Zakat on owned land solution to housing problem

Updated 19 March 2013
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Zakat on owned land solution to housing problem

Experts focused on means to enable the private sector to contribute to financing houses during the fourth session of the last day of the Jeddah Economic Forum (JEF).
One such solution proposed by Sheikh Saleh Kamel, chairman of the Jeddah Chamber of Commerce and Industry (JCCI), is paying Zakat on owned land. “Zakat is an economic plan that is unfortunately not properly understood or implemented in Saudi Arabia. Zakat interferes with our housing issue as well as city planning,” he said.
He added, “We have millions of ‘white lands’, in which Zakat should be paid whether they are intended for investment or not. However, most white landowners unrightfully claim that these properties are not for investment. If we impose paying Zakat as our religion dictates at a rate of 2.5 percent per year, the government will receive larger monetary resources and channel it into building houses for poor people.”
According to Kamel, the only excuse for landowners not paying Zakat is when the land is a moor or not up for sale due to infirmity.
“Ministers have called for the establishment of a system to impose taxes on white lands. However, we have no need for such a system when Islamic law has insured the rights of every individual and stipulated these conditions 1400 years ago.”
He added, “Paying Zakat should be imposed on land grants as well; if land is granted to an individual, this land should be developed and not neglected or monopolized.”
Kamel continued, “White lands are the biggest problem that have led to the housing problem.”
“We are looking for an official fatwa to impose Zakat on the owners of white land. This is the only mechanism that can help us expand land space gradually. In addition, Zakat will reduce the prices of residential units,” he said. He pointed out that Zakat could be an effective way to treat unemployment by empowering the poor unemployed by providing them with capital.
The chairman continued to by reinforcing the correlation between Zakat and tackling unemployment.
“Zakat is not only about providing food and clothing for poor people; rather it is an effective tool for safeguarding development,” he said.
Said Al-Shaikh, chief economist at the National Commercial Bank in Saudi Arabia, provided a sobering view of the current situation of housing in the Kingdom, highlighting that the cost of owning a house is ten times more than the average wage of Saudi individuals.
“The average wage of Saudis based on official data released by General Organization for Social Insurance is about SR 6,000. If we look at the average cost of owning a house, it is about SR 600,000 to SR 700,000,” he said, adding “I don’t think ownership of houses in Saudi Arabia is at a rate of 60 percent as figures have indicated. If we exclude mud houses, ownership is at 40 percent.”
According to Al-Shaikh, the Kingdom needs 2.4 million residential units at a cost of SR 1.3 billion from now until 2022.
“We are expecting an acceleration of funds provided by the Real Estate Development Fund, as the total investment in the period between 2012-2022 is estimated at SR 650 billion, and if we add the additional SR 250 billion offered by royal decree, the total sum of investment will be SR 900 billion. Demand will grow, especially with the implementation of mortgage laws. We expect residential finance to increase to SR 115 billion in 2015,” he said.
Meanwhile, Ballobah Kritayanavaj, senior vice president of the Government Housing Bank in Thailand and director of research and information services, has said that his country has succeeded in resolving the housing problem by establishing 800,000 low-cost housing units in Bangkok.


He added, “Thailand has witnessed significant growth in the housing sector, as we offer different qualities of housing for all segments of society and banks provide loans for all the underprivileged.”
“Both the government and the private sector worked together to achieve remarkable results in the housing growth witnessed between 1993-97,” he said.
Kritayanavaj revealed that Thailand suffered a housing shortage in the 90s, which they overcame by conducting several studies to find out how their citizens can benefit from their wages to pay housing expenses.
He emphasized that the Government Housing Bank of Thailand, established in 1953, was created to provide funds for low and middle-income families. He credited the bank with providing soft loans with great facilitation and easy payment to 5 million families in Thailand.


Citizen rewarded after new car turned out to be used

Updated 31 min 55 sec ago
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Citizen rewarded after new car turned out to be used

RIYADH: A citizen from Buraidah has been rewarded by the Ministry of Commerce and Investment (MCI) for complaining about a commercial fraud. He exposed an auto agency who sold him a “new car” which turned out to be second-hand with a chequered history.
The MCI granted a reward of SR25,000 to Hamad Faleh Al-Qahtani, who reported the fraud.
He bought a new car from the auto agency and made the full payment, but soon realized he had been given a second-hand car.
Not only was it used but it had also been in a crash and been repaired and repainted, which was contrary to what had been agreed upon and in violation of the Anti-Commercial Fraud Law. The ministry followed up the matter with investigations to find the truth and take legal action.
The matter was referred to the public prosecution and then to the Administrative Court in Buraidah, which issued the final verdict that the agency was guilty of violating the Anti-Commercial Fraud Law.
The agency was fined SR100,000 ($26,687). Article 11 of the Anti-Commercial Fraud Law states that anyone reporting a case of commercial fraud which is found to be true upon investigation shall be granted 25 percent of the value of the fine.
The MCI honors 100 informers by granting them financial rewards and gifts on World Consumer Rights Day, which is observed on March 15 every year to foster global awareness about consumer rights and needs. The day was inspired by US president John F. Kennedy, the first world leader to formally address the issue of consumer rights.
The consumer movement first marked that date in 1983 and uses it every year to mobilize action on important issues.
The MCI has urged consumers to report commercial frauds through the Consumer Call Center (1900), through the application of a commercial violation report and through the ministry’s website.