After two and half years of PPP led coalition government, President Asif Ali Zardari has advised the government to privatize the state owned enterprises by selling majority of government shares to small investor through the stock market. The President says this would help to deepen the capital market and protect the interest of stakeholders, workers and strategic investors.
But he has forgotten that our stock exchanges have been used more as a casino for speculative activity by the powerful elite having no interest in long term investments. With the help of brokers they have made billions at the cost of smaller investors and shareholders. The regulator Security Exchange Commission of Pakistan (SECP) played a silent spectators role. In order to safeguard the interest of small investors, it is imperative that the SECP plays an affective role and have a check on the brokers having the power to sway the market at their own will. There should be a transparency and no conflict of interests in governing bodies managing the stock exchanges.
At present only one percent of total registered companies with the SECP are listed on stock exchanges and the market capitalization is less then 25% of the GDP whereas in a developed countrys market capitalization exceeds their GDP. It is the need of the economic condition that the government should immediately privatize all those state enterprises which are burdens on the national exchequer. The government should declare the reference price of 51% of equity shares for the private strategic investors and 49% of the equity for the general public at attractive share prices.
There must be a condition that the small shareholders will be paid at least 10% dividend by the strategic investors which will manage the enterprises. The present economic condition demands that the government instead of taxing the people should offload those assets which are burden on the economy.
S T HUSSAIN
Lahore