PSX official calls for incentivising equity market

KARACHI: The government has been disincentivising investments in the Pakistan Stock Exchange (PSX) compared with the real-estate and construction sector, an official said.

PSX Managing Director Farrukh M Khan while speaking at Karachi Press Club, said that the stock market investors demand a level playing field where they could carry on business activities.

“The PSX is the honest taxpayer whose tax burden gets heavier every year because no one is taxing the undocumented segments of the economy,” he said.

He urged the government to list all state-owned enterprises (SOEs) on the PSX to bring accountability and transparency to the public sector.

Khan attributed the main reason for the consistent decline in both value and volume of trading to the steep rise in the international oil price, which results in a wider trade deficit, rupee depreciation, higher inflation and an increased cost of funds for businesses.

He demanded that the government should introduce various incentives and exemptions to attract companies to make their listing at the PSX, to boost up the economy but also to promote documentation and transparency in the economy

The government should devise standard operating procedures (SOPs) aimed at evaluating the best avenue for fund-raising for mega projects or circular debt settlement, he said.

The foreign investment through the PSX has varied from time to time as there were investments of around $8billion at its peak which now is around $1.5 billion, Khan noted.

Raeda Latif, an official of the PSX said that the government needs over Rs990 billion at the moment for the development and maintenance of new dams which could be raised through the PSX.

Various projects of the public sector including water supplies, power generation, motorways, highways and ports could be accomplished through raising capital from the PSX.

The government has raised an amount of nearly Rs12 billion through crowd-funding for Diamer-Bhasha and Mohmand dams. The required amount or a part of it could be sourced from the equity market, she added.

Raeda noted that the government raised funds directly and indirectly through Pakistan Energy Sukuk to the tune of Rs200 billion each, which depicts the capacity of the PSX as a very important platform to generate money.

She said that the government at times faces delays in funding the ongoing China Pakistan Economic Corridor (CPEC) projects, which affects the completion timeline.

To avoid such delays, the government needs to have funds available which could be accomplished through PSX, she added.

While referring to the condition of the International Monetary Fund (IMF), Raeda said that raising funds through the PSX not only saves money when it compares to banks and foreign agencies but it is easier without the involvement of conditions of sovereign guarantee and risk of depreciation of rupee.