"Bourses are capable" Lakhani
By AMANULLAH BASHAR
Dec 13 - 19, 1999
Yasin Lakhani, president of Karachi Stock Exchange has said that
bourses in Pakistan certainly have the required depth to accommodate government's plan to
privatise public sector entities through stock exchanges.
Talking to PAGE, the KSE president said that the Habib Bank
alone collected around Rs12 billion against its prize schemes while the overall collection
of public by three major banks under the prize scheme was estimated Rs65 billion. Moreover
the Government's prize bonds did not lag behind and so far attracted Rs 72 billion out of
Lakhani referred these examples of overwhelming public response to the
prize schemes launched by the finance sectors both in the public as well as private sector
and said these are the solid grounds to prove that market is responsive to the secured
financial schemes and people are willing to invest provided the schemes are trustworthy.
When asked to comment on the scope of foreign investment, Lakhani said that foreign
investment comes only when the local investors are happy and satisfied. So, for broad
basing the investment specially through share markets, the government will have to
lookafter the interest of the local investors.
The KSE president however said that instead of putting smaller units
which are causing huge losses annually to the government, only large units should be
placed on sale through stock exchange, while the government should get rid of the smaller
units at the earliest. He said that government has nothing to do with running these
industrial units. Shift in the financial or other policies is one of the major reason for
stagnant foreign investment in this country. He referred to the incidents of delayed
remittances due to policies of the State Bank which also discouraged foreign investors in
Criticising the attitude of former governor State Bank of Pakistan Dr.
Mohammad Yaqub, who was responsible for various harms to the financial sector, Lakhani
said that departure of Dr.Yaqub should have taken place much earlier. During his long
tenure Dr.Yaqub did not tired of talking autonomy of the State Bank but always toed the
line of the governments.
The fraudulent investment companies were plundering people open
handedly in Karachi, but Dr.Yaqub who always claimed to be champion of autonomy never took
any action against these companies. He allowed the fraud investment companies to loot
people with the argument that they are out of his jurisdiction. The loot continued unless
the majority of the so-called investment companies fled away.
Hubco Power and IPPs issue have already done a great damage especially
on the foreign investment front. Dragging the issue makes no sense. If some is guilty
prove legally and penalize. Hanging in balance has not only adversely affected business at
stock market but also created a bad impression among the investors both at home and
abroad. This problem should come to an end in accordance with law. Matter of similar
nature has been resolved with Gul Ahmed and Tapal why not with Hubco.
Meanwhile the government idea to carry out its privatization programme
through share market has been welcomed by some financial experts also.
Imtiaz Lodhi, a prominent financial expert has said that privatization
of state owned units through stock exchanges is the only transparent and effective route
to deliver the goods.
He was of the view that privatization through bourses will not only
result in a broad-based ownership but will also boost the activities of all the bourses
which unfortunately have become centres of speculations.
The broad-based ownership of these units will eventually lead to more
professional management leading to a positive growth in these units. He, however, strongly
recommended that no individual buyer may be allowed to buy more than 5000 shares in a
The Finance Minister Shaukat Aziz, it may be recalled, has floated an
idea into market that stock exchanges would have to play an important role in the
privatization process. The privatization process would include using capital markets to
allow participation of the general public in the process. The government was giving high
priority to restore the confidence of investors by well throughout policies.
Currently, the government is faced with enormous task of trying to
re-profile the debt acquired by past governments, especially under circumstances where a
large portion of these loans had not been utilized in productive investment.
It was however made clear that in certain strategic areas, the
government would have to be an active partner whereas the rest of the privatization would
be carried out in a transparent manner.
The assets to be privatized are owned by the public and their
privatization means that the government interference is stopped. Privatization ensures
that market forces would be allowed to prevail, the business decisions will be made on a
business basis by business class itself and not on political consideration at the
governmental level, Shaukat admitted.
The government's role in some strategic industry would remain intact
but it would come to an end in the financial sphere. He said smuggling was a curse which
was not only causing huge loss of revenue but also adversely affecting the domestic