Tuesday, January 19, 2010

Alternatives for Papua New Guinea's housing crisis

Caption: Clay bricks, which can be easily made in PNG, could help ease our housing crisis


A senior Papua New Guinea public servant studying in the United Kingdom has supported calls by Nasfund joint chief excutive officer Rod Mitchell for the housing crisis in the country to be addressed.

Reichert Thanda, an assistant secretary with the Department of National Planning and Monitoring who is currently studying for his masters at the University of Bradford, said the crisis needed to be addressed with a sense of urgency.

“I fear for the worse because, if the relevant stakeholders including the government are not taking appropriate steps to address the housing issue, then this really is a crisis situation given huge projects like the LNG which is expected to employ close to 5-7000 people,” he said.

Mr Thanda proposed steps that relevant stakeholders could apply in addressing this “potentially dangerous” situation:

·        Form a national multi-stakeholder committee comprising key central agencies like Treasury, Finance, Planning and the PM’s Department to as part of the urbanisation policy to free up customary land within the periphery of the Port Moresby City (through registration and leasing of customary land to private investors and individuals to build their houses);

·        Two options: engage youths in manufacture of bricks through supervision by perhaps Habitat for Humanity (e.g. case of Ghana, Philippines, etc). The aim is to build more houses for less (e.g. with K1 million we should aim to build between 20-30 houses as opposed to 5-10 houses through some private sector construction companies). Habitat for Humanity can even partner with our local steel manufacturing companies to get subsidised steel for construction of cost-effective but quality steel houses;

·        Open up and expand the financial and banking sector so that credit facilities are made available including through Nambawan Super and Nasfund. Why not members obtain housing loans directly from Nambawan Super or Nasfund including the saving societies instead of the banks? The market for credit facilities in PNG is completely underdeveloped for average income earners to invest in such properties in order to improve their living standards.

·        Government through a Cabinet decision must allocate K1 million each for staff housing from next year’s Development Budget (starting with central agencies and line ministries and eventually to the provinces) which can be used as either collateral or applied in a scheme describe in point;

·         In light of the LNG project, Government must quickly formulate a single structure salary system instead of the current discriminatory dual system; and

·        The same committee with National Capital District Commission should plan for the city’s expansion immediately.

“While the above proposals are not limited in scope, I am sure it will generate a lot of bright ideas from the people of PNG,” Mr Thanda said.

“Let’s not look to the foreigners to provide us with solutions but look around to see how we can utilise existing skills and resources to improve the lives of our fellow citizens.

“Let me therefore conclude with this quote from Marcel Proust: ‘The real voyage of discovery consists not in seeking new lands but seeing with new eyes’.”



  1. Reginald Renagi5:11 PM

    A good idea here but the government must have the political will to be able to address this problem that has been outstanding for many years.

    Making local bricks by our own people is a great idea that can save us millions from importing it from overseas.

    The two major super funds: Nasfund and Numbawan super are already giving out housing loans to their members but the way it is presently designed is it only suits the upper middle and higher income level executives. So again the middle and lower wage earners will have a hard time repaying their loan repaiments to their

  2. We should now be looking at alternative cheaper alternatives. Habitat for Humanity can also help in this regards. Why don't we utilise the PNG Defence Force to build houses en masse all over the country, which people can buy. This money should be Government benefits from the LNG. Liklik tingting tasol!

  3. There is a huge need for a total rethink of the approach to solving this problem. It needs to go back to village communities and to village schools. Provoncial governments should employ qualified tradesmen to teach practical courses in building trades (carpentry, masonry, electrical, plumbing, roofing, etc) within secondary school curriculums, and to adult classes drawn from the community. Those who enrol should be taught all the basics of construction, and a simplified building approval and safety inspection service implemented using the same tradesmen doing the training work. Money should be set aside to finance community toolkits (patrol boxes filled with all of the tools needed for construction); these could then be purchased by LLG's and the tools made available to owner/builders on payment of a refundable security bond and a small fee. Some of the timber companies could be approached to develop kit housing that is affordable, and these should be subsidized by government in much the same way as the "first home ownership scheme" works in Australia (first home owners can get a grant of up to $14000 from government). I also thoroughly agree in bringing in groups like Housing for Humanity to get local brick-making happening as well as other low-cost initiatives. The financiers can do their part ... making loans of smaller amounts available to owner/builders over longer periods (so that repayments are affordable). Financiers naturally will require security ... and if government is genuinely interested in solving the housing crisis, then governments should step in and offer security bonds for low income families. The payoff in terms of greater community stability, an upskilled workforce, fewer settlements, and fewer social problems resulting from unemployment, boredom and homelessness would more than compensate all parties.

  4. Fellow Countrymen, I am honored with your very valid thoughts and comments. I wrote the article because of the speculation in the media recently regarding the housing issue. This is dangerous since it can drive the demand for a certain good sky high (housing in this case which now becomes a luxurious item or “Veblen Good” as it is know in economics) resulting in subsequent increase in prices (asset bubbles)! Empirical evidences clearly suggests that one of the factors which has led to the recent global financial crisis involved housing mortgages (first in Thailand which has eventually spread throughout the rest of South-east Asia leading to the Asian Financial crisis in 1997, and recently in the US and elsewhere). The ‘asset bubble’ remains so long as there are potential buyers than sellers which creates a “wealth effect” (where investors judge themselves to be richer as the value of their assets increases) until it reaches certain stage when there is a divorce between the asset’s price and its underlying value. When this happens there is a quick drop in asset prices which can trigger a crisis if the relevant authorities are not careful.

    In a nutshell, such speculation is dangerous especially in situations like now in Port Moresby, where houses prices have inflated to sky-high prices. Unless Government intervenes either through policy interventions or NEC Directives, we are heading towards a period of turbulence.

  5. Reichardt, can you write more another pice on this issue which I can use for next Tuesday's property pages in The National which I look after? This is a very hot issue in the country right now.