Minister Howai, do you want to know how best to stimulate the construction sector?

Firstly, you have already come up with some good policy initiatives targeting three separate segments—end customers; residential developers; and big construction companies.

The reduction in the TTMF mortgage interest rates by two per cent with a low of five per cent and a high of seven per cent will allow marginal people/customers who previously could not afford houses to now qualify for mortgages. This will create jobs for masons, plumbers, and electricians.

Then the tax incentives you are giving for the residential developers to build houses will also assist in the building of more homes. The BOLT (build, operate, lease & transfer) financing arrangements which you propose for your ten large projects such as judicial complexes, hospitals, and roads will also remove the cash-flow pressure from the Government and allow the private sector to step up by bringing its own funding to the table. This will also be a boon to construction activity in this country.

However, besides these policy initiatives there are also structural changes needed to facilitate increased activity. The most urgent of these changes is the revamping of the Town and Country approval process, which takes way too long and is definitely bottlenecking the whole construction system.

I know several contractors who have been waiting for more than two and a half years either for Town and Country staff to come to work, return from holiday or run around to all the various ministerial departments etc.

I am recommending a one-stop-shop be set up comprised of all relevant government departments e.g. T&TEC, WASA, T&C, etc. This facility will have to ensure that the median turnaround time on these applications is six months! That's all we—the voting public—are prepared to tolerate.With this change we could easily see a 20 per cent increase in construction activity.

A much more fundamental area needs to be tapped into and this is the low-income housing market. This group of people constitute the largest under-served housing sector.

A two-pronged approach is required to achieve this goal:

The first thing is that these families (129,000) be interviewed by the relevant bank managers in their areas. The bank managers would then be able to "pre-qualify" these customers according to the various price ranges they can afford.

The second thing is with this database of "pre-qualified" customers, the Government could now tell the private sector that if they get the funding to build out these houses–only within the required price ranges–then they (the Government) will give them a guarantee of purchase for all these houses. Obviously "due diligence" has to be done regarding the credibility of these construction companies in terms of their track records, and ability to get the financing. Additionally professional quantity surveying companies will have to sign off before payments are made for the various stages, to ensure accountability.

Why the the Government guarantee? The real reason that low-cost homes are not done by conventional construction companies is because they can't make a profit. The margins are too tight and the rapacious banks' charges are too high….you don't make money.

With a Government guarantee however, you are not limited to dealing with these oligarchic banks in T&T. You can now source external funding from as low as 2 per cent. This drives down your cost of financing and would then allow conventional construction companies to make money by supplying these houses.

Focusing on these low-cost houses by providing these guarantees will satisfy a huge pent-up demand for an important part of our market and will be a big catalyst in stimulating construction activity.

Roger Gordon

Cascade