Finance adviser, PSX board meeting ends on a positive note

KARACHI: Pakistan Stock Exchange’s (PSX) officials meeting with Adviser to Prime Minister on Finance Miftah Ismail ended on a positive note with the capital market’s top echelons optimistic about the government’s willingness to address the tax issues that impede the bourse’s growth.

“We brought forward four to five major issues during the meeting (held on Sunday)…it’s not possible (for the government) to take decisions [on our demands] before the budget…so wait for April 29,” a senior official, who attended the meeting, told The News on Monday. “Adopting these measures will be betterment for the stocks market.”

Government is about to unveil the sixth and last budget of its tenure for the fiscal year of 2018/19 next month. The official, requesting anonymity, said the finance adviser didn’t assure anything, adding that “after all he is a professional guy”.

PSX officials proposed the government to rationalise taxes on bonus shares and capital gains. They also demanded rationalisation of taxation regime for brokers and taxability of inter-corporate dividends to rev up the benchmark KSE 100-share Index that lost around 16 percent during the last year.

PSX has also been seeking extension in tax credit period for newly-listed firms to encourage corporate sector’s listing in the capital market. The Finance Act 2011 introduced tax credit of 20 percent for the tax year in which a company is listed. Currently, the tax credit is for two years from the date of listing. PSX proposed the period should be at least five years to encourage new listings.

Only three companies, including PSX, Roshan Packages Limited and Ittefaq Iron Industries offered their shares to public in 2017, much like in the preceding year. The market is expecting at least five new initial public offerings during the current year.

PSX officials at the meeting said the budget proposals are for the growth and betterment of the capital market, which will result in revenue generation and contribution to the exchequer. “Government support for capital market would bring in both domestic and international funds into Pakistan and help corporate sector to expand, generate employment, raise income levels and support increase in government tax revenues,” a PSX statement said.

The anonymous official said the issue of board reconstitution scheduled on April 19 also came under discussion during the meeting. “There has never been an issue on independent directors,” the official said. “We agreed that number of independent directors in the board should be as much as others. (But), there could be all new faces or be the same.”

Currently, the 15-member board comprises four representatives of Chinese investors who own the capital market’s strategic stake, three selected by brokers, two SECP-nominated members, while the remaining five are independent directors who were nominated by the government to complete demutualisation. PSX chief executive officer sits on the board as the 15th member.

The meeting further discussed treatment of unrealised gain on sale of properties to a real estate investment trust (REIT) scheme. The officials said the investment in REIT should be treated as investment in stocks fund.