poor were
provided with adequate access to land, they will not be able to
make use of the presently available financial facilities .
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IMPEDIMENTS RELATING TO THE TITLING AND REGISTRATION
PROCESSES
• In India, the lack of clear and marketable titles has
proved to be a major barrier for the poor in
accessing housing finance from the financial
institutions in the formal sector.
• In Pakistan, like in India the same issues in titling of
properties, and same cumbrances in the recording
and registration of titles, particularly in downtown
areas of big cities, and their adjacent semi-urban
areas, exist.
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LACK OF LONG-TERM SOURCES OF FUNDING
Thailand
• Local banks are reluctant to join the Baan Mankong Program (BMK)
because they are still unfamiliar with the concept of communitybased lending and its level of credit-risk.
• Even in the BEA program, the long-term financing mismatch has
been a major reason for the project’s failure in achieving its
objective of providing 600,000 homes for low-income Thais in five
years.
Mongolia
• The Housing Finance Corporation (HFC) which is implementing its
program of 40,000 houses faces asset-liability mismatches, since its
source of funds are short term bonds and lending is for longer
periods.
21
LACK OF LONG-TERM SOURCES OF FUNDING
Sri Lanka
• The major risk being faced by the lending institutions is the
declining margins. Unless long term funds at moderate
interest rates are made available, it would become very
difficult to sustain mortgage lending.
India
• Access to long term funds at affordable costs, particularly
for microfinance institutions, is one of the challenges for
enlarging their operations for housing.
Pakistan
• While the commercial banks are aggressive in originating
new mortgages, they use the short term funds/deposits for
long term mortgage lending, thus creating a clear
mismatch.
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NON-AVAILABILITY OF PRIOR CREDIT HISTORIES &
UNDERWRITING STANDARDS FOR POOR
Thailand
• Under the Baan Eua-Arthorn (BEA) program, many
buyers could not get access to housing finance because
of lack of credit history. No credit ratings could be
established. In fact more than 25% of the applications
were rejected for financing.
Mongolia
• Banks have their own standards to underwrite their
housing loans resulting in less access to housing
finance for the poor.
Sri Lanka, India, Indonesia
• Due to the volatility and variability of their incomes,
the low income groups are not entertained by most of
the formal sector institutions.
23
ABSENCE OF WELL DEVELOPED SECONDARY MORTGAGE
MARKETS
• In India, limited securitization of housing loans.
• In Mongolia, the Mongolian Mortgage Corporation (MIK) was
established a few years back to develop primary and secondary
mortgage markets by issuing and selling mortgage-backed
securities.
• In Sri Lanka, secondary mortgage market is non-existent.
• In Thailand, even though Secondary Mortgage Corporation (SMC)
was set up for development of secondary market through
securitization, it has very limited housing finance role. It has done
only outright purchase of housing loans, and no subsequent
securitization was done.
24
NEED FOR A SINGLE INSTITUTION CATERING EXCLUSIVELY
TO THE POOR
• In India, the Government is exploring and examining the possibility
of setting up of companies which could focus only on micro-housing
requirement of the lower income groups.
• In Mongolia, there is need for an institution that targets to develop
and upgrade housing condition of the ger area inhabitants.
• In Thailand, there is a felt need for establishing a specialized
housing finance institution that will provide home financing for lowincome families.
• In Pakistan, the HBFC is considering forming a “social housing bank”
for very poor and very needy people.
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INNOVATIONS IN PRO-POOR
HOUSING FINANCE
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Innovative Practices & Approach
• Project Identified Several
–
–
–
–
–
–
–
–
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NHB Housing Microfinance, India
REPCO Integrated Model of Financing, India
Baan Mankong Program (BMK), Thailand
Women’s Bank, Sri Lanka
Poverty Reduction Program, Mongolia
Subsidized Home Mortgage Program, Indonesia
Community Mortgage Program, Philippines
Ansar Management Company, Pakistan
National and Sub-National Policies, India
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Learnings
 Success of integrated approach where one entity acts as a
demand aggregator, another provides financing and the
other provides technical/construction assistance.
 As all concerned institutions belong to the same group, there is
increased mutual stake holding and co-operation.
 As a result of the integrated approach, overall monitoring is
better, resulting in lesser default and delinquency.
