ISLAMABAD, Feb 4: The State Bank of Pakistan and the Securities and Exchange Commission of Pakistan (SECP) have allowed Saudi Pak Investment and Agricultural Company to set up its Saudi Pak General Insurance Company with an initial capital of Rs200 million.

Informed sources told Dawn here on Friday that while the central bank has given its formal approval for establishing Saudi Pak Insurance Company, the SECP was expected to give its formal approval in this behalf on Monday.

Saudi Pak is jointly owned by Saudi Arabia and Pakistan with 50:50 investment. It has acquired a building in Karachi and personnel including chief executive and other senior staff for the proposed insurance company which would deal in general insurance business.

The ultimately aim, a source said, was to go into re-insurance business by the new Saudi Pak insurance company. Sources said that the board of directors of Saudi Pak has just approved the launching of its Saudi Pak Securities Company which would deal in brokerage, discounting research and deal making.

In addition to that the board has also approved the setting up of Saudi Pak Property and Infrastructure Development Company. It would be set up with an initial capital of Rs500 million.

The purpose of establishing real estate and infrastructure company, sources said, was to offer lending for land development and promote construction activities across Pakistan especially in big cities.

The company would basically, help build five-star hotels in Karachi, Lahore and Islamabad, commercial apartments and plazas so as to remove the scarcity of rented buildings.

The Chief Executive of Saudi Pak Investment Company, Rashid Zahir when contacted confirmed that the State Bank of Pakistan has accorded formal approval for the setting of Saudi Pak General Insurance Company. He said that he was expecting to also shortly have the approval of the SECP in this behalf.

Responding to a question, he said that a number of new ventures including a brokerage house and property and infrastructure company have been planned by the Saudi Pak with a view to extensively help the Pakistani economy.

"We are gaining more strength as today we have over $1 billion assets which also includes our Saudi Pak Commercial Bank and Saudi Pak Leasing Company", Zahir said.

He said Saudi Pak was expecting to earn Rs970 million during 2005, against almost Rs1 billion profit made in each 2004 and 2003 calendar year. The chief executive said that his company was extending loans to a number of new sectors, including telecommunications and media.

Answering a question, he said that local and foreign investors expected the government to ensure security and law and order so that they could invest in Pakistan without any fear. Also, he said, investors wanted better tariff arrangements as the cost of doing business in Pakistan was still high.