ISLAMABAD: Leading economist Dr. Ashfaque Hassan Khan regards housing sector as the mother of all industries because of its high interdependence on various horizontals and verticals.
Talking to WealthPk, Dr Khan said promotion of construction sector held the key to economic prosperity of Pakistan. However, he suggested that the government should ensure its consistent support to the sector – especially in terms of taxation and subsidized credit.
“Housing sector is considered to be the mother of industries, and its operationalization results in demand for various other industries like cement, iron, paint, electrical supplies, labor and many more”, he said.
Construction in housing sector can mobilize as many as 35 additional industries, resulting in a trickle-down effect in the economy, he added. Furthermore, history is also a witness to various economies that boomed because of promotion of construction sector, he said and cited the example of China in this regard.
“China’s development in 1970s and 1980s can be largely attributed to the boost in the construction industry. During this period, the construction sector gained prominence and the government laid emphasis on its promotion,” said Dr Khan while talking to WealthPk.
“Empirical evidence in Pakistan shows one percent increase in the value addition of the housing sector will increase employment by 0.9%, indicating near one-to-one correspondence of the housing sector with employment. And in a labor-abundant country like Pakistan, this proves to be vital.”
Moreover, the housing sector also employs a diverse range of labor – from highly skilled to low skilled workers. With the promotion of just one industry, jobs in various diverse categories can be created.
Pakistan’s growth rate is expected to range between 4% and 5% for the upcoming fiscal year, and to achieve a sustainable and consistent higher Gross Domestic Product (GDP) growth, it is imperative that the construction sector be mobilized.
Dr. Khan also acknowledged the incumbent government’s efforts for promoting the construction sector that was highly active currently.
‘’The rate of subsidized credit to the construction sector has been decreased by the State Bank of Pakistan; however, the differential is paid by the government, which is putting burden on the country.
Nonetheless, the government has taken the right step, as subsidized credit to the sector will prove beneficial to the economy in the long-run”, he said.
Apart from the subsidized credit, Dr. Khan believes improvement in the taxation ecosystem can further the industry’s growth.
“Construction sector is one of the major drivers of growth; hence, the Pakistani governments need to perform hand-holding for this industry, especially when it comes to tax reforms as taxation can deter investment in the segment.”
Dr. Khan is confident that the boom in the construction sector will eventually lead to an economic boom.
INP
