The Philippine Stock Exchange (PSE) is hoping for the Senate's approval of the proposed bill on real estate investment trusts (REITs) to expand the investment scope in the local stock market.
 
"I am hopeful that our Senators will help our cause of developing our stock market through a bill that will introduce new investment opportunities for both our local and foreign markets," PSE president Francis Lim said in a statement.
 
In a sponsorship speech delivered at the Senate on Tuesday, Senator Edgardo Angara highlighted the significance of bringing in REITs, saying they would have a clear-cut positive contribution to both the stock market and economy.
 
"Our stock market is considered one of the oldest in Asia; but its inferiority in size is a matter of national embarrassment. In other words, the slow development of our stock market mirrors the slow economic development of our country," Angara said.
 
The REIT bill was drafted to allow the establishment of a corporation for the purpose of owning income-generating real estate assets and real estate-related assets whose shares of stock will be made accessible to small and large investors alike.
 
The proposed law mandates the listing of these stocks in a stock exchange to enable the general public to buy the stock and promote transparency in these companies.

Investment risks in REITs are minimized since REIT assets are managed professionally by an independent fund manager and property manager. Shareholders are also assured of their investment’s rate of return through the required dividend payout of at least 90 percent.
 
"If we fail to introduce REITs in our country, we might find our stock market further lagging behind our neighbors," Angara added.
 
He cited that Asian REIT markets have shown strong growth potential with their combined market capitalization of $68.3 billion in 2008 from only $46 billion in 2006. Asian REITs’ contribution to the total global REIT market capitalization last year likewise grew to 11.3 percent from 7.6 percent in 2006.
 
As of 2008, the number of listed REITs in Asia represent close to one-fifth of the total REIT companies listed across the globe.
 
Lim said REITs would give relief to investors in the property sector whose confidence has been affected by the subprime crisis in the US.
 
Earlier, President Arroyo signed into law capital market-friendly bills such as the Personal Equity and Retirement Act and the Credit Information System Act.