KARACHI, June 8: The Board of Directors of the Karachi Stock Exchange has termed the budget 2005-06 as investors-friendly and growth-oriented. A KSE press release stated that the Board, which met on Wednesday, also appreciated the fact that its recommendation of maintaining continuity of the long-term economic policies was adhered to by the government. The board further noted that the government had fulfilled its commitment of exemption of the capital gains until the year 2007 besides maintaining the status quo in the context of CVT on stock market transactions.

The board also acknowledged that its long-standing demand of exempting the insurance companies from the capital gains had been met. The board observed that this would create a level-playing field and expressed the hope that the insurance sector would play an active role in the development of capital market. The board also noted with appreciation the acceptance of its demand of one time tax exemption on corporatization of individual stock exchange membership and hoped that this would help in further professionalisation of the brokerage business in the country.

The board was to be impressed by the government’s vision of positioning Pakistan in an advantageous position in the field of textile, carpet, leather, surgical and sports goods by introducing zero tax regimes in these sectors. This measure would help in creating liquidity in these sectors and would also afford more time for creative activities which would bolster economic activity in the country. Similarly, the exemption of customs duty on raw materials for export oriented industries, would reduce the input cost and make Pakistani products more competitive in the international markets.

The board also noted that one per cent rebate allowed for new listings on the stock exchanges would lead to more listings. However, a greater percentage in rebate for listing would perhaps motivate more listings and broad-basing the equity investments in the country. Similarly, the board recommends that the limit of cash withdrawal from banks be enhanced suitably to mitigate practical difficulties.

The enhancement limit of 50 per cent from Rs100,000 to Rs150,000 for investment in pre-IPOs and TFCs would help in broadening the investor’s base. Another positive measure was to reduce the tax slabs to only three and limiting the upper slab to 30 per cent for personal income tax. Similarly, the policy of promoting SMEs up to Rs. 250 million capital, by limiting the tax rate at 20 per cent. These measures would inspire confidence and promote savings especially amongst small business houses and salaried people.

The board assured the government that with the improvement in economic environment, the capital market of the country would perform even better and would generate higher revenues for government exchequer in the coming years.

In conclusion, the board on behalf of the members of the Karachi Stock Exchange and investors’ community at large assures the government of its fullest cooperation in meeting the budgetary targets and promoting investments in the country.