Investment Priorities Program to spur housing for the masses
The 2014 Investment Priorities Plan (IPP), approved by President Aquino last Nov. 21, aims to promote the country’s local industries. Through the IPP, specific activities that include economic and low-cost housing will be eligible to receive over the next three years government fiscal incentives such as income tax holiday.
The new IPP will be valid for three years (until 2016) but will be subject to annual review.
“The IPP, which takes effect this week, will include both horizontal and vertical housing projects that cost no more than P3 million (and depending on geographical location),” said Armenia Ballesteros, president of Subdivision and Housing Developers Association, the country’s largest organization of housing developers.
Ballesteros explained that having an IPP that is effective until 2016 would ensure a consistent, coherent and predictable policy environment that attracts serious investors. “The Board of Investments has just crafted the implementing rules and regulations that will be our guide to effectively benefit from the IPP,” she said.
Multiplier effect
Ballesteros said: “Housing is one of the most effective ways of stimulating consumption and production activity in other sectors of the economy. It has a powerful ‘multiplier effect,’ especially when it comes to projects involving economic and low-cost housing as more jobs are created.”
The multiplier effect refers to the idea that the initial amount of money invested would lead to an even greater increase in national income.
Housing’s multiplier effect is estimated at 16.6 times, which means every P10 billion invested in housing contributed to as much as P166 billion worth of economic activity in the country.
“Housing may be regarded as the ‘mother of all industries’ because it represents the spark plug which triggers income opportunities for various sectors and generates a market for the construction and allied industries—from drawing up the plan to the initial construction and up to finishing the structure, various industries will come into the picture,” she said.
Housing backlog
As SHDA works to eliminate the country’s 3.9 million housing backlog by 2030, Ballesteros believes that devoting more projects that fall under the economic and low-cost housing would quickly lessen the number of houses needed.
Ballesteros said: “One study revealed that the housing backlog for economic to low-cost housing is at 2.5 million. If majority of our 200-strong members would dedicate more projects in this sector, they will be able to serve a huge portion of the population that has been underserved for so many years.”
Since 2012, SHDA is being guided by the “Philippine Housing Industry Plan: 2012-2030,” an industry roadmap that provides not only data but also other relevant information such as production capacity, affordability, financing needs and regulatory framework.
Out of this roadmap, Ballesteros said SHDA has been working to meet the first milestone of building one million new homes by 2016. “So far we have been succeeding as we have already delivered 211,010 units in 2012 and 294,359 units in 2013 (2014 data is not yet available) and we are confident that we will surpass the target. However, if we are to sustain continuous growth, we need the support of various sectors. The IPP is one of these tools that would embolden our members to invest more in economic and low-cost housing projects that are expected to benefit more Filipino families.”
