Having worked for two years as the Vice President of the Islamabad Stock Exchange, Tariq Iqbal took over as president in 1995. He was re-elected for his second term in 1996

Tariq Iqbal
Nov 16 - 22, 1996

In an exclusive interview with PAGE in his office, Mr. Iqbal said that he was not fully satisfied with the pace of development of ISE especially in the field of enlistment of companies which at present stood at 226. "Enlistment has to be expanded in order to make this exchange a more attractive place and in a position to cater to the needs of various types of investors. Immediately after the assumption of office I launched a vigorous campaign in this regard and I am determined to expand the enlistment to about 350 companies by the end of June this year," he said.

A number of companies of repute have confined business activities to the Stock Market of Karachi only as they feel the quantum of business and shares turnover activities were sufficient to meet their requirement and therefore they did not feel any attraction for Islamabad. All of such companies have been approached to have enlistment with ISE without any fee as initial enlistment charges. It is normally charged at the rate of one seventh of one per cent of the total paid-up capital. Even at this low rate the amount becomes quite substantial in view of the large paid-up capital of the companies. Annual licence renewal fee has also been reduced to Rs. 7500/- as against Rs. 25,000/- by Karachi Stock Exchange. These incentives would definitely work and new companies would like to have enlistment with ISE without incurring any extra expenditure. While on the other hand ISE will benefit a lot as it would provide a much wider area for business activities of the investors of this region. Tariq Iqbal said the second impediment from which all stock exchanges in Pakistan, especially the ISE was suffering is the time consuming and inefficient working system which blocked real growth in trade volume. Manual handling of investors' accounts has become outdated. We started work on an automation programme and in the next few months we will have fully automatic trading system in Islamabad Stock Exchange, he added.

In reply to a question about the recent slump in the stock market, Tariq Iqbal said that trading activities have always been most sensitive to laws and other situation. Economic stability always depended on political stability throughout the world.

For long the position of Karachi — a nerve-centre for Pakistan's business world — remained the most important impediment in the growth of stock markets in the country. No doubt the Karachi situation has improved a lot, but a state of confrontation in domestic politics still prevails leading to a condition of uncertainty. "Ups and downs in the stock market are directly linked with political climate and law and order in the country," he added. The soaring inflation has reduced the saving capacity of the people. National savings are sharply falling and the recent mini-budget leading to another spiral in prices has crippled the small savers who are the backbone of the capital market. All these factors should naturally lead to a decline in trade and business activity, he added.

Tariq Iqbal said that economic policies of the successive governments in Pakistan have been based on adhocism and were definitely anti-corporate. Citing the taxation policy as an example he said the maximum tax rate in case of individuals or individually owned firms is at present 35% + 10% surcharge while it is 49+10 per cent in case of public limited companies. This discrimination is definitely a discouraging factor for the corporate sector.

Extremely high rate of taxation in itself is the biggest impediment in the development of the corporate sector. How can you expect that a public limited company with hundreds of shareholders would pass on over 55 per cent of its total profit to the government and distribute the remaining 45 per cent amongst hundreds of shareholders in the form of dividend which is again taxable at the individual level. This normally leads to tax evasion with the connivance of taxation authorities. All these negative factors are discouraging the corporate sector and growth in capitalization is therefore, retarded.

Replying to another question regarding recent moves by the CLA to cleanse the working of stock exchanges by taking punitive action against members for malpractices in the sale and purchase of shares, Tariq Iqbal said that he fully agreed with the CLA authorities and appreciated their efforts to protect the interests of small investors but would only request them to be cautious and slow in their operations. With the present declining conditions,bn the timing is not ripe for such sweeping actions, he added.