Says Pakistan has a great future; Pakistan Stock Exchange formally inaugurated
ISLAMABAD: Federal Finance Minister Ishaq Dar on Monday said that a number of countries have shown interest in investing in Pakistan in different fields, adding that Saudi Arabia also wants to invest in Pakistan in the petro-chemical energy sector and a refinery.
The government on Monday inaugurated the Pakistan Stock Exchange (PSX) after the merger of all three stock exchanges of Karachi, Lahore and Islamabad into a single bourse which would increase foreign investors’ interest and have greater international links.
The ex-office-bearers of the Lahore, Karachi and Islamabad stock exchanges expressed their resolve to work together and hoped that the integration helps reduce market fragmentation and creates a strong case for attracting strategic partnerships necessary for providing technological expertise and assistance.
Finance Minister Ishaq Dar while formally inaugurating the PSX, said, “It is a historic day for Pakistan and a milestone in the history of Pakistan’s financial and capital markets,” and added that it will go a long way towards its sustainable development.
The initiative was long awaited and PSX has materialised after a wait of around 15 years. “It will play a major role in the country’s economic development and the consolidation of its gains. I think Pakistan has a great future and I have great faith but we still have to go a long way.” the Pakistani economy is growing and showing signs of consolidation and now the predictions are that Pakistan will take off and the PSX will play a critical role in this process, the minister said. Coupled with more reforms, and development infrastructure projects underway contrary to the past, a lot of countries are now taking more interest in Pakistan.
“We have foreign exchange reserves for at least six months. Around 22 international institutions have recognised the Pakistani economy as a stable economy.” Various countries are now keen to do more and more business in Pakistan and bring investment. Pakistani companies are performing far better than US, Chinese companies, Dar said.
Pakistan has achieved a lot on the extremism and terrorism front, as Waziristan is almost clear of terrorists. Karachi is much safer now and businesses are booming and so is the economy, Dar said. He added that the education sector was also a major focus and the government was increasing funds and providing more facilities to raise it to international standards.
On the energy side, the government is vigorously working as it has been a major impediment in the economic growth of the country. A number of projects are under way in this sector and by the end of 2017 or March 2018, there will be around 10,000 megawatts additional energy on the national grid. Beyond 2018, there are also other projects under conception to add 14,000 megawatts more to the national grid.
Although he did not name it, yet referring to the China-Pakistan Economic Corridor (CPEC), the minister said that there should be no involvement of politics in projects which are of national importance.
The integration of three exchanges has completed the second phase of the Stock Exchanges Demutualization and Integration Act 2012, passed by a joint session of parliament.
The government has extended support to the capital market through the enactment of crucial legislation such as the Securities Act 2015 which has paved the way for effective regulation of the securities market in line with international best practices.
He said that parliament is deliberating on the Companies Bill 2015, Futures Market Bill 2015 and Corporate Restructuring Companies Bill 2015 and added that these laws would have a significant impact on the performance of the country’s financial and capital markets and will be instrumental in improving the regulatory enforcement, compliance and facilitation.
The international community has started acknowledging that the Pakistani economy is now in a takeoff position and the PSX would be an important player in developing the country.
Dar said that in 2012-13, the economy was facing a very dangerous situation but now the international rating of Pakistan’s economy has turned positive.
Security and Exchange Commission of Pakistan (SECP) Chairman Zafar Hijazi said that the SECP has realised that unless the three stock exchanges are integrated, no strategic investor would come forward and, therefore, the Commission engaged in dialogue with the stock exchanges for their integration and fully facilitated a consultative process.
He said that Pakistan needs a stock exchange that commands absolute confidence of domestic and foreign investors and is able to mobilise capital for economic growth. To achieve such absolute confidence, he said, the PSX must demonstrate the highest standards of governance, transparency, ensure the best technology and availability of innovative products, without which it cannot compete in today’s globalised stiff competition.
He said the SECP will make all efforts to ensure that the independent directors appointed by it are competent professionals of high integrity and are national-level representatives. Hijazi explained that under the current hybrid structure of the exchange with brokers having 40 percent ownership of the exchange and proportionate representation on the board, the SECP is hopeful that this model will be a success in the post-integration scenario. However, he clarified, if the same does not work, the SECP will review it in its entirety to devise the best possible way forward.
He informed the audience that because of our improving economic indicators and compliance with global benchmarks, the MSCI Pakistan Index has been included in the 2016 Annual Market Classification Review for a potential reclassification to MSCI Emerging Markets. He hoped that with the completion of successful integration of exchanges and other complementary reforms in place, Pakistan will regain the status of Emerging Market at the MSCI platform.
Arif Habib, a business leader, said that the Pakistan economy is at a take-off position, the fiscal deficit is coming down, the energy sector has numerous projects to generate more to the national grid and security situation has improved a lot. In the next 10 years, there is new potential of over $100 billion investment in this sector. More and more local retail investors should also participate in the stocks business. In Pakistan, the rate of return is almost one-fifth. More investment will create more jobs, revenues for the government, and consumer goods for people and boost exports.
Feroz Qasim, another business leader, expressed his views, saying that creating the PSX is just like “bringing three brothers in one house. We have taken the first step but a lot is needed to be done. This sector is heavily taxed, so the government should also look into it”.
The Chairman, Demutualization Committee ISE, Mukhtar Ahmed Jaffery, Chairman Demutualization Committee LSE Yasser Mahmood, the State Bank of Pakistan governor, NBP president, SBP deputy governor, managing directors of the PSX, LSE, ISE and CDC, NCCP, chairpersons of CCP, NIT and PMEX, members of the SECP Policy Board, members of the demutualization committees, and prominent business leaders from capital market, insurance and non-banking financial sector attended the event.