Property developers warn of economic backlash of ban on land conversions

The Chamber of Real Estate and Builders Association (CREBA) has warned of an imminent economic disaster within the next two years following a ban on land conversions imposed by the Department of Agrarian Reform and virtually upheld by President Arroyo through Administrative Order 226.

Asking for an immediate lifting of the ban, CREBA president Reghis Romero II pointed out that the land conversion ban may seem to be a harmless piece of government policy, but it can be the last straw that will break the camel’s back.

He said the ban would neither solve the food shortage nor the energy crunch as being suggested by the government, but could turn the country’s housing backlog into another crisis.

“With food, housing and energy crises, you definitely have a perfect recipe for an economic disaster within the next two years,” Romero stressed, as he recounted the 1997 East Asian currency squeeze and the ongoing US subprime mortgage debacle that all emanated from a mishandling of the real estate sector. “You cannot just tinker carelessly with the real estate industry without facing grave economic consequences.”

The land conversion ban, he said, could eventually lead to a halt in all construction activities, crippling the entire supply chain – from land developers and housing contractors to all the industry suppliers and service providers, including manufacturing, tourism, and retail sectors.

Stock market prices of all listed property firms will plunge and pull down all other related businesses while unemployment will rise enormously since construction accounts for a big chunk of the country’s labor force, Romero said.

He added that within two years, the country’s housing backlog of 1.5 million will rise to 2.1 million based on government’s own conservative estimate. “Poverty will thus widen and deepen, leaving our poor people with only two choices – go abroad to become OFWs or go to the boondocks to become NPAs – depending on their qualifications,” he said.

This grim scenario, however, is not confined to the private sector. Romero emphasized that government itself will be badly affected, with many state agencies failing to meet their respective goals that are tied up or linked to land development.

“Obviously, the land conversion ban is being used by DAR as a smokescreen for its dismal failures. Yet, DAR’s self-assumed power to convert lands is just one of its many questionable, if not anomalous, practices,” Romero said.

To avert an impending economic disaster, he proposed for a review, revision and implementation of the National Urban Development and Housing Framework prepared by the Housing and Land Use Regulatory Board (HLURB), so as to guide the formulation of location-specific land use plans that will consider the reclassification criteria of the Local Government Code.

On agriculture, CREBA suggested that lands have to be identified and mapped according to crop suitability and susceptibility to typhoon, floods and other natural calamities. Meanwhile, EP and CLOA (land reform awardees) holders should be encouraged to band together in cooperatives, contribute their small parcels thereto, which shall be managed professionally so that with the resulting economies of scale, the utilization of improved technologies and machineries may be optimized.