Reforming housing for the poor in the Philippines

Author: Marife Ballesteros, PIDS

The enactment in the nineties of the Urban Development and Housing Act (UDHA) of 1992 and the Comprehensive Shelter Finance Act (CISFA) of 1994, two pro-poor housing legislations, greatly changed the Philippines’ policy on housing the poor. From a highly centralised and heavily subsidised policy, the government moved to a market-oriented and participatory approach to housing. Despite these reforms, the problems with UDHA and CISFA have not delivered housing on the scale or of the quality that is required.

The National Shelter Program (NSP), which regulates housing production, regulation and financing, is the Philippines’ banner program for low-income housing provision. The NSP divides housing into ‘socialized’ (valued at less than USD 6,000, targeted at households up to the 30th income percentile) and ‘economic’ housing units (valued at up to USD 40,000, targeted at households up to the 50th income percentile).

Current housing efforts remain inadequate, with figures showing an acute housing shortage estimated at over one million units – still probably a gross underestimate. On average, the NSP has only delivered 26 per cent of its target, or less than 10 per cent of total housing need. Moreover, the housing backlog is likely to worsen,, due to worsening poverty and increasing urbanisation.

Several factors have contributed to hindering the outreach and sustainability of the NSP programs.

First, following the Philippines’ general decentralisation trend, the UDHA makes local government units (LGUs) responsible for being the UDHA’s main implementer. But most LGUs lack the capacity and resources for shelter and urban management. Moreover, LGUs are not often keen to accept low-income migrants for relocation, due to limited social services and economic opportunities, and housing maintenance costs.

Second, resettlement costs are increasing, increasing LGUs’ dependence on national subsidies. Lack of coordination between the lead national agency on resettlement – the National Housing Authority (NHA), LGUs and other national agencies further hinders the success of resettlement projects. Another problem is beneficiaries abandoning or transferring the home-lots they are awarded, due to a lack of opportunities and services.

Third, identifying suitable beneficiaries of government housing programs is difficult. LGUs lack incentives to develop databases for beneficiary registration, so the awarding of home-lots is often ad hoc and politically dependent. Tracking down the awardees of housing units has also proven difficult, due to lack of a monitoring system.

Fourth, under the UDHA, both the government and the community must eradicate professional squatters and squatting syndicates. But actual enforcement – arrests and prosecutions, has been sloppy, partly because of weak coordination between authorities and communities.

Fifth, the awarding of home-lots is often delayed by bureaucratic legalism and valuation issues. The establishment of eviction guidelines for urban poor settlements has been one of the highlights of the UDHA, providing informal settlers with some legal rights to the land they occupy. But these rights are sometimes disregarded, specifically in private lands, and monitoring has been weak, because no central agency or quasi-judicial body exists to ensure compliance.

Sixth, housing finance programs have limited outreach. For example, the Social Housing Finance Corporation‘s ‘Community Mortgage Program’ has been helpful, but lacks sufficient funding to expand operations. On the other hand, the Home Development Mutual Fund’s ‘Socialized Loan Program’, geared towards salaried workers, has not greatly benefited the poor

Not only does the Philippines have one of the lowest mortgage penetration ratios, but public expenditure on housing is one of the lowest in Asia, at less than 0.1 per cent of GDP on average,  The aim of CISFA was to strengthen the NSP through regular and higher annual budget appropriations between 1995-2002, but only 52 per cent of this  allotted increase in NSP funding was actually released. The entry of housing microfinance has been limited

Moreover, private sector funds remain considerably untapped. The UDHA intends to entice private investment in socialised housing through tax exemptions and regulation, but the incentives’s benefits are not clear. The UDHA also requires developers without socialised housing projects to set aside 20 per cent for low-income housing programs, but compliance has not been adequately monitored.

For the housing sector to be more responsive to the needs of the poor, several key reforms are required.

First, a reliable and sustainable poverty database system is needed at the local level. with clear and measurable parameters to identify suitable beneficiaries. The Department Of Interior and Local Government is currently working on a monitoring system to generate baseline information on poverty; this system could also be adopted for shelter programs.

Related to this, establishing a national resettlement policy will ensure a common framework for resettlement approaches, housing packages, and entitlement. NHA’s role as lead agency should be strengthened, with funds from the various resettlement agencies integrated into a common fund.

Second, a system of incentives should encourage and capacitate LGUs to perform their roles in shelter as identified in the UDHA. LGUs and the national police should also be empowered to more effectively curtail squatting syndicates.

Third, the Philippine government should develop a public-private partnership as a key strategy to resettlement projects. The tax incentive scheme for shelter needs to rationalised and made more responsive. At the same time, the government must increase public expenditure on housing, ensuring that the subsidy scheme is transparent and well-targeted.

Finally, NSP success requires a favourable environment for housing finance. Thus, the government must ensure the financial health of state-owned housing finance institutions, and encourage the entry of housing microfinance institutions, including foreign-based microfinance. Scale and sustainability will only come through through developed capital markets, not continuously using government funds. On the demand side, government should try to improve the bankability of the poor through community and livelihood development programs.

This article is summarised from a Phillipines Insitute for Development Studies (PIDS) Policy Note published here.


