Economic eclipse:Government's Partial Budget has dashed the hopes of Real Estate Stakeholders

Real estate stakeholders, who were hoping for a boost from the budget of 2012-13, have been left disappointed by partial budget.Realty might have to face a stagnant year again, because the budget is no more than an administrative formality.

Minman Shrestha, general secretary of Nepal Land and Housing Developers' Association (NLHDA), states that transaction of apartments and housing has increased by 15 per cent within the first quarter of 2069 (April-July 2012). Shrestha says, “However, transactions are moving ahead only on need basis, and improvement is temporary. The government has not introduced full budget, so policies, and the overall situation, have remained as they are.“

Opining that realty cannot get worse than this, he says, “Genuine developers are somehow managing to sustain, but those operating under speculation have already crashed.“

Accusing that the government has not created a favourable environment for the industry's growth, Shrestha says, “Instead of emphasising on planned urban development, the government is tightening regulations. Half of ongoing housing projects are either shut off or slowed down because of insufficient bookings, unsupportive banks and negative market rumours.“ If the scenario continues, Shrestha says that no new projects will commence this year. Also expressing his displeasure, Shambhu Prasad Phuyal, general manager at CE Construction, says, “As the government has only introduced budget for administration, there is no remarkable change in the scenario.“

Being optimistic about Nepal Rastra Bank's Monetary Policy, Phuyal says, “We are positive about the policy, which may extend time for renewing loans and clearing dues. However, lack of full budget on time will hamper development activities and realty is not an exception. This year will be tougher than the last one if the government doesn’t take decisive steps. Realty is stagnant since the last two years and the third year will turn out to be the worst.” Agreeing with him, Jaya Ram Lamichhane, president of Federation of Contractors Association of Nepal (FCAN), says, “The special budget has not addressed development activities, and this will affect the economic chain.” Stating that the absence of full budget this year has escalated chances of unemployment and abortion of Investment Year 2012, Lamichhane says, “Three million labourers will lose their jobs and the country will face severe unemployment. Besides, entrepreneurs who have invested billions of rupees in construction machinery will be forced to halt operations. Development activities will stop or decrease and half the investors will stop their work.” The demand of all stakeholders is that the government introduce full-fledged budget within a month to aid development and rescue the economy. If not, the whole economic cycle will deteriorate and labours as well as investors will have to seek jobs abroad. Besides, investors will be reluctant to invest, and the Investment Year will be in shambles.

Stating that the import of raw materials as well as essential equipments have also reduced in the present context, Lamichhane says, “The government’s revenue collection will also recede dramatically if this continues. The economic process should not be hampered due to political instability, but currently, politics has totally eclipsed the economy and the whole nation is suffering due to present political situation.”

Source:The Himalayan Times

1Ropani