The Securities and Exchange Commission of Pakistan (SECP) has informed the Senate Standing Committee on Finance that the future roadmap of major fiscal reforms covered withdrawal of the presumptive tax regime (PTR) and exemptions with new incentives on the long-term savings ie insurance and private pensions.
Sources told Business Recorder here on Wednesday that the figure has been mentioned in a presentation of the SECP to the Senate Standing Committee on Finance, containing functions, responsibilities and future roadmap and strategy for fiscal reforms of the commission.
In the fiscal reforms, the SECP has proposed specific short-term measures for development of bond market, real estate investment funds, infrastructure bonds and private equity. The regulatory measures proposed by the SECP included finalisation of a policy for corporatisation of un-documented sectors of the economy.
The SECP has also placed the future roadmap and strategy before the committee. The SECP said that the objectives of the future roadmap included availability of wide range of financial products, engendering culture of documentation and disclosure, innovative insurance products impacting at grass roots level, participation of youth in private pension and encouragement and promotion of entrepreneurship.
In its presentation, the SECP said that as many as 829 foreign investors are registered with the SECP out of 63,141 companies operating under the regulatory framework of the commission. According to the presentation, 574 public listed companies are registered with the SECP, public unlisted companies are 2,249; private companies 57,162; single-member companies 1,492; companies limited by guarantee 71; non-profit associations 548; trade organisations 222; foreign companies 819 and four falling with the category of 'other companies.
The SECP said that the significant reforms have been witnessed in capital markets. The CGT reforms included new mechanism for determination and collection of CGT; NCCPL was made the intermediary to determine the CGT; revamped CGT to help investor to do away with documentation requirements; 100 percent exact determination of the CGT and the problems of the non-documented gains made during the exemption period have been resolved in revamped CGT regime.
Major issues highlighted by the SECP in capital markets included restoration of market confidence; lack of investor education and awareness; under-developed/ non-existent debt market; limited range of derivative products; under-developed commodity and currency market; limited expansion and outreach; fiscal measures; lack Islamic and Shariah compliant products; limited primary market in particular for SME sector; surveillance capacity of the stock exchanges and lack of image building efforts by capital market institutions.
The SECP said that significant reforms have been witnessed in the NBF sector. Under the Collective Investment Scheme Regulatory Reforms, it included enhancement of unit holder rights, registration and regulatory framework for Trustees, conditions and procedure for winding up of Open End Fund, requirements for categorisation of Collective Investment Schemes. Other reforms are tax reforms for private pensions, permission granted to write short tenure (less than 3 years) leases, provisioning criteria reviewed, CDD and knowing your customer requirements, amendments in the Modaraba Ordinance, 1980 empowering the Commission/Registrar Modaraba to make regulations and to issue directives, etc, were approved by the Parliament, Shariah compliance and Shariah Audit Mechanism issued to eliminate the risk or possibility of any violation of Shariah principles by Modarabas, approval of two new Shariah compliant resource mobilization by modarabas.
The SECP has also explained issues in NBF sector at the finance committee. The issues included leasing and investment banking sector has limited resource mobilization ability, liquidity problem owing to asset/ liability mismatch, non-existence of level playing field with commercial banks, no regulatory funding support in financial distress and dearth of skilled human resource. In case of mutual fund sector, issues are limited retail investor base, competition from NSS, lack of investor awareness, concentration of financial institutions, illiquid and underdeveloped debt market and undeveloped investment advisory industry.
The SECP said that the issues in insurance sector are low insurance penetration (0.87 of GDP), low insurance density ($7.62 per capita), low insurance education and awareness, market concentration only among few big players, limited local reinsurance capacity, imprudent underwriting practices resulting in declining core income, inefficient policyholder grievance handling mechanisms, inadequate or non-existent tax incentives to promote personal lines of insurance business.