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SRI LANKA COUNTRY PROFILE

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CHAPTER 7: PROMOTING SUSTAINABLE HUMAN SETTLEMENT DEVELOPMENT<br />

18<br />

CP2002-<strong>SRI</strong> <strong>LANKA</strong> PAGE 18 Of 106<br />

Decision-Making: The main decision making authority for formulating policies and strategies related to human<br />

settlement development rests on a number of ministries but most vital decisions are taken by the Ministry of Urban<br />

Development, Housing and Construction. The two main formulating and implementing agencies in the ministries<br />

are the Urban Development Authority (UDA) and the National Housing Development Authority (NHDA). The<br />

UDA promotes integrated planning and implementation of economic, social and physical development of urban<br />

areas while the NHDA formulates programmes for housing and infrastructure development. Other Government<br />

Institutions whose decisions directly or indirectly affect human settlements include: the Irrigation Department;<br />

Central Environment Authority; Land Settlement Department; Mahaweli Authority; Resettlement and<br />

Rehabilitation Authority; Sri Lanka Land Reclamation; and Development Corporation. Generally in the<br />

construction of houses and other buildings decision making is in the hands of thousands of individuals. Their<br />

decisions depend on a number of factors such as location, price, affordability, availability and accessibility and the<br />

cost of building construction. As a result, there is an unplanned and haphazard conversion of prime agricultural land<br />

and wetlands, extension of urban sprawl, encroachment and squatting on environmentally sensitive areas. Decision<br />

making in urban low income settlements has gradually been shifted to Community Based Organizations (CBOs)<br />

through social mobilization and empowerment.<br />

Programmes and Projects: Actions and measures adopted since 1990 include a number of housing programmes.<br />

The most ambitious housing project was the launching of the 1.5 Million Houses Project in 1990 by the NHDA. It<br />

was a nation wide project and comprised 11 sub-projects for urban and rural areas including housing for the<br />

Mahaweli project area and major irrigation settlements and for plantations. Seven other sub projects were for the<br />

private sector (formal and informal), special 1000 houses (direct construction), for disaster housing, Provincial<br />

Councils housing, Cooperative housing and housing for employees. The objective was to improve the existing<br />

housing stock. By the end of 1994, only 57 % (nearly 859,000 families) of the target had been achieved. In 1995, an<br />

island-wide housing programme was introduced called Janaudana, which focuses on lower and lower middle<br />

classes. This is a sites and services project which provides assistance to construct 100 houses in each electorate<br />

while the Government provides access roads and other infrastructure facilities. By the end of 2001, a total of 39,985<br />

houses had been constructed. Other projects aimed at the lower and lower middle classes are the Scattered Loans<br />

and Grants Project, Serviced land plots, Urban Relocation Projects, Direct Construction, Urban Development and<br />

Low Income Housing Project (Clean Settlements Project, 1998). The most recent, is the Sustainable Townships<br />

Programme whose aim is to provide urban low income communities residing in ‘under served’ settlements in<br />

Colombo with serviced flats with titles and to liberate prime land occupied by these communities for other urban<br />

activities.<br />

Other measures to provide adequate land and housing as indicated in the Sri Lanka Country Report for Istanbul +5<br />

(Ministry of Urban Development, Housing and Construction, 2000) include the following: the provision of State<br />

lands owned by the NHDA at 50% of the market value to Government employees, artists, scientists etc; the<br />

provision of State lands owned by the Land Commissioner to low income families and the supply of building<br />

materials to low income families. Another significant step has been to encourage private property developers to<br />

invest in housing for middle and lower middle income groups. Some of the incentives and concessions include:<br />

granting of 7-10 year tax holidays; duty free imports; reduction of Stamp duties; and the provision of State owned<br />

land to BOI approved property developers at concessionary rates. Credit is a major constraint to housing<br />

development. Some of the attempts have been made to solve this problem as indicated in the above Sri Lanka report<br />

are the mobilization of the Employees Trust Fund and the Employees Provident Fund in the housing finance<br />

market; mobilization of more resources from the NHDA, Provincial Councils and cooperatives; establishment of<br />

the Housing Development Finance Corporation; establishment of the Employees Housing Fund and the<br />

introduction of the secondary mortgage market system; reduction of interest rates by the NHDA from 20.5% to<br />

10%-15% for low income house builders; reduction of interest rates by Commercial banks from 19% to 15%. A

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