Next budget to carry capital gain tax exemption

KARACHI (May 21 2003) : Prime Minister Mir Zafarullah Khan Jamali said that the budget for the next financial year will carry capital gain tax exemption as proposed by the stock exchange and also directed the players to broaden the investors base through opening branches and outlets in different parts of the country.

Prime Minister Jamali was the chief guest at the Top 25 Companies Awards 2001 organised by the Karachi Stock Exchange (KSE) where companies were selected on their financial activities, dividend disbursement and trading during the whole year.

The prime minister said that other companies should follow the footsteps of these companies and should improve their financial results.

The global economy was passing through recession and the trend was still following. However, Pakistan's economy showed resilience because of the government's efforts and its policies, continuity of economic reforms, he said.

“The continuity is the name of the game and you cannot play with the economic policies,” the prime minister said.

Jamali said that with the prudent economic policies the fiscal year to be ended June 30, 2003 would show major improvement in the macroeconomic indicators.

The gross domestic product would exceed the set target of 4.5 percent during the current fiscal year, balance of payment have shown great improvement and were in surplus and the foreign currency reserves have reached $ 10.5 billion.

He said that ample foreign currency reserves and flow of remittances from the overseas Pakistanis, which was doubled in the nine months ended March 31, 2003 to $ 3.2 billion, has helped the country's exchange rate versus the dollar.

“Inflation rate is low, while interest rates have never been so conducive and domestic and external debts are declining,” he said.

The prime minister said, “Our trade and investment regime is transparent and open, we are directing our resources towards improving human capital and physical infrastructure.”

The government was committed towards vibrant and transparent capital market and wanted to safeguard the interest of the investors.

He said that the Securities and Exchange Commission of Pakistan (SECP), which has recently introduced corporate governance rules, has ensured various transparencies to improve the disclosures pattern.

Moreover, they wanted to make the audit system more transparent so that the stakeholders should be ensured off their investments made.

The prime minister said that the stock market was termed as “best performing market in the world” and recorded improvement in 2002 and now rallied into 2003 because of series of measures introduced by the government, the regulator and the stock market.

Several measures were needed to raise the capital through raising of equity listing.

He said that to increase the investors base, he urged the stock players to increase their geographical spread through opening new outlets and branches.

The prime minister was accompanied by Finance Minister Shaukat Aziz, Privatisation Minister Dr Abdul Hafeez Shaikh, Industries Minister Liaquat Ali Jatoi, Commerce Minister Humayun Akhtar Khan, Sindh Governor Dr Ishratul Ibad, Sindh Chief Minister Sardar Ali Muhammad Khan Mehar and Special Assistant to Prime Minister Brigadier Manzoor.

In a lighter view Prime Minister Jamali said, “I can only advise you take a calculated risk.”

Finance Minister Shaukat Aziz in his keynote address said, “I am surprised that the proposal from the stock exchange was fewer.

He said that we need second generation reforms in the stock market as the objectives of transparency and safeguards of the interests of investors, besides reviving.”

He said that there were five players in the corporate world, investors, company, stock exchange, regulator, brokers and the government.

“We have witnessed a new listing of Rs 30 billion last year of which most of them were debt listing,” he said.

Firozzuddin Cassim, chairman, KSE, in his address of welcome said that the current market capitalisation of $ 11 billion was creditable, the target was to achieve capitalisation equivalent to the GDP level of $ 60 billion as per international standards.

“We had the opportunity to meet the director general of the Dubai financial market who assured us of tremendous resource potential for investment in the equity markets in Pakistan.”

He said that the experience of listing of the National Bank of Pakistan and dis-investment of the government holdings in listed companies has proved quite successful and has generated over Rs 3 billion.

The exchange urged the government to sell stakes in the OGDC, Pakistan Petroleum and Habib Bank through the stock markets within three months.

Moin Fudda, managing director, KSE, said that the KSE was the best performing market in the world and as per Monday's market preview the index has still gained 64 percent in the year.

He said that during 2002 the market saw a listing of 17 new debt issues.

“We are planning to introduce OTC market, margin trading and option trading within this year.”

Moreover, Fudda said, “We have planned to market the exchange and would soon introduce live trading at Jinnah Terminal. In phase two the live trading of shares would be available on the hotels.”

The yield on stocks is 10 percent, while the PE ratio is Rs 12.

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