House gives 3rd reading approval to REIT, crop insurance bills
THE House of Representatives approved on third and final reading a bill requiring real estate investment trusts (REITs) to reinvest the proceeds of their fundraising activities in the Philippines.
Legislators also passed on third reading measures encouraging the private sector to invest in crop insurance and establishing a financing program for micro and small enterprises.
Sitting in plenary session on Tuesday, 283 legislators voted for House Bill No. 7525, with zero no votes and zero abstentions. The bill seeks to amend Republic Act No. 9856 or the Real Estate Investment Act.
According to the proposed amendment, a REIT sponsor or promoter is required to reinvest in the Philippines the proceeds of the issuance of REIT shares “within one year from receipt of proceeds realized by the sponsor or promoter.”
Also subject for reinvestment are “other securities issued in exchange for income-generating real estate transferred to the REIT, or any money raised by the sponsor or promoter from the sale of any of its income-generating real estate to the REIT.” This includes any redevelopment, and/or infrastructure projects in the Philippines.
REITs should also submit a reinvestment plan to the Philippine Stock Exchange and Securities and Exchange Commission upon registration and secure a certification annually to prove that it is compliant with its reinvestment plan.
Property consultants welcomed the bill but said that REITs may need more than a year to reinvest their proceeds.
House Economic Affairs Committee Chairman and Negros Occidental Rep. Gerardo P. Valmayor, Jr. told BusinessWorld that he will be waiting for the Senate’s version of the bill before considering whether to adjust the one-year reinvestment deadline.
“We will ask for the opinions of business groups and whatever happens after the Senate’s (deliberations), then (see if we can still work it out,” he said.
He said that a fixed timeline was initially to assure that REIT proceeds do not go elsewhere.
The REIT Act, which passed into law in 2009, resulted in zero REIT issuances, until the government relaxed some requirements in the implementing rules and regulations.
The Philippines currently has eight REITs: AREIT, Inc., Citicore Energy REIT Corp., DDMP REIT, Inc., Filinvest Reit Corp., MREIT, Inc., Premier Island Power REIT Corp., RL Commercial REIT, Inc., and VistaREIT, Inc.
Legislators also passed on third reading a bill seeking to encourage private sector participation, including cooperatives and farmers’ organizations, in investing in agricultural insurance. The bill passed with 268 votes, zero no votes, and zero abstentions.
House Bill No. 7387 seeks to expand the services of the Philippine Crop Insurance Corp. to include livestock, fisheries and aquaculture, agroforestry projects, and forest plantations and non-crop agricultural assets such as machinery, equipment, transport facilities, and infrastructure.
Legislators also approved on third reading House Bill No. 7363, proposing to establish a low-interest, collateral-free financing program for micro and small enterprises (MSEs). The vote was 278 for and zero against, with zero abstentions.
Under the proposed Pondo sa Pagbabago at Pag-asenso Program (P3) Fund, the Small Business Corp., under the Trade and Industry department, will directly lend 40% of the P3 Fund; and accredited partner financial institutions (PFIs) the remaining 60%.
The P3 funding is expected to serve as an alternative to usurious lending schemes known as “5-6.” — Beatriz Marie D. Cruz