PAK-LIBYA'S PRO-ACTIVE BUSINESS APPROACH

 

Government's direct contact with the management of various banks appreciated

Feb 14 - 20, 2000

The Finance Minister, Mr. Shaukat Aziz and the Governor, State Bank of Pakistan, Dr. Ishrat Husain had a meeting with the Management of Pak-Libya to review Pak-Libya's operations and the Company's present and future plans. In the meeting, Mr. Zaigham Mahmood Rizvi, Managing Director, Pak-Libya was accompanied by Mr. Ramadan A. Haggiagi, Deputy Managing Director of the Company. Pak-Libya was established as a Joint Venture financial institution between the Governments of Libya and Pakistan. The Company has an authorized capital of Rs. 4.0 billion, wherein the paid-up capital stands at Rs. 2.2 billion. While reviewing the performance of the Company, the Finance Minister highly appreciated the growth of the Company's operations in the recent past, which is demonstrated by the expansion of its Balance Sheet, profitability as well as the diversity of its operations. The Company had an original subscribed equity capital of Rs. 1.0 billion, shared equally between the two Governments, wherein the total employed capital including reserves has more than doubled since inception and currently stands at Rs. 2.2 billion. In addition to this, the Company has paid a cumulative dividend of Rs. 1.9 billion since its inception. The dividend payout is thus nearly twice the subscribed capital of the Company. The Company enjoys a good Credit Rating which stands at "A +" for Long Term and "D1" for Short Term investments. They were further briefed on the manualization, systemization and computerization of the Company's operations which are taking place in the Company. Currently, Pak-Libya is also in the process of securing ISO-Certification. Referring to the stuck-up portfolio of the Company, the Management is making the best use of support avenues now being provided by the Government for vigilant and candid handling of default cases. It was noted in the review that there is a general revival in the economy, wherein specific signs of improvement are visible in the leading sectors like Textiles. The Minister encouraged Pak-Libya to continue playing a pro-active role in development financing. The Management was motivated to actively pursue its plans to encourage leading industrialists of the country running good business houses, for further expanding their operations through BMR i.e. Balancing, Modernization and Replacement. Pak-Libya would be approaching the top rated and successful business houses, particularly in the textile sector, for long term project financing support in their balancing, modernization and replacement plans. The Textile sector is fully geared to play its traditional leading role in boosting the country's export potential. The financial sector should meet its responsibility towards supporting good business houses, the Minister stressed. It may be noted that while there are a few defaulters/bad businesses who have damaged banking and financial sector of the country by way of substantial loan defaults. A large number of good business houses have played a dynamic role in the country's economic development over the years. They are the country's hope for playing an even stronger role in industrial development in the current economic challenges faced by the country. As such, the banking sector of the country should come forward to lend further support to these highly credit worthy business houses in reactivating their investment plans. Pak-Libya is fully geared to play its due role.

While reviewing Pak-Libya's role in the Capital Market Operations, with particular reference to the promotion of Public Debt Instruments and the Mutual Fund Industry, Pak-Libya was further encouraged by the Minister and the Governor, State Bank of Pakistan to continue playing an important role in the area of Capital Market and resource mobilization through listed instruments of finance. In order to develop the Public Debt Market, Pak-Libya is in the process of floating listed TFCs. These TFCs will be floated through a Special Purpose Vehicle (SPV) company. Pak-Libya is already having as its associate, an Investment Advisory Company namely Asian Capital Management (Pvt.) Limited, which is playing a major role in the promotion of Mutual Fund Sector of the country. Pak-Libya is also a Co-Manager of an existing Mutual Fund namely Asian Stocks Fund. The NAV of Asian Stocks Fund, during the last one year has moved up from Rs. 3.80 to Rs. 6.15 per share, showing a substantial growth of 60% during the year. Pak-Libya has also promoted a Fixed Income Securities Fund in the name and style of Munafa Securities Mutual Fund, with a paid-up capital of Rs. 150 million and is aimed at investing in low risk, stable instruments of finance like TFCs. The Fund will attract Investor Groups desiring to have a regular income stream, with a low risk appetite. Pak-Libya is also in the process of promoting an I.T. Venture Capital Fund to promote the venture capital enterprises in the I.T. sector. The Minister also appreciated Pak-Libya in its plans to float an I.T. Venture Capital Fund, which is expected to make an important contribution in promoting I.T. entrepreneurship in the country. It is also in the process of floating a Fund of Funds i.e. a Mutual Fund specializing in investments in Mutual Funds only. The Minister stated that these kinds of funds had played a very vibrant role in promotion of savings and in the growth of Mutual Fund Market in Europe and Africa. Pak-Libya was assured of the Government's support in such developmental activities to continue playing a dynamic role in the country's Capital Market. As part of Pak-Libya's Corporate Advisory Services, Pak-Libya alongwith AMZ Securities, are the Joint Financial Advisors to the Iran-Pak Refinery Project, a gigantic investment of US$ 1.1. billion in the Refinery Sector. The Minister assured that the Government of Pakistan gives great importance to this oil refining project and would like to see it on stream.

During the meeting, the process of Islamization of Economy was also reviewed. Pak-Libya is playing an active role in the development and promotion of Islamic Instruments of Finance, which include a Rated and Listed Musharika (M-VIS) as well as Infrastructure Musharika. The Management of Pak-Libya assured the Minister and the Governor that it is fully geared to play a meaningful role in the design, development and floatation of the Islamic Instruments of Finance for raising investment funds and making project investments.

At present, Pak-Libya is the only financial institution which has taken a pro-active role and initiative in promotion of I.T. Sector and has sponsored an I.T. Company in the name and style of Future Management Institute of Technology (FMIT). FMIT is involved in education and training of I.T. professionals as well as providers of Software/Network solutions with leading software development businesses and has already undertaken some joint venture projects with European and American Companies.

Since one of the purposes of establishing the Joint-Venture Financial Institutions like Pak-Libya was to promote trade between the two brotherly countries, Pak-Libya has established a trading company in the name and style of Union International (Pvt.) Limited (UIL). It is the first Company in Pakistan, which is based on e-commerce concept and is also registered with the Import and Export Board in Libya. UIL will also be concentrating in the African Market for boosting Pakistan's exports to the African region. UIL will be maintaining business information portals on Pakistan based on e-commerce approach and is fully geared to play an active role as an Export/Import House of the country. It is contacting leading manufacturers and exporters of the country to approach Libya and the African Market through the good offices of UIL.

The Managing Director, Pak-Libya, Mr. Zaigham Mahmood Rizvi highly appreciated this initiative of the Finance Minister and the Governor, State Bank of Pakistan and expressed optimism that such direct contacts with Management of various Banks would supplement Government's plans for revival and strengthening of the economy.