ISLAMABAD, May 28: The government has doubled the minimum equity requirement for foreign insurance companies to operate with 100 per cent ownership rights in life, non-life and general insurance business.

Pakistan had enhanced ownership rights to 100 per cent from 51 per cent in October last with a condition that foreign companies shall bring in a minimum of $2 million in foreign exchange and raise an equivalent amount of equity from the local market.An official told Dawn that the ECC has decided that the minimum equity requirement would now be $4 million, not less than $2 million, which should come from abroad on the proposal submitted by the commerce ministry.

The commerce ministry has approached the ECC of the cabinet for raising the equity requirement on the plea so that Pakistan could have a bargaining chip in the current negotiations under WTO regime.

A similar condition was imposed in the year 1993 when 51 per cent equity holding was allowed to foreign insurance companies.

The ministry was of the view that if 100 per cent foreign equity was to be allowed, foreign companies should also be required to bring in minimum of $4 million and raising funds from the local market should not be compulsory.

The official said government has liberalised insurance sector with a view to attract foreign companies to invest in the sector, which has enormous potential.

Liberalisation of insurance sector was very much part of the financial reform process, which was delayed due to some problems.

He said like banking sector, the insurance sector would also attract foreign players to get benefits from growing economy of Pakistan.

There is also no restriction on the number of branches and to whom they shall employ, said the official and added the foreign companies would be treated at par with the domestic companies.

The general insurance was the only area which was gearing up to grab new business opportunities that were emerging from a fast track privatisation programme, growing construction industry, increasing international trade and equally expanding domestic wholesale and retail trade.