Tuesday, October 05, 2010

Lesson Snippets….

It’s not easy going back to academic stuff. The hard drive and the RAMs are not what they used to be. The CPU is almost obsolete. Yet in the midst of all the confusion, ‘blurness’, blankness and lost in the street of the academic world, some lessons stuck in this old head. Struck more like it. Using the lecturers’ terminology, there are some ‘take away’ points and I try to share as much as I can here, the important ones at least.

Economics and its world of demand and supply seems to play a very important role in setting public policies all over the world. Despite economics being an inexact science, people argue if it is even a form of science and add to that economists seem to argue among themselves to what is wrong, what is right, it’s prediction is the cornerstone of policy making. Prior to this, my personal perception is economics tend to look at facts, figures and tend to be ‘cold hearted’. More concerned about ‘efficiency’, the so called size of the pie  (share rather then ‘equity’, the distribution of the economic gains. Yet, the perception has slowly changed. More and more it can be seen in the pursuit of ‘efficiency’, distribution takes place. May be I am wrong but that’s how the perception has changed. Coming back to using economic arguments in policy making, hopefully someone can enlightened me to what extent it has been used in the process of policy making in Brunei.

Housing is always an important necessity no matter how we are. Recently, I had to opportunity to listen to how our neighbor approached this challenge. The take away points generated some raw thoughts.

The first one is about the DEMAND. Do we really know the actual demand on housing? Is the queue number the real demand? Is there anywhere we can manage, priorities and streamline the numbers to get the actual demand? Without knowing the real demand, we may end up building more than what is really needed. An aspect of this is the eligibility. Do we consider application from single person? Here, they based it on a family nucleus. A family nucleus is made up of minimum TWO person eg husband and wife, mother and kid etc.

Secondly is how can make use the houses to create assets for the recipients. Here, the ‘houses’ are treated as assets. Their value will grow in tandem with economic progress. The owners can cash in on the appreciation in value. Two important side to this is making ‘home ownership’ as the cornerstone and also allowing ‘right sizing’. Right sizing means upgrading or downgrading to meet the necessity.

The third one is ‘FORCED SAVING’. Everyone is ‘forced’ to save part of their income towards housing right from the beginning of their working life. Here, the figure is about 30% of the take home pay. This saving in most cases pay for most of the cost of buying the home. By the time the individual is allocated a house, he or she will have enough to make significant amount to pay for the house and subsequent payments.

An important aspect to all these is ‘financial savviness’ of the individual. The perception is that the general population is not financial savvy. Is this due to lack of education? May be educating them right from primary school will help. That’s for the future. How about for the current generation? We can’t force them to go back to school. The real question is the access to financial planning specifically in developing their individual ‘housing plan’ to meet their needs and within what they can afford. The individual will be more aware and understand more what they can afford and what needs to be done. Eventually he will have the ‘right’ expectation. The next question is who to provide this? Either we can leave it to the financial institutions or we face this head on. As we are responsible to allocate the houses, collect payments, we should be able to give financial advice. Financial advice given right from the day they submit their application.

The most important of all is we need to be pragmatic. Being pragmatic, able to evolve to meet the challenges and improve is the answer rather then to be tied up by rules and regulations. After all as the saying goes, rules are meant to be broken. Before they are broken, we can adjust to meet the demand of current time.

P.S. Is the academic world slowly infecting me? After re-reading this entry, it doesn’t sound like the usual me. Scary to think what will be the effect after 12 months of academic dose….