Interview: Yasser Hassan Abul
How are public-private partnership (PPP) frameworks being developed to encourage private sector participation in housing construction projects?
YASSER HASSAN ABUL: In order to drive private sector participation in the development of housing projects, the Public Authority for Housing Welfare (PAHW) plans to adopt a PPP framework that relies on the existing legislation, while also following PPP project structuring best practices, and interacting closely with the private sector throughout the development and tendering life cycle. In terms of the legislative set-up, PAHW is developing its PPP projects in accordance with Law No. 116 of 2014 (the PPP Law), and Investment Resolution No. 32 of 2016 issued by the Board of Directors of PAHW. A significant step forward, these laws are certain to attract investors and lenders as they allow for foreign ownership of project companies, giving lenders a sense of security when it comes to project contracts and the transparency of the procurement process. We will also engage the private sector throughout the development and procurement of PPP projects, outlining new opportunities and explaining how these will be tendered.
How is the ministry working with other stakeholders to ensure that new housing developments have adequate infrastructure and utilities?
ABUL: Typically, PAWH engages in housing projects through the comprehensive development of new cities. Each city’s master plan is designed with a focus on ensuring attractive value proposition. These master plans detail every component of the city, which typically includes housing units, as well as social and economic facilities such as schools, hospitals, commercial and retail areas, and industrial zones. We then liaise with key government stakeholders to design the appropriate scale of infrastructure, like roads and utilities, based on the expected demand. In some locations, such as Sabah Al Ahmad, some of the basic infrastructure is already being developed. As this infrastructure is critical for the successful delivery of new housing developments, PAHW may ask the project companies to construct infrastructure facilities if they have not yet been built. These specifications are provided by the relevant agencies, and the facilities will later be handed over to these agencies for operation and maintenance once construction has reached completion.
In which areas is there a need for legislative change or issuance of new laws to achieve the housing development objectives of PAHW?
ABUL: There are two sides to developing housing construction projects that work in tandem. The Kuwait Credit Bank acts on the demand side to provide Kuwaiti citizens with social and real estate housing loans for the purpose of home buying, construction or improvements. PAHW, meanwhile, acts on the supply side of the housing delivery system, and is in charge of government-developed homes and land distribution. A few regulatory reforms on both sides would help to facilitate our objectives. An introduction of a mortgage law by the central bank, a review of Kuwait’s credit policy and insolvency law to maintain the rights of both the debtor and creditor, and further organisation of bond market regulation would put us in an extremely strong position going forward. Currently, Kuwaiti citizens do not have access to flexible financing options that could help reduce the housing affordability gap. At the same time, PAHW has set an ambitious target of allocating 60,000 units over a five-year period (2014/15-2019/20). The execution of the proposed projects should reduce the waiting time and the accumulated number of requests, which will result in the acceleration of loan distribution. The main challenges now faced by the finance sector are in regards to accessing diverse financing and encouraging relocation. PAHW is planning to address these issues by adopting a phased development, as well as tapping regional and international markets for capacity and financing.