There is a dire need to simplify the regulatory framework, increase participation of retailer investors and encourage the formation of holding companies by removing inter-corporate dividend tax to boost the development of capital markets in Pakistan, according to experts in a panel discussion organized by ACCA Pakistan (the Association of Chartered Certified Accountants), CFO Club and Pakistan Stock Exchange (PSX).
The webinar featured prominent industry leaders and financial experts, including Sajjeed Aslam (Head of ACCA Pakistan), Shabbar Zaidi (Ex-Chairman FBR), Raeda Latif (Head of Marketing & Business Development, PSX), Asif Soomro (Managing Director, KASB Securities), Shehzad Dhedhi (Founder, CFO Club) and Imran Ahmed (CFO, Engro Fertilizers).
Delivering the opening remarks, Sajjeed Aslam shared that, “Pakistan has immense potential for growth in developing capital markets. We need to create financial literacy around capital markets and teach individuals how to invest and generate capital from their investments. We also need to enable start-ups and businesses to utilize debt funding and equity funding to increase their growth capital.”
According to Shabbar Zaidi, high market volatility is one of the reasons for low individual investors’ participation, while large pension funds also avoid investment in the stock market. He recommended that long-term investment should be encouraged through tax credits and excessive compliance requirements of listed companies should be removed for the listing of more entities.
“In the last few years, we have seen positive changes in the regulatory framework and we are becoming more transparent. PSX is also prioritizing investor education to encourage more participation of retail investors”, added Raeda Latif
Asif Soomro suggested that the government should seriously reconsider the proposal to withdraw inter-corporate dividend tax relief as this is an excessive requirement. The relief was introduced after an extensive collaborative process and global benchmarking in 2007/8 to promote the formation of Holding Companies structures and corporatization of family-owned enterprises. Further, he also stressed on investor education so they could learn to take a long-term view of the capital markets.
The participants concluded that regulators should develop a deeper understanding of the market prior to introducing new governance policies and legal framework. Based on the overwhelming response, ACCA Pakistan and CFO Club will be organizing similar sessions in future as well to enable dialogue on important aspects of the economy.
At the time of writing, the session had crossed 500,000 views on facebook alone.