by Manzoor Ahmad
Humans are gregarious in nature. They prefer to live and work together. The primitive man was a natural practitioner of collectivism which is cooperation in a very primary form. All great religions of the world have emphasized the need of co-operation. ISLAM also mentions about cooperation most vividly “0, people of earth cooperate and be helpful to each other for good cause” Cooperation was helpful to meet all kind of human needs revolving around food, shelter and clothing. Today’s cooperative farming, cooperative marketing and housing are the offshoots of primitive collectivism. Pakistan is the seventh most populous country (150 millions) in the world and ranks 5th in Asia after China, India, Indonesia and Bangladesh comprising 796,096 sq kilometers area. Cooperative is a kind of business except that its main objective is to do business with customers who already know each other. In other kinds of businesses whether proprietary, partnership or corporate concerns, they work for unknown customers. This makes a big difference since it is ultimately the customer who commands cooperative business and its profit structure. Other businesses are controlled by market forces.
An important branch of cooperative is housing. My specialization in this sector, will restrict my discussion about this sector only. Historically, housing in Punjab was the responsibility of the Government in the shape of housing and Urban Development or improvement Trusts like LIT, RIT etc. Commercial and cooperative developers entered the housing sector in the 70s and onward. Commercial and cooperative developers have advantages and disadvantages of their own. A commercial housing developer mostly works with his own capital and to achieve good results, he puts in his heart and soul to make the project a success. An efficient commercial developer would like to complete the project and deliver the product as early as possible so as he may go for next project.
Cooperative housing depends on the cash flow coming from its members, If the cash flow is slow, the development of cooperative housing society will become slow and when the society is slow to develop, the members will not pay the dues thinking that the cooperative society may fail. So it is a vicious circle due to which many well-intentioned cooperative housing societies earn had name and they are declared incompetent and defaulters. Complaints start flowing from the members against the society. The Cooperative Department and other regulatory agencies are approached by the members for the recovery of their partial investment in the housing. The cash starved cooperative housing societies cannot deliver and therefore departmental controls, enquiries and threat of punitive measures create further panic. The flood of complaints against society’s management sets the regulatory and investigative agencies into motion. The exasperated management resorts to skin-saving measures. The management of a society, being voluntary and mostly un-paid, cannot devote full time to the society since it has to earn its broad and butter elsewhere. This is the reason that departmental cooperative housing societies are relatively successful since most of its office hearers are employees of the same department.
Problems with development agencies
The success of a housing project, whether it is cooperative or commercial, depends on the favour and services of various Government agencies which make a housing project liveable and habitable. Let us take development authorities like LDA, GDA, MDA, FDA etc. Entire rules of business of these development authorities are oriented towards commercial developers who are supposed to invest their own capital to complete a housing project. But when the approval of a cooperative housing project is sought from a development authority (say LDA), the same rules of commercial developers apply.
The harshest rule of a development authority is that a housing project must mortgage 33% saleable plots to the LDA and only 66% plots should be sold out to the members/buyers. 33% mortgaged plots will only be released by the LDA when 100% development is completed. How can a cooperative set up complete a project 100% with only 66% resources. Naturally the cooperative societies tend to sell the mortgaged plots so as to raise 100% resources for 100% completion of the project. This kind of action by cooperative housing societies attracts penalties from the LDA which further complicates matters for a cooperative society. Another harsh and highly cruel rule of the LDA is that it takes over all the plots earmarked for schools public services, mosque and playgrounds without giving any compensation to the housing societies.
The intention behind this rule might be noble since most of the rouge societies convert public utility land into plots. But this very rule, when applied to good cooperative housing societies, becomes source of exploitation by the LDA. The LDA takes over public land of societies and sells it either to private school owners or gives away to Punjab Education Foundation which is a politically oriented autonomous body.
WASA is another exploitative body. It is supposed to provide trunk sewer at its own cost under the PAKSITAN HOUSING POLICY announced by the Federal Government in 1998. But what is happening is that housing societies are being served with demand notes of amounts running into crores of rupees for laying Trunk sewer. Wherefrom a cooperative society shall pay such enormous amount to WASA specially when a housing society did not include this mandatory payment to WASA in the cost of plots. This is the reason that most of the cooperative housing societies including Valancia and Izmir are having problems with the LDA and WASA who refuse to approve house building plans unless the society settle with WASA.
The building inspectors of development authorities are another kind of blood suckers. They prowl in various cooperative housing societies and pick silly objections on building plans. These building inspectors threat to demolish the buildings. The frightened members of the society then pesters the management of the society which finds itself helpless.
Another agency which exploits housing societies is WAPDA. If a housing society requests WAPDA for electricity on deposit basis, the society has to pay 26% extra to the WAPDA as service charges. Even then the WAPDA functionaries may not give electricity to the society for months and years. The alternative is to obtain electricity connection on bulk supply basis. The bulk electric power to housing society has another disgusting problem. The society must pay to WAPDA the cost of GRID STATION or make its own Grid Station he cost of the grid station again runs into crores of rupees. Cooperative housing societies do not include the cost of Grids and Trunk Sewers in the cost of plots. When the Management of a Cooperative demands funds for these unexpected expenses, members make fuss, intimidate and malign the office bearers who further panic or they quit the management in frustration.
Cooperative Department, unfortunately, has no authority to intervene into the regressive and unfriendly Government bodies who consider housing cooperatives as fat milking cows. Cooperative Act again needs amendment. In our opinion, the Cooperative Department should officially be represented in the Boards of all such Agencies whose services are most essential to complete Housing Projects.
The writer is a (Retd) Senior Executive Vice President Mashriq Bank Founder Hony. Secretary Canal View, PECHS, PMCS AND EDCS
Courtesy: The Nation, 28/4/2008