22 August 2004	Sunday	05 Rajab 1425

PESHAWAR: In the backdrop of decreasing rates of return on saving schemes, small savers in NWFP are left with limited investment options to supplement their hard-earned money.

Where should small savers invest and avoid depreciation of their money amidst increasing rate of inflation?

This is one of a host of questions presently under circulation among business circles, particularly among people who have saved little money and want to make safe investment amidst an unfriendly business environment of the Frontier province.

Business circles believe that NWFP has little to offer to its small savers, specially when it comes to avenues that offer better prospects for safe investment.

"A province where thousands of industrial units have been closed, and where industries are situated far from the sea port and offer meagre infrastructure to promote trade and business activities, people with small savings stand little chance to progress," said Kamran Sheikh,an industrialist.

Business circles and bankers are of the view that after the "NWFP-becoming-gateway-to-Afghanistan" syndrome could not be turned into reality even after Pakistan's exports to the war-torn country recorded considerable increase during the last couple of years, the small savers in the province were left further marginalized.

"Had the province managed to capture part of emerging Afghan markets by competing well against the traders of Punjab, the small savers could have also benefited," said Mr Sheikh.

Elaborating the point, he said that greater economic activities because of business with Afghanistan could have given rise to the need for private investment.

"In such a scenario small savers could have pumped in their money or even they could have pooled their fund to start a business or a trading house," said Mr Sheikh.

However, under the prevailing situation when the province, said experts, was experiencing worst economic recession because of the closure of large number of industries, suspension of grinding operations of around 200 flour mills as a result of ban on the transportation of wheat from Punjab, the over all business environment had become more gloomy than 10 years back in the case of NWFP.

"Declining rate of deposits has added more to the already worrisome situation haunting small businessmen, particularly people who have saved little money," said Murad Khan, a banker.

Business circles said that as a result of decrease in the deposit rates, saving schemes had become less lucrative, leaving small savers in the lurch as majority of them did not have idea to the effect of supplementing their income by making investment in safe sectors.

This situation, said bankers, had given a rise to small investments in real estate and stock businesses. The real estate and stock exchange, they say, have emerged with considerable potential, particularly for small savers.

Though small investors are hesitant to make investment in the risky stock exchange, the real estate business has experienced major growth during the last couple of years. Property prices in townships and housing schemes recorded substantial increase.

Plots of five, 10 and 20 marlas in the Hayatabad township, University town, Regi Lalma housing scheme in Peshawar and Sheikh Maltoon township in Mardan, changed quick hands, resulting in substantial increase in their prices during the last couple of years.

The prices of land in the Regi Lalma housing scheme - where even construction of houses has not yet been allowed - registered a tremendous growth during the last three years, creating a major profit earning window for the small savers.

In Hayatabad, says Razzaq Ahmed, who deals in property business, where price of one kanal land was of about Rs2 million a year ago, it is now being sold at Rs4 million - registering a 100 per cent increase.

"Though it largely depends on an individual as to how much he or she is dynamic as far as making prudent investment is concerned, the real estate and stock exchange seem to be two leading sectors where small savers and potential investors are diverting their funds," said Durre Maknoon, in-charge of law and settlement, PICIC, Peshawar.

The reduction in deposit rates, he added, had coincided with the decrease in lending rates with a view to enabling small businessmen to make their own investments. However, he maintained, people who did not want to take risk and did not have orientation in any business were behaving cautiously.

"Those who don't have an alternative to invest their funds have chosen the real estate sector," said Mr Maknoon, adding that awareness about the share market had also improved among business circles and small savers.

A large number of people from NWFP, he maintained, opted to invest money when Pakistan Petroleum Limited floated its shares recently. The phenomenon of the stock business was gaining momentum with more and more people doing business with Karachi, Lahore and Islamabad stock exchanges through investment companies that had registered growth in the provincial capital during the last few months, he added.

"People are still cautious about diverting funds towards the share business, though the capital market registered tremendous growth in the recent past," said Noman Ahmed, who works in an investment company.

Mr Maknoon said that in a couple of cases, the investors pooled up their money and availed bank loans to set up compressed nature gas (CNG) filling stations in the provincial capital. However, such examples are not common.

He rejected the impression that the establishment of so many CNG stations in Peshawar had attained a point of saturation and would shortly lead to crippling down this growing sector.

"Demand for CNG has registered a growth because of a large number of CNG-driven cars financed by commercial banks and leasing companies, he added.