With the foundations laid, citizens endure long wait for apartments
The most serious, widespread cause and consequence of poverty is the lack of access to housing. Although decision makers in Mongolia already understand that providing apartments with minimum sanitary conditions to the poor and improving apartment conditions would make people’s lives better, what they have been doing has not been fulfilling its goal. The authorities have been promising thousands of new apartments and, as they lay more foundation stones, apartment prices are going up and not a single family from ger districts has moved into an apartment.
Our bitter experiences in recent years suggest that it is time to change our approach to implementing the policy on providing people with housing. The Government cannot forget Mongolian people, no matter how poor they are, have the right to housing, education and basic health services.
The Government once again made promises this February that brought hope to ger district people that they could have apartments of their own. They announced that loans up to 50 million MNT with 6% annual interest rates would be provided to people who have not owned an apartment before and have a household income below 700,000 MNT. This program of 100,000 apartments will only include apartments that are newly built. Excited for what they were promised, people had bigger celebrations than before during the Dragon Year Tsagaan Sar Festival.
In March the Government approved the second list of apartments, towns and districts of the ‘100,000 Apartments’ program, which will be constructed in Ulaanbaatar, regional pillar centers and province centers.
They increased the number of apartments on the first list from 79,000 to 124,000. Half of the newly added apartments have an area of 55 square meters each. Excited as they were, people celebrated their own and the opposite gender holidays, namely International Women’s Day and Mongolia’s Soldier’s Day more widely than before.
Soon after the Government issued a guarantee to the Development Bank of Mongolia and allowed it to issue 200 billion MNT in bonds to the domestic market. The Development Bank of Mongolia succeeded issuing bonds worth USD 580 to the international market. The subscription or demand for these bonds with interest rates of 5.75% a year was USD 6 billion, which was 10 times more than announced. Content with the Government’s decision to start the next election by borrowing a massive amount of money from abroad with a promise to provide 500,000 people with apartments, construction companies increased their apartment prices abruptly.
If this goes on, only a few people will be able to have apartments at a high price and most are likely to be left without any. Even though internal and external debts of Mongolia have increased massively, it looks like that politicians who promised free cash will be replaced by the ones who promise apartments and only those construction companies along with their political accomplices will make any profit.
With the purpose of organizing the construction and provision of these apartments, the Mongolian Housing Finance Corporation (MHFC) was established by Joint Decree Nos. 196/372/567 from the Minister of Finance, Minister of Construction and Urban Development and the Mayor of Ulaanbaatar on October 17th, 2006. The Government should have established a joint stock company with transparent operations instead of setting up a limited liability company owned by three government organizations.
MHFC is failing to have an influence on supply and demand of apartments and is unable to consolidate in terms of structure and operational capability. Also, income from the Development Bank bonds is passing through retail banks, which is increasing apartment prices and causing more financial pressure on people.
One might even ask if MHFC has become just a branch of a retail bank.
The advance payment has been increased because of the risk retail banks are taking, which makes it impossible for people with low incomes to get into one of those 100,000 apartments.
MHFC has become a bureaucracy that can do nothing more than demand various documents from people.MHFC is working as a retailer for construction companies by creating a list of the apartments they are selling and having it approved by the Government. Even though apartment building quality should not concern MHFC, no one in Mongolia is currently responsible for poor quality apartments where walls begin to crack starting in the first month.
MHFC should have taken the leading role when deciding vital issues regarding apartments such as location, land ownership and infrastructure construction. MHFC has become just a tool and “legitimate representative” of Ulaanbaatar’s land mafia, which already finished the “Zaisaning” of land in Yarmag.
We need to combine the issue of reducing poverty with our policy to provide housing. If we create proper conditions and provide every family, no matter how much their income level is, with an opportunity to move into an apartment, we will be able to solve many of our most pressing problems such as smog in the city, economic, demographic, and infrastructure issues.
In order to do that, we must transform MHFC into a Housing Council, which would be in charge of supply issues such as building infrastructure, constructing apartments, and its provision as well as demand issues including finding out the exact level of people’s income, choosing the location, space, and area of apartments depending on purchasing power of every family and their long term rentals.
This council has to be led by representatives from related government organizations, the Development Bank, city administration and citizens. Most importantly, its operations have to be transparent.
This council has to decide where and what apartments would be built. Private companies should compete to handle the construction work after the Housing Council declared what infrastructure, apartments, schools or kindergartens would be built with what layout and plan.
The planning should let the rich and the poor live in one place by putting public rental apartments and private houses together with an appropriate ratio. Every project has to be implemented in a way where apartment building quality is examined regularly and faults are fixed right away. The council should announce tenders between construction companies and try to finance good quality apartments with reasonable price. We have to stop this trend where only the buildings of companies with connections to political parties are sold.
Instead of involving retail banks, the Housing Council should be both client and renter so that it could set the monthly rent accordingly to income of every family allowing people with low income to pay a lower amount of rent.
If it is done, its social influence will actually be seen. People would rent public apartments for many years and those who can afford could choose to have their own house built. A part of the public apartment building maintenance and services cost would be constituted by payments made by tenants. Every apartment building would be led by the Apartment Owners’ Association (AOA) and all AOAs would be governed by the Housing Council. If we follow this path, our city’s infrastructure and planning will experience an evolution, which will stop few officials from unlawfully gaining from public properties.
This path to provide housing is chosen by many countries, the most successful of which is Singapore. What happened to our large delegation led by the Prime Minister who visited Singapore and promised to introduce it in Mongolia? Their experience might not be able to be duplicated in Mongolia because there are not as many politicians who misuse public property for their own good in Singapore.
