KARACHI, Sept 29: The State Life Insurance Corporation (Slic) has presented a proposal to the government to set up a Real Estate Management and Development subsidiary company that will manage about Rs18 billion worth real estates owned by the corporation.

The proposal to set up a subsidiary real estate management and development company has been floated at a time when quite a few powerful ministers in the federal cabinet want a quick privatisation of the corporation.

A strategic divesture of 51 per cent plus shares of the corporation will put a massive life fund of Rs125 billion plus more than 50 high-rise commercial buildings and a large number of vacant plots in all major cities at the disposal of the successful bidder.

Sources in the corporation said that the idea to form a subsidiary real estate management company is to involve the small savers and the middle income group persons in real estate development projects. The Security Exchange Commission of Pakistan (SECP) is understood to be making some rules for the operation of a real estate trust in the country.

Following changes in the interest rates, quick fluctuations in stock exchange and an unprecedented rise in value of real estate, the sources in Slic believe that there is now a convincing case to appoint a professional fund manager and to set up a state life asset management company.

The Slic still enjoys a near-monopoly status in life insurance in the country where it faces competition from four private companies. But the government’s decision on Wednesday to allow foreign insurance companies to conduct business in Pakistan is bound to put much pressure on the Slic.

Reports suggest that the SECP has been working for more than a year on plans to privatise the Slic. Accordingly, its name was put on the privatisation list. But the privatisation process received a setback from the scandalous deal of Pakistan Steel and growing public anger over frequent power breakdowns of the KESC after its privatisation.

“Any government’s move to privatise the Slic can make hundreds of employees restive and thousands of policy holders uncomfortable,” sources in Slic said. They believe that the Slic privatisation would be put off after elections if the present political setup is returned to power again.

“After getting a public mandate, the government will be in a far more comfortable position to move ahead with the privatisation plan,” sources said.

The total investment income of Slic came down by 4.5 per cent in the year 2005 as against its income in 2004. The annual report reveals a total income of Rs12.95 billion in 2005 as against Rs13.56 billion in 2004.

Much of the negative impact is said to have come from the changes in accountancy principles. But there has also been a slight drop in income from capital gains to worry the policy holders.