MANILA, Philippines - A bill that seeks to institutionalize real estate investment trusts (REIT) has lapsed into law, according to the top official of the Philippine Stock Exchange (PSE).

In a statement, PSE president and chief executive officer Francis Lim said he received notice from the Office of the President that the REIT bill lapsed into law last December 17 as Republic Act No. 9856.

President Arroyo did not sign RA 9856 as the Finance Department recommended to veto the bill, citing its impact on the government's tax collection efforts. Under the 1987 constitution, a bill not vetoed or signed by the President will become a law after 30 days.

"We are getting a lot of interest from many of our property firms for REIT listings. This landmark law will put the Philippines at par with the rest of the world which has had REITs for over 20 years," Lim said.

Contrary to fears that the fiscal incentives of the REIT law will undermine government revenues, Lim said it can help contribute to local coffers by promoting transparency in tax reporting. He added that the new business opportunities to be created by the law will translate to a broader tax base for the government.

"The perceived tax revenue loss is more imaginary than real. There is at present no REIT industry to speak of. Without a REIT law put into place, there will be no REIT transactions and, therefore, there will be no tax revenues," Lim said.

The REIT law will provide the regulatory and tax framework for REITs, or companies that own and operate income-producing real estate assets. Shares of these REITs are to be listed on and traded at the PSE.

It will also extend certain tax incentives to encourage investments. But to avail of these, the REIT must maintain its status as a listed company and annually give out at least 90% of its distributable income to shareholders.