Speakers at a seminar organized by Hansuke Consulting have urged the federal government for close co-ordination among the regulators of the financial sector so that the sector grows well and meet the global challenges.
"Many more players have entered the financial market hence banks and regulators have more challenges. Now there is a need to create the architecture of the financial sector industry and bring in all the technology innovations to provide the basic and more advanced services to the users of this sector," Managing Director of Pakistan Stock Exchange (PSX) Nadeem Naqvi said speaking at a seminar on 'The Financial System at a Strategic Crossroads, Managing the Regulatory and Reputational Risks."
On equity market, he said that in the case of the capital market, we don't have the instruments or demands for the more complex products that has brought a lot people into trouble. "Pakistan's per capita GDP is over 1500 dollars now, while un-documented economy is about 40 to 50 percent, it means per capita GDP already reached 2200 dollar", he said citing that a study conducted five years ago said when a country's per capita GDP crosses or reaches $2000, its financial sector will be the single biggest sector that will experience very high growth for the next 20 years.
However, he said, to go forward, one has to do the single biggest thing is co-ordination among the governments and the regulatory bodies including State Bank of Pakistan, Securities Exchange Commission of Pakistan (SECP) and Federal Board of Revenue (FBR).
"These three organisations are under ministry of finance but they don't talk each other. If SBP do anything good, SECP remains unaware or unwilling to participate, Naqvi said.
He said Pakistan Stock Exchange launched government's debt security trading platform two years ago, but zero activity took place as the SBP felt that government securities were effectively being managed by primary dealers.
He said that in order to activate them, now they convinced SECP for installation of a terminal inside the SBP so that they could monitor the trading. "We need to talk each other and we need to engage each other for improved results," he urged. MD PSX said Singapore was the best example as they had a regulatory role to ensure investors' protection and reduce risk management. He informed that 10 years ago Pakistan equity market was only 35 percent compliant with international standards. In 2015, Pakistan was the first country in the world to open itself for assessment. Now, we are 65 percent complaint and have a target of 80 percent by end of December 2017. After meeting these international standards, Pakistan's stock market would be on radar of international investors.
"We have struggled for two years to make stock market an emerging market and a very calculated road map was followed in term of MSCI, regulatory term and operational transparency and governance," he said. Shabbar Zaidi, a renowned tax consultant, said that there is misperception about the foreign investment made by Pakistanis abroad. "In my personal opinion bulk of investment has been done aboard under the regulatory framework of Pakistan," he said.
"As per my personal estimates Pakistanis have invested an amount of $120 billion assets abroad, but there is nothing wrong about this. Some $6 billion were invested in Dubai property in 2014," he said adding that such seminars were very useful to educate masses, investors and government as well.
Zaidi said problem in Islamabad was not corruption; but the bulk of problem was lack of understanding. He said the problem was regulatory framework and person behind the framework. He said the SBP and SECP were regulators and they need to work together for growth of financial sector.
In his welcome address Bashir Jan Mohammad, Chairman of Westbury Group of Companies, highlighted the efforts of Hansuke Consulting for financial sector. He said that the UK based Hansuke Consulting was now launching its services in Pakistan. "Hansuke has extensive international expertise, that will be bringing to the Pakistani financial services sector to further improve the services in Pakistan" he adding that Ali Kazmi, Managing Director of Hansuke consulting, had already worked with leading institutions, such as HBL and UBL. With recent changes in global regulation and technological developments, our industry is presented with new opportunities alongside challenges, Bashir said.
Managing Director Hansuke Ali Kazmi, Chief Risk officer OneSaving Bank, the UK, Hassan Kazmi, Deputy CEO Habib Asset Management Ltd Maleeha Bangash, Senior Consultant Hansuke Consulting Rob Smith, CFA Dr Amjad Waheed and others also spoke on the occasion.