The National Research Institute program leader of property development, Dr Eugene Ezebilo, in an interview with Loop PNG said the public sector in the country is not effective enough to address the issue of housing.
“So if the private sector is allowed to drive the housing sector, then we’ll have a lot of improvements,” reiterated Dr Ezebilo.
He said in other parts of the world, the new paradigm is what is referred to as “an enabling approach.”
The state facilitates for the private sector to construct houses while agencies such as the National Housing Corporation implement the housing policy through the ministry of housing and urbanisation.
“Then at the same time the state, through its agencies, should provide infrastructure but the private sector mainly focuses on building houses,” explained Professor Ezebilo.
Currently in PNG it is not clear what type of approach is being used.
“It is as though the governmental agencies are providing houses, which should not be the case.
“It costs a lot of money for government agencies to provide houses,” he stated.
“And at the same time, when they are providing housing, the public sector is not efficient and effective in providing services.
“The people driving the public sector, they may not care much as opposed to the private sector.”
He said the private sector is disciplined by the market forces. The private sector considers a profit and considers the longevity of its projects.
“The private sector would not like to fail because it will be on them.”
With the state dispatching some of its burdens to the private sector, they will now be able to divert resources to other areas of national concern.
The other aspect is the issue of land; the private sector cannot do it if there is no land provided.
“The state will need to put more effort to bring more customary land to the land market,” said the professor.
Currently there are many cases of fraudulent land titles, making it risky for financial institutions to confidently lend to those wishing to put up their land as collateral.
This is where the hybrid of the Integrated Land Group act comes into play with the emergence of the urban development lease, which can be used as collateral for a loan from financial institutions.
“What happens is that the ILG surrenders their land to the state and the state now, through the Department of Lands and Physical Planning, develops the urban development lease. So the urban development lease becomes a state title,” said Professor Ezebilo.
He said this will make it easy for commercial banks to recognise it and it will attract investors because now it becomes more or less a state title.
“It’s a win-win for the ILGs, state and the investors because the ILGs will be able to negotiate with portions of their land, the government will be able to confidently engage with investors and financial institutions will be guaranteed genuine land titles.”