Housing crisis — A ticking time bomb

“The toughest disincentive to the homebuilders is the acute scarcity of available real estate for housing."

In the 1800s, when the Philippines had a population of 1.89 million living in traditional “bahay kubo” homes iconic to Philippine culture, housing and shelter shortages were unheard of.

Today with 119.1-million Filipinos, a staggering increase of 6,300 percent, we face a housing crisis with a shortage of 6.5-million homes, projected to rise to 22.0 million by 2040. Behind these numbers lie millions of families enduring substandard living conditions in shelters that can hardly be called home.

Various studies conducted by reputable housing development associations attribute this shortage to rapid population growth, urbanization, a surge in informal settlers, limited availability of land for housing, outdated construction processes, slow permit processes, inadequate financial support to developers, high financial costs, low returns, and a myriad of other unsettling challenges plaguing the housing industry.

The toughest disincentive to the homebuilders is the acute scarcity of available real estate for housing which is a finite supply currently estimated at ₱305 trillion and growing.

The Home Development Mutual Fund, popularly known as Pag-IBIG Fund, was established in 1978 with two mandates: first, to assist in providing affordable decent shelter, and second, to generate savings for its members.

The Fund was given the herculean task of assisting all its members to build a home through socialized housing loans.

Pag-IBIG has performed exceptionally well in reducing the housing backlog since its creation with an impressive record in the past three years of releasing housing loans totaling ₱341 billion to build 297,000 units.

However, the housing gap reported at 6.5-million units as of end 2023 prompted PBBM to order Pag-IBIG to accelerate its program by financing one million houses per year until the end of his term.

But the huge housing backlog even before Pag-IBIG was created and the rapidly expanding population will keep the housing shortage a continuing national concern.

This dire housing situation poses a serious threat to the nation’s security and stability, which can only exacerbate the divide between the underprivileged homeless and the affluent homeowners.

Given this, there is a risk the homeless may turn to ideologies like socialism, viewing Karl Marx’s classless society as more desirable than capitalism.

Neglecting the housing crisis could lead to widespread homelessness, forcing families to live on the streets or in inadequate, overcrowded, and unsafe conditions, accentuating further the social inequality and potentially sparking political disorder and social unrest.

Further, the housing shortage will have broader economic implications, affecting employment, consumer spending, and economic growth.

Some experts in the housing industry propose solutions such as rethinking government’s role in housing finance, delinking housing social assistance from finance markets, and addressing fundamental supply side and urban governance issues.

But with our freewheeling and disharmonious multiparty political system where the economic agenda is subordinate to other less meritorious plans, there is always the bleak prospect the housing crisis will just be overlooked in the halls of power.

Time is of the essence in addressing the housing problem, and while we may not have the luxury of solving it overnight, we need to demonstrate to future generations that beginning today we are earnestly committed to providing decent homes for all of our countrymen.

Source: Daily Tribune

PHL sees improvement in budget transparency

The Philippines saw an improvement in its budget transparency score in the 2023 Open Budget Survey (OBS), making it the “most fiscally transparent” country in Asia.

In the survey by the International Budget Partnership (IBP), the Philippines’ transparency score went up by seven points to 75 out of 100 from 68 in 2021.

This surpassed the government’s target score of 71 under the Philippine Development Plan 2023-2028 and was well above the global average of 45.

The Philippines’ score placed it at 15th place out of 125 countries. In the 2021 OBS, the country ranked 19th out of 120 countries.

“[The] Philippines has increased the availability of budget information by publishing the midyear review online in a timely manner,” the IBP said in the report.

The Philippines’ budget transparency score of 75 was higher than its Southeast Asian peers like Indonesia (70), Thailand (60), Vietnam (51), Malaysia (48), Cambodia (43), Timor-Leste (37), and Myanmar (3).

To further improve budget transparency, the IBP said the Philippines must sustain and institutionalize the timely publishing of its midyear review timely online, including updated spending estimates.

“The DBM (Department of Budget and Management) will continue its best practices in ensuring a transparent, participatory, and accountable people’s budget,” Budget Secretary Amenah F. Pangandaman said in a statement.

However, the Philippines received a score of 33 out of 100 on public participation in the budget. This was still better than the global average of 15, and highest among Southeast Asian peers.

This pillar looks into the executive, legislature, and its main audit institution’s practices in line with the Global Initiative for Fiscal Transparency’s Principles of Public Participation in Fiscal Policies.

To enhance public participation in the budget process, the IBP said there is a need to engage vulnerable and underrepresented sectors.

“To further strengthen public participation in the budget process, [the DBM] should also prioritize expanding mechanisms during budget formulation and implementation to engage any civil society organization or member of the public who wishes to participate,” it said. 

It also called on lawmakers to conduct public consultations before approving the budget, and allow the public or civil society organizations to testify during audit report hearings.

