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Importance of Construction Permit Reform

The enforcement of building permits is so complex that it continues to foment informality. In most developing countries, this rate hovers between 60 to 80 per cent. The end result is poor oversight on safety, and higher costs for the community; while the cost in human lives is most evident, local authorities lose the opportunity to generate more revenues. Entrepreneurs lose the chance to access formal financing sources, as they are unable to back their loans with formally-registered assets.

Building permit reforms reduce backlogs in building permit applications, and thus increase construction. The benefits of increased construction extend beyond employing more construction workers. Construction related materials and services are purchased from local suppliers, local jobs are created, and these workers will spend the income they earn at local establishments. It is estimated that for every 10 jobs directly related to a construction project, another 8 jobs are created in the local economy (“The Economic Impact of Accelerating Permit Processes on Local Development and Government Revenues”, PriceWaterhouseCoopers, December 2005). In short, building permits are not just random administrative requirements, but are particularly important to generate more wealth, attract investment, and ensure a better protection of the community.