KARACHI: According to an official, the government has been disincentivizing investments in the Pakistan Stock Exchange (PSX) in comparison to the real estate and construction sectors.
Farrukh M. Khan, Managing Director of PSX, said during a speech at the Karachi Press Club that stock market investors deserve a fair playing field on which to do business.
“The PSX represents the honest taxpayer whose tax burden increases year after year because no one taxes the illegal economy,” he said.
He asked the government to list all state-owned businesses (SOEs) on the PSX in order to improve the public sector’s accountability and transparency.
Khan blamed the fall in trading value and volume on the sharp rise in international oil prices. This leads to a bigger trade imbalance, a weaker rupee, more inflation, and a higher cost of financing for businesses.
He asked the government to use a variety of incentives and exemptions to get businesses to list on the PSX, not only to help the economy but also to improve documentation and openness in the economy. This is what he said.
He added that the government should establish standard operating procedures (SOPs) for determining the optimal method of funding megaprojects or resolving circular debt.
Foreign investment in the PSX has changed over time, from about $8 billion at its peak to about $1.5 billion now, Khan said.
According to Raeda Latif, a PSX representative, the government now requires about Rs. 990 billion for the building and upkeep of new dams, which might be obtained via the PSX.
Numerous public sector projects, including water supply, energy production, highways, roads, and ports, might be funded under the PSX.
The government has crowdfunded about Rs 12 billion for the Diamer-Bhasha and Mohmand dams. She stated that the necessary funds, or a portion of them, could be raised through the equity market.
Raeda said that the Pakistan Energy Sukuk generated Rs200 billion in cash for the government, both directly and indirectly. This shows that the PSX is a critical platform for money generation.
She said that the government sometimes encounters financial delays for ongoing China Pakistan Economic Corridor (CPEC) projects, affecting the timeframe for completion.
She noted that the government needs funding to minimize such delays. This might be obtained via PSX, she noted.
Raeda was talking about the International Monetary Fund’s (IMF) situation when he said that getting money through the PSX not only saves money, but it’s also easier because there are no sovereign guarantee terms and the rupee could go down.