Public housing is a concept that has yet to materialise into anything tangible for Cambodia, but the government has shown its willingness to cooperate with the private sector to make some much-needed progress establishing affordable dwellings.
Representatives from microfinance institutions (MFIs), banks, private firms and civil services gathered with members from the Ministry of Land Management, Urban Planning and Construction (MLMUPC) late last week for a workshop on public housing, with the discussion focusing on financial measures that can be adopted to encourage the establishment of affordable housing.
Tep Kosal, director of housing foundation and housing loan department at MLMUPC, stated that, right now, the government is working on a national policy concerning public housing development for people within the average and low income bracket. Kosal acknowledged that over the years it has been difficult for people within the average and low income brackets to acquire housing loans.
Besides acknowledging that Phnom Penh was in dire need of public housing, the MLMUPC has not substantially progressed in finding financing solutions. The Post and Post Property started reporting on how the MLMUPC was developing the policy in May 2015 – apparently to no avail.
However, last week’s workshop revealed nothing that had not already been said more than a year ago. The only update was that the MLMUPC had, by now, come to the conclusion that the government could not subsidise public housing due to a lack of funds.
So, it was left to the MLMUPC’s Kosal to comment: “Presently, we are drafting a public housing policy to urge real estate development firms to develop housing projects, because the government can’t afford it.”
“That’s why we want to hear about what kinds of encouragements are required from the government,” Kosal said.
He continued that the value of public housing has not been officially decided by the ministry, but there have been estimation suggestions of between $15,000 and $25,000.
Peng Hong Socheat Khemro, general director of the Ministry’s housing department wasn’t tired of repeating the obvious, saying that due to the inflow of people from rural areas to more urban towns in recent years, the government has tried to create additional juristic frameworks on the establishment of a public housing policy to give assurance to local and international investors.
“Most housing developments are only targeted at people within the high income bracket; therefore, the demands of housing development for people within the average and low income bracket, as well as vulnerable people, remains an issue that needs attention from all parties involved,” he said.
Meanwhile, Chan Sophan, MLMUPC secretary of state hinted the banking sector should take care of the problem and said there are many private establishments such as commercial banks, specialized banks, and various MFIs that provide credits for home construction and housing purchase. However, he added that some loans provided are very short-term with high interest rates, which is why people within the low income bracket are having trouble purchasing a house.
“Homes are very important to each and every one of us, to at least have somewhere to live,” Sophan said.
He added, “Cambodia is developing at a fast pace. In the past, governments only thought of having food to eat, and clothes to wear, but today, we have reached a point where we organise homes for the people.”
Ann Channy, chief of sales for World City, which is developing Camko City, believes that while establishing government policy is the first step to develop an effective public housing model, he said private developments still needed to benefit.
“Public housing should be valued between $25,000 to $30,000 to ensure that developers can generate profit as well as having the houses be affordable for people with average and low incomes,” Channy said.
“I support the plan in which the government negotiates with banks to lower the interest rates and provide long-term loans.”
Mann Chandy, CEO of Premium Housing Co., also expressed support for the government’s new policy of negotiating with financial institutions to provide lower interest rates and to give out favourable long-term loans, but requested for the permission to divide the property for customers, and the abolishment of property tax.
“Government should encourage firms with these solutions, if the government agrees to these terms, then many private firms and investors would be interested in developing public housing,” Chandy said.
Acleda Bank managing director In Channy, however, said that while the idea of providing long-term loans and low interest rates had its merits, long-term loan would automatically result in overall higher interest rates.
Channy added that the terms of a loan cannot be decided for all financial institutions by the government because each financial institution has different resources and available capital. Acleda currently provides loans with a maximum term of 10 years.
Effectively ruling out the possibility of the private banking sector financing the government’s public housing plans any time soon he added:
“Interest rates can’t be lower, because we borrow the money with high interest rates, due to their being high risk in our country. But if our country surpasses the lower middle income bracket, then interest rates would be lower than it is today.”