Mess Housing
The Philippine Star
April 29, 2002

THE government's housing program continues to draw controversy. The latest hint of another potential scandal is the ouster of Pag-IBIG CEO Manny Crisostomo last February, and this should send terrifying signals to members and investors of the decades-old Fund. As a career officer - having spent more than 20 years in various housing agencies - his dismissal comes in the wake of pressure by government to move more funds to socialized housing.

In fact, not even a month after Crisostomo's removal from office, Pag-IBIG Fund started releasing more money to bail out housing loans incurred by the past and present government administrations on its centerpiece shelter program. Conveniently too, this happened just after the GSIS (Government Service Insurance System) and the SSS (Social Security System) - citing the imperiled state of members' contributions - had begged off from expending more of its funds to support this program.

Messing around with Pag-IBIG's portfolio appears to be another politically expedient but economically unsound government decision to channel hard-earned savings of member-contributors' pension funds to finance a government promise or to bail out of bad loans. (In this case, it looks like it is both.)

Dream House Remains a Dream

The problem of socialized or subsidized housing is one that continues to plague our political leaders. Started by the Aquino administration, the shelter program pledged to bridge the gap between the homeless population and the number of available low-cost housing. But the logic flaw of such grand dreams is often in its do-ability. Panaginip na mananatiling panaginip.

Succeeding leaderships (Ramos, Estrada and Macapagal-Arroyo) continued to harp on this seemingly visionary gesture by grandly promising a house for every Filipino. This political promise is measured by the usual tug-of-war on the promise of the number of houses to be built versus the number of houses that have been built.

What is conveniently glossed over is the need to ensure that a sustainable housing finance system is firmly in place with participation of the private sector. Thus, what we now have are an outstanding amount of bad loans made by homeowners who have run out of money to pay on amortizations, and houses that have stood empty for so long because there have been no takers.

Concluding, what this simply means is that the promise of more houses does not necessarily mean every Filipino owning a home for his family.

Home Developers, Not the Homeless, Happy

Those who have largely benefited from this politically attractive but economically flawed program are home developers who embraced the scheme because of the guarantee that they would get paid for the houses they built regardless of whether these were sold or bought. If these home developers are now complaining that government has been slow in paying them, serves them well for jumping in on such hare-brained scheme.

If government administrations think that they are earning pogi points by counting the number of houses built, they better think twice because as long as newly-constructed houses continue to be beyond the reach of families, there is no political impact.

Pension Funds At Risk in the Name of Politics

Currently, government's exposure in housing loans is already over P300 billion. Largest at risk are the GSIS, SSS and, recently, Pag-IBIG, all of which channel members' pension money to the government's National Home Mortgage Finance Corporation (NHMFC) and the Home Insurance and Guaranty Corp. (HIGC).

NHMFC and HIGC, in turn, extend the loans to prospective homeowners through the economically logic-flawed United Home Lending Program (UHLP) of the government. This program was suspended after creating the monstrous problem that is the reason why government housing is a mess today.

In the first place, pension funds cannot continue to be the milking cows of scatty political platforms. As private funds administered by the government, they are not into the business of subsidizing housing loans. Their priority should be generating earnings for their members' future needs.

The SSS, for instance, reportedly burned around P29 billion in the now bankrupt NHMFC. It is borrowed money that wouldn't be plowed back to its coffers. Money that SSS needs desperately now given its dwindling actuarial valuations.

GSIS too had suffered close-to-irreversible damage in previous years; so much so that present managers have committed not to fall in the same trap again. Not wanting to be thrown into an equivalent predicament, Pag-IBIG initially put up a fight. Obviously, it has not so far been successful.

Cut Subsidies and Let the Market Take Over

Currently, government's housing ideology is politically biased. It features interventionist subsidy policies set up supposedly to make housing affordable to those who cannot afford. Housing subsidies, however, as gleaned from the profile of people who have availed of housing loans, have largely been given to people who can afford. Politics also means palakasan.

We must trust the private sector to develop its own initiatives to bringing sustainable and affordable housing for deserving Filipinos. Government's role is to set policies that will guide and facilitate this vision. Government should govern; business should do business.

If we have millions of Filipino families who cannot afford their own homes, government must drive policies to increase the productivity of our people so they can pay for shelter. Not to artificially bring down prices of homes.

This leads us to my favorite premise. Everything has a cost. Nothing comes free these days.

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