• Commercial Banks can provide long term housing loans to
MFIs who can pass them on to their members to facilitate
incremental housing.
• The option of using Group Guarantee as collateral could be
explored as peer pressure will ensure that the poor make
timely repayments.
Learnings
•
Small/incremental loans for construction of toilets/kitchens, etc. for improving
infrastructure.
•
Exploring alternative forms of collateral like savings, etc.
•
Urban poor communities and their networks need to be at the center of decision
making with respect to funding and implementation of the project - their
preferences and ideas are given primary importance.
•
Institutions need to act as a facilitator and also provider of technical support;
•
The Government institution need to work with community networks to achieve
scale;
•
Importance of saving for housing loan need to be emphasized among the
community;
•
Community networks need to interact with a wide variety of actors to achieve
housing solutions;
•
Provision/ security of land tenure a need for success of the program.
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CONCLUSIONS &
RECOMMENDATIONS
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NEED FOR RISK MITIGANTS
• The creation of a Credit Guarantee Fund/Risk
Fund by the Government
• Title insurance
• Credit bureau
• Alternative forms of collateral
• Consumer finance and education
• Construction and technical assistance
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CREATION OF AN “AFFORDABLE
HOUSING FUND”
• Provision of credit guarantee to financial
institutions.
• Providing subsidies to the poor in the form of
infrastructure, interest rates etc.
• Low interest loans to financial institutions.
• Directly finance innovative projects.
• Support research projects/studies.
32
Others
• The success of the BMK program implemented by CODI in
Thailand and the Community Mortgage program in
Philippines clearly point that channeling of funds through
community networks can work to the advantage of the
community.
• There is a strong need for strengthening of laws related to
the recovery of Housing loans.
• There is need for continuous dialogue and dissemination
among various stakeholders at all levels.
• There is a need for creating “Exclusive” of “Intermediate”
institutions which will act as a bridge or link between the
community and the formal sector institutions.
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KEY RECOMMENDATIONS
• Common issues and varied experiences – common issue with varied
dimensions
• Physical and virtual platform for knowledge and experience sharing
• Low cost construction technologies – NHB/Monitor Group, India
• Low cost construction materials – Research and Development Institutions
• Long term funds and Liquidity Facility - MFIs
• Product innovation – Savings & loans, Progressive Housing Finance
• Policy initiatives and programs by different governments – Need for SWOT
Analysis
• Land bank and provision of serviced land – to counter rising land prices
• Promotion of Housing Micro-Finance Institutions/Social Housing Banks
• Regional Co-operation
REGIONAL SUPPORT
MECHANISM
35
Felt Need
• The need for establishing a Regional Network on Pro-Poor Housing
Finance was felt by participants at the Regional Policy Dialogue on
Pro-Poor Housing Finance, held at New Delhi, India from January
30-31, 2008.
• Later, meetings held within the framework of the NHB – UNESCAP –
UNHABITAT project, including those held in Chiang Mai and
Bangkok in 2009, further emphasized the need for such a network.
• Discussions on the nature and shape of the network were also held
following the SAHF meeting in 2010 in New Delhi. During the
meeting it was agreed that the existing initiatives of SAHF,
UNESCAP, UNHABITAT and NHB would be merged into the new
Regional Network.
• Subsequently an additional meeting was held in Bangkok in March,
2010, where the modalities for the setting up of the network were
presented and discussed.
36
KEY AREAS IN ASIA PACIFIC WHERE REGIONAL
ACTIONS ARE NEEDED
• Norms and standard setting.
• Creating regional funds and institutions to
promote networking.
• Exchange of information and experience.
• To build capacities of formal and MFI/NGO/CBO
based housing finance institutions.
37
ROLE OF A REGIONAL NETWORK
• Link institutions across the entire spectrum of housing finance
provision.
• Undertake research and analyses of innovative practices in pro-poor
housing finance, policy options and frameworks enabling the
establishment and successful functioning of wide-spread pro-poor
housing finance mechanisms in Asia and the Pacific.
• Training and capacity building at all levels including virtual
communication and face-to-face exchanges.
• Region-wide advocacy of pro poor housing finance issues.
• The regional network would not only allow for a better exchange of
information, but would also offer opportunities for collaboration
between various housing finance institutions.
38
Thank You All
39