THE ROLE OF EXCHANGE COMPANIES
Money changers have to windup their business from June this year
H&H Exchange Co (Pvt) Ltd
By SYED MOHAMMAD FRAZ ZAIDI
Apr 12 - 18, 2004
Exchange Companies, a whole out effort of Honorable Finance Minister, Mr. Shaukat Aziz and Honorable Governor, State Bank of Pakistan, Dr. Ishrat Hussain, and all SBP officials, as their name suggest, are not new idea to the Corporate Culture of Pakistan's rapidly growing economy. In fact, today's Exchange Companies are the modernized and corporate form of yesterday's contemporary Money Changers. With the incorporation of Exchange Companies, the untouched and to some extent notoriously mysterious business activities of Money Exchange business had been unfolded and the misinterpretations regarding these activities has been eliminated.
In order to regularize Money Exchange business in Pakistan, State Bank of Pakistan has incorporated Exchange Companies (the then Money Changers) through FE Circular No. 9 dated July 1, 2002.
To take the initial step towards this positive move, State Bank of Pakistan has shown tremendous confidence in the management of H&H Exchange Co. (Pvt) Ltd which comprises of the prominent business personalities having the excellent repute and experience in the Money Exchange business, and issued the first ever licence to H&H Exchange Co. (Pvt) Ltd, hence starting a new era of money exchange business in Pakistan. H&H Exchange Co (Pvt) Ltd has the privilege to be the first ever Exchange Co. of Pakistan, which started its business operations with effect from February 6, 2003.
Here the question arises that what were the major factors, which lead State Bank of Pakistan to convert Money Changers into Exchange Companies?
The main driving force behind Exchange Companies formation was the post 9/11 global economic situation, when the inward remittances of foreign national Pakistani had been increased many folds due to the uncertain political, social as well as economic future conditions of the western world. In order to effectively handle the influx of foreign exchange in Pakistan need of properly managed foreign exchange companies was felt.
Also, as a part and parcel of the then government's efforts for the revival and reconstruction of Pakistan's economy to enhance the economic viability of Pakistan in the global business community, a comprehensive system of corporate governance was required for foreign exchange business as well, which would only be achieved by converting money changers (SBP licenced, non-formal business groups) into Incorporated Limited Companies under Companies Ordinance 1984.
Further, to broaden the tax base of the country and to bring more and more business activities into tax net of CBR, in order to enhance the collection of national exchequer, exchange companies were need to be formed.
The accurate data collection, recording and maintenance through Exchange Companies, would help State Bank of Pakistan in keeping up-to-date information of foreign exchange demand/supply position in Pakistan which results in the stability in the US Dollar-Rupee parity in the Interbank Market as well as Open Market (Kerb Market) and to harmonise them, on one hand and to accurately determine the exact need, demands and sources of foreign exchange in Pakistan, on the other hand.
H&H Exchange Co. (Pvt) Ltd, in order to take active part in Pakistan's economic revival was the first Exchange Co. to take a step forward and joined hands with SBP to curb the bottlenecks and hurdles which were hampering Pakistan's economic growth and prosperity. Credit goes to the pivotal role played by the Chief Executive Officer and Director, Mr. Haji Haroon and Mr. Muhammad Yousuf Rao respectively, of H&H Exchange Co. (Pvt) Ltd, by assisting SBP in the formulation of Exchange Company policies and procedures and their effective practical application in the country's business environment.
H&H Exchange Co. (Pvt) Ltd stands distinct amongst the other Exchange Companies, in assisting Government of Pakistan towards economic reconstruction and stability, by contributing in the piling up of record level of foreign exchange reserves, the highest ever in the country's history. This fact is clearly evident from the quantitative date of US dollar brought into Pakistan and sold in the Interbank Market. H&H Exchange Co. (Pvt) Ltd was the only Exchange Company, which sold $50 million in the InterBank Market in the month of December 2003, where the total industry data excluding H&H Exchange Co. was $10 million only.
In addition, H&H Exchange Co. (Pvt) Ltd, was the highest contributor to the National Exchequer, in the form of tax amongst other exchange companies, thus stamping their efforts/desire towards the country's prosperity.
H&H Exchange Co. (Pvt) Ltd has successfully completed one year of its operations and has earned an enviable reputation as the largest Foreign Exchange Company of Pakistan amongst the business community as well as in the corporate circle. The extraordinary growth in customer base through opening of various branches in major cities all over the country, speaks itself the reputation of H&H Exchange Co. (Pvt) Ltd, which has been earned in a short span of one-year amongst the masses. The Chief Executive, Mr. Haji Haroon and the Director, Mr. Muhammad Yousuf Rao, offers there thanks to all staff members of the company, for their utmost efforts towards the achievement of company's goals. They also thanked the Honorable Finance Minister Mr. Shaukat Aziz and Honorable Governor State Bank of Pakistan, Dr. Ishrat Hussain, and other officials of SBP for their whole-hearted co-operation and positive policies for making this idea of Exchange Companies successful and fruitful for the country.
Inshallah, in future also, H&H Exchange Co. (Pvt) Ltd will always be ahead of all others in making their maximum contribution towards Pakistan's economic prosperity and growth.