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  • Teri

    What we really need are jobs for people. However, there is also problem with culture. We have what they call as professional informal dwellers. They occupy a property and require payment they vacate but move to another area to do the same thing. People should not be paid to vacate a place but move to a new area where they will improve their lives. For people to stay there has to be jobs. Unfortunately some Filipinos do not like to toil their hands. They would rather just bum around and make money the easy way. They in fact cannot focus on work you see the sale people in the department store and in the grocery they gossip and tell jokes and do not attend to customers. Even the simple job of order taking in a drive through window cant be done right. They have to love their work. The problem is really bad. Another is the cost of electricity there reall has to be done with Meralco its handling of its franchise rights. God bless the Philippnes

  • Alex Paurom

    ARMM, The failed experiment and BASECO
    After reading PDI /Opinion-ARMM, The failed experiment, dated Feb/16/011 and receiving the notice to vacate the apartment I was rented for delayed payment, I was really reluctant to transfer at my friend’s residence here in BASECO. The place has the notoriety being the largest slum area in the country where the poorest of the poor lived in sub-human condition and was inhabited by criminals and violent gangs. It dreads me instantly of what would life awaits for me in BASECO, but my business partner just shrugged his shoulder off, as if would tell me “Kung ayaw mo, Wag Mo!” To refuse his offer for help would mean trouble ahead of me. I have no place to go. I have no choice, except to give in. He is the only one giving me favor to ease up my predicament.
    The name BASECO stands for Bataan shipyard and Engineering Company, a pre Marcos Company built during the pre war as shipyard Dry-Dock facility, Left idle then became slum area expanded into a 57 hectare reclamation area during the dictator Ferdinand Marcos. BASECO, or, was formerly known as NASSCO (National Shipyard and Steel Corporation). The area covers five shipyard centers in Manila: Bataan, Iligan, Punta Sta. Ana, Pandacan, and North Harbor.
    Its first settlers were fishermen from the faraway homeless Visayas and Bataan people who built “makeshift posts” or a temporary small house while do their fishing in the area, eventually, the relatives of caretakers of the stay-in guards of the shipping companies in BASECO Compound began to reside there and eventually grew in a multitude of squatters.
    In 1982, BASECO was officially declared Barangay 649, Zone 68. Now “Bagong Lupa.” In 1986, under the administration of then President Corazon C. Aquino, sequestered the shipping facilities formerly acquired by the Romualdez family (during the Marcos era), which were believed to be part of the ill-gotten wealth of the Marcos family. The series of informal settlement demolitions in Quezon City and other parts of Metro Manila between 1990 and 1993 accelerated the growth of the Barangay as it became the government’s relocation site for the evicted slum dwellers. Further contributing to the sudden increase in population are the “professional” squatters in the area.
    It grew, unmanaged by the local executive by post Marcos era, left by the national government enormous economic potential in the area. Any country in Asia, a place near Seaport is a vital economic importance. I wondered how previous National and local executives ignored such economic importance of the compound. Neglected and turned it a slum area equal to that of New Delhi, India.
    Large portion of the eastern part of BASECO was populated by Muslim, mostly Maguindanaos. Maranaos and Tausugs are scattered the whole compound. Central and Western part are populated by Warays and Visayan People, for that, it dreaded me even more. My deeply rooted prejudices towards our Muslim brothers stand right in my own face.
    Surprisingly, it was totally a different scenario when lived in BASECO for more than a year. Now I didn’t have any regrets staying in BASECO, the people here is better than I thought. Economic activities are now spiraling into a greater height. Muslims and Christian co-exist and do their entrepreneurial spirits vibrantly alive. I didn’t witness in my entire life, such a re-inventiveness of the Muslim and Christian alike improving their lives right at the very place called the “cursed land”. BASECO now has so many commercial houses, Muslims and Christian businessmen including the expert micro-financier “Bombay, 5-6” exchanging goods and services for everything that concerned livelihood. There’s seems to be an economic synergy of cooperation between Muslim, Christian and Hindu. I maybe hopelessly ambivalent of what I had witness of the place. A larger and decent School now completed. Every month, I’ve seen more families are getting better and build decent homes. I was totally wrong of pre-judging the place.
    Almost everyday, I got home late night because of the nature of my business. Taxi wont bring me right at my own home doorstep in fear of being held-Up, so I walked from the compound entrance to inner BASECO called block “9” where my rented room located, bringing along my laptop and three Cell-Phones, but nothing bad happened to me since the first day. I’d learned from my Muslim friends telling me stories about series of murders in the past inside the compound due to drug related crimes. Well violence begets violence and it was drugs, and so it was. I am more interested stories about the people with different ethnic-cultural background thriving, sharing lives in practically the same consciousness and aspirations about family’s future betterment. I wondered still how the peace process in Mindanao have gone so far as compared to BASECO. To be more logical about it, the place is perfectly a recipe for ethnic confrontation like that of Gaza between Israelites and the Palestinian people. To me, this is a cultural phenomenon, Muslim and Christian neighborhood with a Hindu economic partner.
    To put it in a proper perspective as to what BASECO have become and the countries at war because of their religion. They should learn about BASECO. Malacanang should try to re-think its position about peace process in Mindanao and should heed the call of a genuine peace. It is right here in BASECO. Islam is Peace, Christ is Love, Hindu is happiness. The so called ARMM failed experiment, The Ampatuan case, Nur Misuari and Abu Sayaf is an eye opener for Malacanang. How can it be peace where only a handful armed bandits and greedy powerful clan can only determined the language of how it is going to do about the Peace Process?. The Language of the tyrants is greed and violence.
    It is here in BASECO the secret recipe. I may not be a social scientist, or an economic Prophet, or a business technocrat, BASECO is on the rise from the ashes of being a badland to a strategic commercial site. Ill bet on it.

    Alex C. Paurom Block 9 BASECO COMPOUND, MANILA

    • Lynn Ridenour, English Teacher, Wonju, South Korea

      I just read your comment and I will re-read it. I have rarely read such a thoughtful and also hopeful message. Thank you for taking the time and effort to write your thoughts.