KARACHI, May 20: Prime Minister Mir Zafarullah Jamali on Tuesday announced exemption of capital gains tax on investment in equities, which was earlier available only up to the assessment year 2004-05.

He was speaking as chief guest at the Top Companies Awards-2001 ceremony of the Karachi Stock Exchange.

Exemption of capital gains tax was a key demand that had been made by the KSE in its budget proposals and reiterated in his speech made earlier by the KSE chairman, Firozuddin A. Cassim.

The prime minister also offered to resolve the KSE’s long-standing dispute with Pakistan Railways over a piece of land. “You will get your money back or the land,” he said.

Reading from his prepared speech — because he said he was in an entirely unfamiliar field — the prime minister stated the GDP growth for the current fiscal year had surpassed the target of 4.5 per cent; the balance of payment had improved considerably and foreign exchange reserves had reached $10.5 billion.

He said the currency exchange rates were stable and the country had already received $3.23 billion in home remittances, compared with $1.63 billion it received last year.

The prime minister said the government was continuing the policies of the previous regime, for “you cannot fiddle with economic policies.” He said in the post 9/11 era, when all major powers witnessed recession, Pakistan’s economy had shown great resilience.

Mr Jamali said a vibrant and efficient capital market was needed for the better health of the economy and the unprecedented boom that the stock exchanges had seen was due to the reforms taken earlier in the governance, risk-management and investor protection.

While acknowledging the contribution of all key stakeholders in the growth and development of stock exchanges, the prime minister identified areas where more attention was needed.

These included the capital market’s ability to mobilize more funds through fresh equity offerings, which, he said, would deepen the market and expand the retail investor base.

The prime minister also advised the stock exchanges to go beyond the geographical limits of major trading centres of Karachi, Lahore and Islamabad.

Secondly, he said, it was the responsibility of the stock exchanges to see that companies fully observe transparency and disclosure requirements and said while it was important to reward best performing companies, the regulators must also act against delinquent companies.

The prime minister also advised the stock exchanges to further improve selection criterion for the top companies awards.

Mr Jamali also spoke fervently about Gwadar, which he described as a “gateway between the East and the West”. He said a lot of investment was pouring into Gwadar and urged the investors to look in that direction.

The prime minister hinted that another incentive package would be announced for investment in Gwadar.

Mr Jamali closed his speech with the mention of relationship with India and said all problem between the two countries needed to be solved. “We want a safe region and a decent life for every citizen,” the prime minister said and observed that risks had to be taken — but those must be ‘calculated risks’.

Earlier, in his speech Finance Minister Shaukat Aziz said the country’s GDP had exceeded the 4.5 per cent target and the per capita income had also risen to double digits in rupee terms.

He said due to reforms there had been a paradigm shift in the level of quality of the capital markets in Pakistan. He said savings should be channelized through mutual funds, which must grow further.

Shaukat Aziz identified five key stakeholders whose interests were needed to be protected in the market. These included, investors; companies; stock exchanges; brokerage houses and the government.

In his address of welcome, KSE chairman Firozuddin A. Cassim said due to the positive policies pursued by the government, the KSE index crossed the 3,000-point level on Friday last.

He stated that the market capitalization had risen to $11.5 billion and “our target is to raise it at least to the GDP level.”

He said privatization of the OGDC, Pakistan Petroleum and the HBL would be undertaken in the next three months.

A presentation about the KSE and its performance was also made by Moin M. Fudda, the managing director of the KSE. The gateway for execution of Internet trading was granted to a brokerage firm — AKD — which was inaugurated by the prime minister before he distributed awards to top 25 companies for the year 2001.