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Alimullah regrets fiscal law disparities

Capital markets should

meet corporate

financing needs

ASHRAF KHAN

ISLAMABAD: Securities and capital market should be strengthened for corporate financing instead of overwhelming reliance on the banking sector. That would also give boost to national savings. This was stated by Qazi Alimullah, Deputy Chairman, Planning and Development Division in his concluding remarks at the seminar on prospects of bond market in Pakistan. He was presiding over the first session of the seminar held here on Saturday.

Qazi pointed out the impediments in the growth of capital market. He said that disparity in fiscal laws and inefficiency of the institutions concerned are hampering the growth of capital market.

He said stage was set for the taking off of the capital market in the country. Though international financiers are satisfied with the track record of economic policies, most of the potential investors were worried about the law and order situation in Karachi, atomic policy and growing element of fundamentalism in Pakistan.

He said in spite of attractive incentives offered in the capital market sector the market response is very poor. He emphasised the removal of the investors worries to make the capital market a success.

Earlier, Arif Sarfraz, Managing Director, Bear Stern Jehangir Siddiqui & Company, Hamid But, Managing Director, Citicorp. Investment Bank and Fakir Sayed Aijazuddin, Chief Executive, First International Investment Bank addressed the seminar with reference to the Pakistan first Euro issue and first listed domestic fixed income issue.

The speakers unanimously of the view that the first issue of the Euro bond could not draw the desirable level of subscription whereas issues of bond in private sector - Dewan Salman Group of Companies - termed as successful. However they said the issues from the public and private sectors are rated with different parameters and sovereign issue is distinct to that of private sector.

They were of the view that all the signs are there that progress in the direction of developing a dynamic debt securities market in Pakistan is being made in order to build on the newly laid foundation, the corporate sector will have to respond in a positive manner. They said though the initial response to these developments has been encouraging and during the year 1994-95, four corporate sector institutions came forth to issue non-equity securities valuing at over 1.2 billion, there is still a long way to go before the bond market in Pakistan matures into an institutionalised mode of financing.

They further said the extent to which the current promising trends can be translated into operational success will be determined by the level of mutual coordination and professional ethos which are established in the relationship between the regulatory authorities and market players, corporate finance advisors, stock brokers and stock exchanges.

Giving an optimistic look they said the present drive towards this goal, the prospects of an active bond market in the country are looking brighter than ever before.