Big companies should be given incentives for listing on stock exchanges: Senate body, SECP agree

The Senate standing committee on finance and the Securities and Exchange Commission of Pakistan (SECP) were unanimous in that major incentives, including tax benefits, should be given through Finance Bill (2011-12) to the corporate sector for encouraging big companies to come forward for listing at the stock exchanges.
The committee, which met in the parliament house on Wednesday with Senator Ahmed Ali in the chair, said it was concerned on the non-listing of big companies in the stock market and added that these should be motivated for listing to improve the stock market depth.
SECP Chairman Muhammad Ali Ghulam Muhammad informed the committee that SECP wanted the government to allow incentives to big companies through next Finance Bill (2011-12) to encourage their listing at the stock exchanges.
He informed the committee that the big corporate entities are not coming for listing at the stock exchanges. These companies are not motivated to get enlisted with the stock exchanges. "We need to incentivise the big companies so that new companies should come to stock market and get listed. The committee should give its recommendations to provide incentives to such companies through the Finance Bill (2011-12). There is no motivation for the big companies to get listed on the stock market".
About small investors in stock exchanges, the SECP Chairman regretted that either the small investors suffered huge losses or were unable to conduct business in the stock exchanges. There is a need to provide incentives to the small and retail investors to encourage them in the stock market. One of the objectives of the capital market reforms is to increase the depth of the market by broadening the investors' base, he added. He told the committee that the SECP would take measures to develop debt market for providing debt to the companies on long-term basis. On the conclusion of the meeting, SECP Chairman told reporters that the listing of companies at the stock exchanges is not available for the last few years. There are many big corporate giants and companies in key sector like oil exploration and production companies, telecommunication sector, IT, entertainment and other sectors where they do not find it fruitful to get themselves listed with the stock exchanges. Through Finance Bill (2011-2012), the government should attract big companies for enlisting at the stock exchanges. As a result of new listing of companies, the capitalisation and turnover of the capital market would increase.
Due to recession/crises after 2007, the capital markets are not so vibrant. In the presence of new rules and procedure, the small investors would be attracted to make investment in the stock market. SECP Chairman said that stock market environment is conducive for the upcoming initial public offerings (IPOs) under the new privatisation plan being finalised by the government. The investment is available in the country and the only thing needed is attractive IPOs for investors.
When asked about the tax incentives for encouraging companies for listing at stock market during last few years, he responded that big companies find that these incentives are less attractive. "If we are able to attract the big public and private companies for listing at stock market it would help improve the depth of the stock market and its capitalisation".