Resolving the urban burden | Pakistan Today

Resolving the urban burden

Disturbing statistics such as 50 per cent of the urban population living in squatter settlements make one wonder if the survey of 39,708 households in the new house rent index incorporates what people pay in illegal settlements where the state or any property rights laws do not have a writ.
The report issued by the world bank last year talked of the housing shortage standing at 7.6m units. The reasons are simple to elicit; the per capita income stands at $1,254 (Rs109,000) annually, whereas urban construction costs are lower range bounded by Rs1.2-2m in areas which have remote accessibility to job centers, implying that a sizeable chunk of salaries goes towards meeting transportation costs. Moreover, the poverty line at $2/day translates into annual per capita earnings of about Rs64,000 not substantially from the per capita income, which boils down to about $3.4/day.
Thus, most of the population lives very close to the poverty line or in other words is extremely susceptible to transitional poverty, implying that housing is a distant proposition for more than 60 per cent of Pakistanis today. The solution to their predicament lies in peeking just across the border. Tata has invested heavily in creating towns for employees around their industrial areas in Jamshedpur, Mithapur, Babrala and Mathigiri, India. This suggests that the private sector in partnership with the government (on account of insufficient resources) still has a chance at developing planned cities, which would significantly reduce the burden of the five main urban centers in Pakistan. Moreover, it can contribute to a great degree of precision in terms of job hunting and selection for low to medium skill workers, which may eventually lead to lower delinquency rates in the medium term.
The creation of such cities would also require identification of investment arenas, which can yield respectable returns over the next thirty years or more. Following precedents already set by other Asian economies, widening the economy’s export base would be the first step in the way. Moreover, considering the overall state of crisis and deteriorating demand conditions globally, common sense would point towards investment in production of goods that have an inelastic demand structure, that is, food, clothing, etc. Precedents lie in the Bangladesh economy, where the low-end ready made garments (RMG) sector has continued to bring in considerable employment and foreign exchange in the country despite a worsening global economy.
Pakistan also has an exploitative edge in the inelastic goods segment as more than 20 per cent of the GDP comes from agriculture and about half of the industries are involved in agro-based processing activities. Moreover, the horticulture sector can have bright export prospects if small investments can be made in grading and processing fruits and vegetables, ensuring adequate quality and obtaining fair price.
Other promising export goods are plastic materials that have registered export growth between 20-37 per cent over the last two fiscal years. In addition, jewellery also seems to be star export performer increasing more than seven-fold from $22m in FY09 to about $161m in FY11.
The solution then boils down to a shift in an overall macro-policy perspective towards counseling, creating opportunities, building an asset base an integral part of which is housing, sustaining families, creating contentment and most importantly sharing!
The key ingredient that would hold the desert this time may have never exited or has been missing since the demise of our Quaid; nationalism.

The writer is an economic researcher and freelance financial journalist. She can be reached at [email protected]

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