Left in the shelves for seven years already, the Real Estate Investment Trust Act (REIT) of 2009 should be implemented immediately as it has been designed to promote the development of the capital market.
This, after the House Committee on Economic Affairs chaired by Third District Rep. Arthur Yap threshed out all that remains to be addressed during the committee meeting on November 16 that zeroed in on the long overdue Implementing Rules and Regulations (IRR).
During the meeting, Yapâ€™s committee also addressed the overdue implementation of another law, the Personal Equity and Retirement Account (PERA) of 2008. The PERA law is set to be implemented by January 2017. Yap expressed relief that these two laws, envisioned to help sustain the countryâ€™s growth momentum and alleviate poverty, will soon be implemented.
Members of the Committee, Cagayan Third District Rep. Randolph Ting and Kabayan Partylist Ron Salo expressed their incredulity over the long period that these two laws remained unimplemented. Aghast by the delay, Salo pointed out that Republic Act 9856 or the REIT Act, which lapsed into law in December 2009, mandated the Securities and Exchange Commission, in coordination with the Bangko Sentral ng Pilipinas (BSP) and the Department of Finance (DOF) to issue its IRR within 90 days from its effectivity.
The REIT law aims to promote the development of the capital market by enlarging the participation of the investing public in the ownership of real estate and using the capital market as an instrument to finance and develop infrastructure projects. REIT gives investors the option to invest directly in finished products that are already earning moneyâ€”such as residential and office units, hotels or shopping malls or even infrastructure ventures like toll roads and power plants. The implementation of the REIT Act has been put on hold because fiscal authorities- -the DOF and BIR- -of the previous administration and the SEC failed to agree on how to divide the ownership between real estate companies and the public. According to the representative of DOF, Lawyer Jason Lopez, the finance department intends to implement REIT before the end of the year.
Lopez quoted Finance Secretary Dominguez saying that â€œREIT law is no longer a low-hanging fruit but is already a fruit on the ground. The law is already thereâ€. DOF would fix the IRR provision which states that the investment trust must be owned at least 66 percent or two-thirds by the investing public over a three-year period upon listing when that the law merely provides for a 33 percent or one-third public ownership. RA 9505 or the PERA Act, on the other hand, establishes a retirement system where contributions are made by both employers and employees. BSP Assistant Governor Johnny Noel Ravalo briefed the members of the committee on the salient points of PERA and the barriers to its implementation.
According to Ravalo, these contributions are managed and invested by an “administrator” chosen by the employee. Any person may only have a maximum of five PERA accounts cumulatively worth up to P200,000. Contributors are entitled to income tax credit every year worth five percent of his or her annual contributions.
PERA will come on top of existing contributions to pension funds Social Security System and Government Service Insurance System. However, there is a limited number of administrators qualified and accredited by the BIR. Moreover, there is a need for BIR to confirm the tax exempt status of the PERA investment products.