Participants at a business policy roundtable on Monday underscored the need for giving the foreign investors level playing field in the country. The roundtable was organised by Centre for International Private Enterprise (CIPE), in collaboration with the Indus Entrepreneurs (TiE) at a local hotel.
The recommendation draft adopted at the end of The conference said that restriction on foreign venture capital (VC) and private equity (PE) fund on seeking funds locally should be eliminated.
The draft further said that excessive regulatory powers should be avoided. The regulator should regulate where it was absolutely necessary, it said, adding the criteria for suspension and cancellation of licenses should be re-considered.
It said the requirement of minimum number of investors to form a VE/PE fund should also be re-considered and the regulator's monitoring fees, which had no precedence in the institutional model, should be eliminated.
"The flexible environment that permits development of a wider range of structures should be developed. "The legal structure for the VC/PE sector should be developed. It should be based on a balanced between international best practices and domestic laws, and it should keep evolving," the draft said. In accordance with international trends, the draft said, restrictions on pension funds and insurance companies on investing in the VC/PE sector should be reconsidered.
"Since FMCs operate on long-term contractual arrangements with investors, the requirement for renewing licenses on an annual basis should be reconsidered. "Internationally, there is no minimum or maximum number of investors generally specified, and the proposed limits of 10 and 50 respectively should be reconsidered, to perhaps zero and 100," it said. The participants welcomed extension in the tax holiday for the venture capital companies till 2014, and said the PE&VC Funds sector would have been reached a mature stage till this extension is expired.
Country Director of CIPE, Pakistan, Moin Fuda, pointed out that the extension in the tax holiday was given by the government on the recommendation made by CIPE earlier last year. SECP Commissioner Salman A. Shaikh said that SECP would co-operate for removing unnecessary barriers in developing the private equity and venture capital funds market in the country.
Christopher Lane Davis, Special Counsel, McCarter & English, LLP, USA, said that the US private equity and venture capital industry was substantially free from regulation.
He claimed that India had no regulation for this sector. Moin M. Fuda said that CIPE was a non-profit affiliate of the US Chamber of Commerce and its core activities were in the area of institutional capacity building by initiating policy dialogue between the relevant stakeholders through organising business policy roundtables.
"Since its inception in Pakistan in January 2006, we have been working in the area of corporate governance, chambers and association development, policy advocacy, economic journalism development and women entrepreneurship development," he said.
Ali Ansari, President of TiE Karachi Chapter, said that TiE's focus was on generating and nurturing the next generation of entrepreneurs, he added. Sohaib Umer, Chairman, Advocacy, TiE Karachi Chapter; Basheer Chaudhry, President, Modaraba Association of Pakistan, and others also spoke on this occasion.