Insurers to try investing in low-income housing
Shanghai would launch a pilot project to allow insurers to invest in low-income housing, China Insurance Regulatory Commission chairman Wu Dingfu said.
'We are studying the entry regulations for insurers to invest in such projects,' Wu said on the sidelines of yesterday's National People's Congress session.
He also revealed that the commission had reached an agreement with the Shanghai government to set up the country's first insurance exchange.
The pilot project is considered a key move for the insurance industry to widen its investment channels. According to interim measures launched by the commission in September, mainland insurers may use up to 10 per cent of their funds on real estate projects.
'There's no legal obstacle. We will focus on risk control [when drafting the regulations],' Wu said.
Low-income housing development has been an important part of Beijing's efforts to rein in runaway property prices and honour its pledge to improve people's living standards and well-being.
Premier Wen Jiabao said in a policy address on Saturday the country planned to build or renovate 10 million low -income housing units and units in run-down areas this year. The central government, which will allocate 103 billion yuan (HK$122 billion) for low-income housing development, asked local governments on all levels to raise funds 'through various channels and substantially increase spending in this area'.
Ping An Insurance (Group) chairman and chief executive Dr Peter Ma Mingzhe said investing in low - income housing would bring relatively stable, safe and sustainable returns to insurance companies.
'They are different from commercial real estate projects. Local government will be responsible for land use, project development and flat sales. It will be a reliable and risk controllable investment,' Ma said. Considering the relatively small profits involved, Ma suggested the government offer tax incentives for insurers and allow them to invest in different ways.
China Life chairman Yang Chao also urged Beijing to launch further guidelines on how to invest in real estate projects. 'The law took effect in September, but we still can't go ahead with our investment,' he said.