By Prinz P. Magtulis (The Philippine Star) | Updated September 23, 2015 - 12:00am
Housing backlog in the Philippines is estimated at 3.6 billion despite the booming property
MANILA, Philippines - The Philippines is embarking on two local and overseas initiatives collectively worth around P2.4 billion this year to address the country’s housing backlog, the National Home Mortgage Corp. (NHMC) said.
Topping the list is the country’s participation in a fund pool to be discussed in this year’s Fixed Income Summit by the Association of South East Asian Nations (Asean) from Sept. 28 to 29 which Manila is spearheading.
The “co-mingled” fund has secured the nod of Malaysia and Indonesia and will be up for discussion by four other countries, NHMC president Felixberto Bustos Jr. told reporters in a briefing last Monday.
“We are looking at submitting $5 to $8 million for the amount of the pool. This will be backed by our best assets and will be mixed with the other assets in the region,” he said, adding the mechanism is targeted to be set up on “the first quarter.”
Discussions will focus on risk sharing among countries and the type of assets that will be eligible to back up the funds. The funds, Bustos said, will be distributed through bond issuances within the Asean.
Housing backlog in the Philippines is estimated at 3.6 billion despite the booming property sector.
With the Asean fund pool, Bustos said the country hopes to provide “alternative funding” for housing through the fixed-income sector. In this way as well, the country will not lose out on other Asean countries once the integration kicks in by the end of 2015.
“This will be good since right now, we do not have a Philippine (fixed income) product. Our fear is once the integration happens and Asean players come in, our huge liquidity will flow out,” Bustos said.
“At least with this, we can secure some of our own funding together with the rest of the Asean,” he said.
Locally, the NHMC is also on the final stages of issuing P2-billion worth of local bonds, proceeds of which will “strictly” be channeled to low-cost and socialized housing. The project was already “approved in principle” by the Housing and Land Use Regulatory Board.
The goal is to attract large developers which are having difficulty complying with the provisions of Republic Act No. 7279 that mandates the development of at least 20 percent of total project area to low-cost housing.
The P2 billion will only be an “initial issuance,” he told The STAR.
“Developers find it difficult to comply because of the social costs it entails,” Bustos explained.
“They feel like if they try to comply with the law, what they will save in one area where they have housing projects will be offset by costs from another area where they have socialized housing projects,” he added.
This was not the first time the NHMC offered bonds for socialized housing. In 2002 and 2009, two sets of “Bahay Bonds” with combined worth of P2.6 billion were issued by the agency to companies and individual investors.
Similar to these undertakings, the planned program this year will be backed by mortgage payments to pay for the interest of the bonds to be issued. The issuance however will only be open for housing developers, not retail investors.
“We feel that once we develop the fixed income market, we could have another source of financing. On the Asean side, there will be more and more infrastructure projects, so fixed income could be a good source of funds for that,” Bustos said.