In any case, we need to change our policy and approach to providing people with housing. Let us stop all this drama laying foundation stones of apartment buildings only two months before the election.
Mongolians are waiting for the buildings, not the foundation stones.
Translated by B.AMAR
Our bitter experiences in recent years suggest that it is time to change our approach to implementing the policy on providing people with housing. The Government cannot forget Mongolian people, no matter how poor they are, have the right to housing, education and basic health services.
The Government once again made promises this February that brought hope to ger district people that they could have apartments of their own. They announced that loans up to 50 million MNT with 6% annual interest rates would be provided to people who have not owned an apartment before and have a household income below 700,000 MNT. This program of 100,000 apartments will only include apartments that are newly built. Excited for what they were promised, people had bigger celebrations than before during the Dragon Year Tsagaan Sar Festival.
In March the Government approved the second list of apartments, towns and districts of the ‘100,000 Apartments’ program, which will be constructed in Ulaanbaatar, regional pillar centers and province centers.
They increased the number of apartments on the first list from 79,000 to 124,000. Half of the newly added apartments have an area of 55 square meters each. Excited as they were, people celebrated their own and the opposite gender holidays, namely International Women’s Day and Mongolia’s Soldier’s Day more widely than before.
Soon after the Government issued a guarantee to the Development Bank of Mongolia and allowed it to issue 200 billion MNT in bonds to the domestic market. The Development Bank of Mongolia succeeded issuing bonds worth USD 580 to the international market. The subscription or demand for these bonds with interest rates of 5.75% a year was USD 6 billion, which was 10 times more than announced. Content with the Government’s decision to start the next election by borrowing a massive amount of money from abroad with a promise to provide 500,000 people with apartments, construction companies increased their apartment prices abruptly.
If this goes on, only a few people will be able to have apartments at a high price and most are likely to be left without any. Even though internal and external debts of Mongolia have increased massively, it looks like that politicians who promised free cash will be replaced by the ones who promise apartments and only those construction companies along with their political accomplices will make any profit.
With the purpose of organizing the construction and provision of these apartments, the Mongolian Housing Finance Corporation (MHFC) was established by Joint Decree Nos. 196/372/567 from the Minister of Finance, Minister of Construction and Urban Development and the Mayor of Ulaanbaatar on October 17th, 2006. The Government should have established a joint stock company with transparent operations instead of setting up a limited liability company owned by three government organizations.
MHFC is failing to have an influence on supply and demand of apartments and is unable to consolidate in terms of structure and operational capability. Also, income from the Development Bank bonds is passing through retail banks, which is increasing apartment prices and causing more financial pressure on people.
One might even ask if MHFC has become just a branch of a retail bank.
The advance payment has been increased because of the risk retail banks are taking, which makes it impossible for people with low incomes to get into one of those 100,000 apartments.
MHFC has become a bureaucracy that can do nothing more than demand various documents from people.MHFC is working as a retailer for construction companies by creating a list of the apartments they are selling and having it approved by the Government. Even though apartment building quality should not concern MHFC, no one in Mongolia is currently responsible for poor quality apartments where walls begin to crack starting in the first month.
MHFC should have taken the leading role when deciding vital issues regarding apartments such as location, land ownership and infrastructure construction. MHFC has become just a tool and “legitimate representative” of Ulaanbaatar’s land mafia, which already finished the “Zaisaning” of land in Yarmag.
We need to combine the issue of reducing poverty with our policy to provide housing. If we create proper conditions and provide every family, no matter how much their income level is, with an opportunity to move into an apartment, we will be able to solve many of our most pressing problems such as smog in the city, economic, demographic, and infrastructure issues.
In order to do that, we must transform MHFC into a Housing Council, which would be in charge of supply issues such as building infrastructure, constructing apartments, and its provision as well as demand issues including finding out the exact level of people’s income, choosing the location, space, and area of apartments depending on purchasing power of every family and their long term rentals.
This council has to be led by representatives from related government organizations, the Development Bank, city administration and citizens. Most importantly, its operations have to be transparent.
This council has to decide where and what apartments would be built. Private companies should compete to handle the construction work after the Housing Council declared what infrastructure, apartments, schools or kindergartens would be built with what layout and plan.
The planning should let the rich and the poor live in one place by putting public rental apartments and private houses together with an appropriate ratio. Every project has to be implemented in a way where apartment building quality is examined regularly and faults are fixed right away. The council should announce tenders between construction companies and try to finance good quality apartments with reasonable price. We have to stop this trend where only the buildings of companies with connections to political parties are sold.
Instead of involving retail banks, the Housing Council should be both client and renter so that it could set the monthly rent accordingly to income of every family allowing people with low income to pay a lower amount of rent.
If it is done, its social influence will actually be seen. People would rent public apartments for many years and those who can afford could choose to have their own house built. A part of the public apartment building maintenance and services cost would be constituted by payments made by tenants. Every apartment building would be led by the Apartment Owners’ Association (AOA) and all AOAs would be governed by the Housing Council. If we follow this path, our city’s infrastructure and planning will experience an evolution, which will stop few officials from unlawfully gaining from public properties.
This path to provide housing is chosen by many countries, the most successful of which is Singapore. What happened to our large delegation led by the Prime Minister who visited Singapore and promised to introduce it in Mongolia? Their experience might not be able to be duplicated in Mongolia because there are not as many politicians who misuse public property for their own good in Singapore.
In any case, we need to change our policy and approach to providing people with housing. Let us stop all this drama laying foundation stones of apartment buildings only two months before the election.
Mongolians are waiting for the buildings, not the foundation stones.
Translated by B.AMAR
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