Interviewed by: MD Mozahid Al Mehedi
The housing sector is an important driving force in the economy of Bangladesh. Associated with about 269 linkage industries, this sector not only builds housing, but also plays a significant role in increasing employment, industrial production, investment and government revenue. On the eve of the announcement of the National Budget 2026-27, REHAB President Dr. Ali Afzal spoke about the expectations, challenges and things to do of the housing sector.
Question 1: What is the biggest expectation of the housing sector as we stand on the verge of announcing the budget?
Dr. Ali Afzal:
In the current economic reality, some policy support is very important to keep the housing sector sustainable and dynamic. Our main demands include reducing flat registration costs, ensuring a flat-rate interest rate on housing loans, creating a special housing loan fund for the middle class, reducing taxes on construction materials, reducing the burden of additional taxes and VAT on the housing sector, and encouraging expatriate and domestic investment.
We do not want any special benefits. We want a policy environment that will make it easier for the common man to get housing and at the same time keep an important sector of the economy active.
Question 2: Many say that the housing sector is only the business of developers. Why do you consider it important for the national economy?
Dr. Ali Afzal:
It would be wrong to view the housing sector as just a business sector. Hundreds of industries and service sectors are involved in the construction of a building, including rods, cement, bricks, glass, ceramics, elevators, electrical equipment, transportation, banking, insurance, architectural and engineering services.
The money that flows through the sale of a flat is gradually spread across numerous sectors. Because of this multidimensional impact on the economy, the housing sector is called a sector that creates a ‘multiplier effect’. If the housing sector is active, the industry remains active, employment increases, revenue increases and the overall economy is dynamic.
Question 3: There are repeated demands to reduce flat registration costs. Why is this so important?
Dr. Ali Afzal:
After purchasing a flat in Bangladesh, the buyer has to bear significant additional costs including registration, stamp duty, tax at source and other charges. This ultimately leads many potential buyers to withdraw from the decision to buy a flat.
We believe that if the registration costs are reduced to a reasonable level, the volume of transactions will increase. In this, the government will receive more revenue from a larger number of transactions even with a lower tax rate. That is, even if the tax rate is reduced, revenue will not decrease; rather, there will be an opportunity to increase revenue due to increased economic activity.
Question 4: How realistic is the demand for a single-digit interest rate on housing loans?
Dr. Ali Afzal:
Of course it is realistic. Housing is not a luxury, it is a basic human need. Currently, due to high interest rates, it has become difficult for the middle class to buy a flat. Housing loan installments are going beyond the income capacity of many families.
In different countries of the world, there is a system of long-term and low-interest housing loans, giving special importance to the housing sector. If housing loans can be ensured at a single-digit interest rate in Bangladesh too, then millions of families will benefit and a new momentum will return to the housing market.
Question 5: How much is the need for a special housing loan fund for the middle class?
Dr. Ali Afzal:
The biggest housing demand in our country is among the middle class. But they are currently under the most pressure. Land prices, construction costs and loan interest - all combined, are making it difficult for them to realize their dream of owning their own housing.
We want a special housing loan fund to be formed, where middle class families will get loans on easy terms in the long term. This is not only social welfare; but also an effective way to expand economic activities.
Question 6: How reasonable is the demand for tax reduction on construction materials?
Dr. Ali Afzal:
The increase in the price of construction materials directly affects the price of flats. Currently, the price of almost all types of materials including rods, cement, glass, ceramics has increased. Tax and customs issues are also associated with this.
When production costs increase, the pressure ultimately falls on the common buyer. As a result, housing goes beyond the purchasing power. If the tax structure is rationalized, construction costs will decrease and housing will become more accessible to more people.
Question 7: You are talking about the opportunity of investing undisclosed money and at the same time closing the source of undisclosed money by reducing taxes. How do you see this?
Dr. Ali Afzal:
Our position is very clear. It is necessary to bring the money that is stagnant in the economy to the productive sector. The housing sector can provide that opportunity. However, this is not a long-term solution.
In the long run, a tax system is needed where the tax rate is reasonable, tax payment is easy and people are encouraged to pay taxes voluntarily. If the tax burden is excessive, people look for ways to evade taxes, but if the tax rate is reasonable, revenue collection also increases and the tendency to create undeclared money also decreases.
Question 8: The budget will be announced tomorrow. Are you optimistic at the last minute that these demands will be included?
Dr. Ali Afzal:
We are certainly optimistic. However, the day of the budget announcement is not the end of everything. After the national budget is presented in the parliament, the opinions of various stakeholders are taken and it usually takes a few weeks for the budget to be finally passed.
We believe that the government will seriously consider the reasonable demands of the housing sector, considering the larger interests of the economy. Even after the budget is presented, there is an opportunity to make necessary amendments or additions through discussion and review. Therefore, we are keeping positive expectations until the last moment.
Question 9: What is REHAB’s message to the government in one sentence?
Dr. Ali Afzal: Housing sector is expensive
