Tue, Dec 23, 2008 - Page 12 News List

Committee passes securitization bill

SLUGGISH MARKET Lawmakers are trying to stimulate the real estate market with the bill, which they say would provide greater incentives for urban renovation projects

By Crystal Hsu  /  STAFF REPORTER

The legislature’s Finance Committee yesterday gave its approval to a measure that would allow the securitization of properties under development as well as undeveloped land in an attempt to help stimulate the sluggish market.

The bill, supported by the Financial Supervisory Commission (FSC), had the backing of ruling Chinese Nationalist Party (KMT) lawmakers, who control a majority of seats in the committee and the lawmaking body as a whole.

FSC Chairman Sean Chen (陳沖), who spoke for the bill earlier in the day, said the amendment would provide the private sector with more incentives to take part in urban renovation projects and other public works.

Currently, investments in real estate properties under development or undeveloped land are not allowed.

The FSC resubmitted the bill in May this year to push for such investments after a similar measure won committee approval in 2006 but failed to win its final readings before the term of the legislature expired in January this year.

The bill empowers authorities to set a ceiling on investments on real estate properties under development or undeveloped land, and the FSC proposed capping the rate at 30 percent of the value of the properties.

The deregulation would not extend to real estate investment plans where the government or national enterprises own a 20 percent stake, and the ban would also apply to projects in which the government has greater than a 10 percent share.

Chen said the proposed revisions would allow investors with real estate more channels to raise funds as they seek to extend investment to land, buildings and their ownership under urban renovation programs, as well as public construction projects for which the government welcomes private investment.

Academics and government officials have called for the deregulation, saying that present rules are too strict and that trustees tend to be passive when managing assets.

Chen said the planned reform would not apply to the high-speed rail project as the government guarantees its operations.

The nation’s real estate-backed securitization market only came into existence in March 2005.

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