While the key administrative and regulatory infrastructure for housing is already in place ~ comprised of the NHA for government housing production, the NHMFC-PagIBIG-HGC (Home Guaranty Corporation) triumvirate for home financing, and the HLURB as the regulatory arm ~ nonetheless, the current housing problem plaguing some 4.5 million poor families continues to deteriorate. To resolve this problem, CREBA continues to work for the adoption by Government of measures that will effectively address 4 major concerns:
Equitable Land Access.There can be no housing where there is no land for the purpose.In 1988 Government institutionalized the Comprehensive Agrarian Reform Program (CARP) under RA 6657. Since then, the improper interpretation and implementation of the law resulted in locking up practically all of the country’s lands under the program. Despite the clear exceptions and exclusions under the law, no land may be developed without clearance or approval from the seemingly all-powerful Department of Agrarian Reform (DAR).The daunting bureaucratic processes and costs involved in securing such clearance have effectively stymied all residential, commercial, industrial and other non-agricultural development efforts by both government and the private sector. If at all a project is approved, it is only after at least 2 years of delay, entailing exorbitant costs that drive the prices of housing packages to unaffordable levels.It has been CREBA’s major effort to convince Government to rationalize CARP implementation, so that those lands which are already CARP-exempt under existing laws, and which Congress and the local governments have already set aside for various non-agricultural development purposes, may be readily made available for such purposes. Read CREBA’s Position on Land Access, Proposed Executive Order on Land Access.
Permanent and sustainable homebuyer financing assistance program.To eliminate the 4.5 million housing backlog within 20 years, a production rate of at least 500,000 socialized and low-income housing units per year needs to be achieved.Involvement by private developers in this effort is indispensable, since Government does not have the necessary fiscal resources to undertake this massive production effort on its own.However, good business sense dictates that for private developers to undertake such production, there must be effective demand ~ meaning, buyers who can afford to pay. Given that housing is a relatively high-ticket item and majority of the homeless suffer from low take-home pay, homebuyer-financing assistance by way of soft housing loans is therefore a must.Pag-IBIG funds alone are not sufficient to sustain this production volume. In addition, a permanent and sustainable homebuyer financing system must be instituted by law rather than by mere executive or administrative fiat. This would ensure continuity despite changes in political leadership, and thus inspire continuing confidence on the part of the private sector.For this purpose, CREBA has been continually pushing for enactment of a law that will institute its proposed Centralized Homebuyer Financing Program (CHFP) ~ designed to capture and channel private funds into a continuing massive housing production, and provide soft housing loans without need of government subsidy.
Elimination of Inequitable Taxes.Among all businesses, the real estate and housing industry suffers most in terms of the heaviest tax burdens. It is also the most highly regulated ~ with some 20 government agencies involved ~ and as such further suffers from heavy regulatory fees at every stage of the development, selling and conveyance processes.Among the tax burdens that CREBA has been challenging are the Creditable Withholding Tax (CWT) on sales of real property, the 2% Minimum Corporate Income Tax (MICT), the 233% increase in the Documentary Stamps Tax (DST) on loan instruments, and the 10% VAT on foreign currency denominated sales of real property.CREBA has recently filed before the Supreme Court a constitutional challenge against the CWT and MICT, and is continually making representations with Government for the reversion of the DST to its previous level, as well as a proper interpretation by the BIR of the VAT exemption granted by law to sales in foreign currency. ReadCREBA’s Supreme Court Petition on the CWT & MICT, Reply to the Solicitor-General’s Comment on the Petition, CREBA’s Position on the DST.
Department of Housing.CREBA has perceived that since the abolition of the Ministry of Human Settlements in the wake of the Martial Law regime’s downfall, the housing effort has suffered in terms of prioritization at the highest levels of Government.It is CREBA’s view that since shelter is one of the 3 most basic needs of man, provision of the same should enjoy a priority at least equal to tourism and other government services, and should be similarly addressed by a full-fledged Department rather than just a mere Coordinating Council.Toward this end, CREBA has been continually working for the creation of a Department of Housing and Urban Development. Read CREBA’s Proposed Housing & Urban Development Act.
Cognizant that Government’s socio-economic policies impact strongly on the industry and the homeless, CREBA has broadened the focus of its advocacies to embrace a comprehensive socio-economic reform framework. Read CREBA’s Framework for Economic & Social Advancement.
Among the major components of this reform framework are:
Wage Hike & Lower Prices via an Interest Rate Ceiling.Since the Anti-Usury Law was rendered inoperative, the Philippines has had one of the highest levels of bank lending rates in the world. Because lending rates are allowed to be dictated by market forces ~ which, in the Philippine setting, is highly susceptible to manipulation ~ any temporary political or economic aberration results in a rate spike.And since cost of borrowing represents a major cost for all businesses, a rate spike triggers a chain of cost- and price- inflation across the entire economic spectrum, driving the economy into a tailspin.The high cost of borrowing is viewed as the primary reason for the inability of the business sector to raise wages; any government-imposed wage hike only results in retrenchment that further worsens unemployment. It is also seen as the reason for the abnormally high prices of goods and services which render local products and exports thereof uncompetitive.CREBA is of the view that if interest rates were to be stabilized at a 9% ceiling, all businesses will be able to generate savings (a) from which to draw the increase in minimum wage, and (b) by which to lower prices of goods and services. Even Government will benefit in terms of reduction in the domestic debt servicing burden.The compounded favorable impact on purchasing power is expected to revitalize all markets, and consequently improve investment levels, employment levels, global competitiveness and government’s revenue generation picture. A solution to some 70% – 80% of the country’s woes ~ including peace and order problems, political instability ~ should automatically follow.The country’s 30-million labor force, being the principal beneficiary, is certain to embrace this move. So will the business sector. The banking sector should have no cause to oppose, since a 9% interest cap that is tax-free is roughly equivalent to 12% taxable, and considering that a revitalized economy will provide banks with much greater business opportunities and much lesser risk of non-performing loans.
It was during the Anti-Usury Law regime from 1916 to 1978, when bank lending rates were pegged to 12% per annum, that the Philippines outperformed its Asian neighbors in terms of economic growth and stability. A statistical review reveals that the country started experiencing economic reverses only in the early ’80s when the Central Bank was allowed, under PD 858, to lift the 12% rate ceiling.
CREBA’s proposal, in essence, is for the restoration of Anti-usury Law regime, but with one modification: from a 12% taxable ceiling, to a 9% tax-free ceiling. Read full text of CREBA’s Position Paper on Interest Rates.
Regulation of foreign exchange rate and foreign portfolio investments, to stabilize the peso and prevent severe economic dislocations, by avoiding over-dependence on short-term foreign investments and insulating the economy from exploitation by foreign speculators, without hampering foreign direct investments.