Meanwhile, the Philippines received a score of 83 out of 100 in budget oversight, noting that Congress and audit agencies provide “adequate oversight” in monitoring the country’ budget use.

“To strengthen independence and improve audit oversight by the Philippines’ Commission on Audit…. [it must] ensure that audit processes are reviewed by an independent agency,” IBP said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the government must ramp up its digitization efforts to ensure budget transparency.

“Further digitization of National Government and local government processes and transactions internally and with the general public would help improve transparency and overall rankings,” he said.

Institute for Leadership, Empowerment, and Democracy, Inc. Executive Director Zy-za Nadine M. Suzara, who also worked on the data gathering of the survey, said confidential funds hamper budget transparency.

“There’s lack of transparency in the use of confidential funds and it really isn’t the best example in terms of promoting, better yet, ensuring transparency,” she said in a Viber message.

“Though there are guidelines on how to use the confidential funds, we have seen since the Duterte administration how the allocation and use of them by non-security agencies have been so prone to abuse,” she added.

There are at least P9-billion confidential and intelligence funds in the 2024 national budget.

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Source: Business World

How to age well in Asia and the Pacific

The Asia and the Pacific region is aging rapidly. Older people, those aged 60 and above, accounted for 13.5% of the region’s population in 2022. That figure is expected to nearly double to 25.2% by 2050.

Such unprecedented population aging is happening at lower incomes than when advanced economies faced such demographic change. The sheer speed and scale of aging, coupled with the heightened vulnerability of older persons, underscores the urgent need for the region to promote the well-being of older people.

Four interconnected dimensions are important for old-age well-being, namely health, productive work, economic security, and social engagement. Health is central since it can keep older people productive, economically secure, and socially engaged. The four dimensions are closely linked. Some are inherently mutually reinforcing such as health and social engagement while others can create unintended consequences such as the work disincentives of generous pension benefits.

Economic and social progress in the region has sharply reduced poverty, tangibly improved quality of life, and significantly extended longevity. Yet the well-being of current and future cohorts of older people is at risk from multiple threats. For instance, 57% had at least one diagnosed noncommunicable disease, 31% had elevated depressive symptoms, 40% had no pension, either contributory or social, and 16% felt lonely most of the time.

As such, older people in Asia and the Pacific face vulnerabilities across all four key dimensions of old-age well-being. Furthermore, a yawning inequality separates older people in health, productive work, economic security, and social engagement.

More specifically, well-being in old age is impeded by pervasive informal employment and stark gender inequality. Very few informal workers in the region enjoy protection from disabling illness or injury. Informal workers enjoy little or no paid leave, disability allowance, or pension, or other option to prepare financially for old age. Many have little choice but to work as long as their health permits.

Women can expect to live longer than men but are more prone to disease and therefore insecurity in old age. Gender inequality has narrowed in some areas but persists institutionally, such as in pension systems that tie benefits to contribution periods without allowing for the greater family demands that cultural norms place on women. Time spent on housework and family care constrains women’s economic opportunities and leaves them vulnerable in old age.

Old-age well-being is thus a work in progress in the region. A key policy agenda across the region is to ensure the well-being of older people by helping them to age well. Well-being in old age can be enhanced by individuals’ lifetime investment in their own health, education, skills, financial preparedness for retirement, and family and social ties.

Policies for aging well should therefore actively promote healthy lifestyles, lifelong learning to update skills and learn new ones, and long-term financial planning for retirement.

Promoting well-being in old age has fiscal costs, but countermeasures can help contain them. In particular, public and private investment in human capital — beginning in the cradle with preventative and curative healthcare, followed by lifelong education — can generate over time bigger silver dividends as healthy and educated older people become more productive. The silver dividend or additional productivity that could be gained from untapped work capacity among older persons is substantial and could equal up to 1.5% of gross domestic product for some economies in the region.

Governments must do more to empower people to plan and prepare for old age. They can disseminate information and raise awareness to help workers of all ages set realistic expectations about future retirement needs, taking into account that future policies may change the retirement age and pension terms. They can also support initiatives that help firms and workers themselves develop career plans and retirement paths in anticipation of longer working lives.

A lifelong, life-cycle, population-wide approach is needed to meet the aging challenge. Evidence presented in this report lends strong support to a three-pronged approach to aging well: A lifelong approach encourages continuous investment in human capital throughout people’s lives. A life-cycle approach provides adequate intervention in accordance with age-specific needs. And population-wide outreach targets people of all ages.

Comprehensive aging policies can ensure a healthy and productive older population with autonomy and ability to offer a large silver dividend, the economic and social contributions made by older people.

Future generations of older people in Asia and the Pacific will live healthier and longer lives and be more educated. To leverage their full potential to the benefit of their own well-being and the broader society, it is time for governments to take action to improve all four dimensions of well-being in old age.

If they do, people of all ages can aspire to live well and age well.

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Source: Business World and ADB