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NOVEMBER 09, 2017

• LECTURE 1
Stock market & stock exchange
and Pakistan’s Experience with
Corporate Governance
STOCK MARKET = CAPITAL MARKET =
Instruments are;
• Debt market (where the company raises funds by issuing
Bonds, NCDs-Non Convertible Debentures' Debentures
are long-term financial instruments which acknowledge a
debt obligation towards the issuer. Some debentures have
a feature of convertibility into shares after a certain point
of time at the discretion of the owner. etc.) or
• Equity market also known as stock market where company
files for an IPO(-Initial public offering type of public
offering in which shares of a company usually are sold to
institutional investors that in turn, sell to the general public,
on a securities exchange, for the first time) and dilutes its
holding for public in order to raise capital.
STOCK MARKET STOCK EXCHANE
 In spite of the fact that the expressions “stock exchange” and “stock market” are to some degree compatible in
typical discussion, there are a few distinctions in the implications of the terms.

 Stock market is an expansive element covering an extensive variety of business sector exercises and
organizations. The stock exchange is one piece of the stock market’s framework.

Identification Identification

Stock market” is the common term to discuss the sorted A stock exchange is an organization or association that
out exchanging of stocks. The stock market incorporates advances the exchanging of stocks through posting
stock exchanges, electronic exchanging frameworks and administrations and prerequisites, devices to unite
over-the-counter (OTC) market. purchasers and merchants, and frameworks to track
costs and deals information.

Systems Systems

Without a stock market, trades would have no motivation Without a stock exchange, organizations would have no
to exist. formal system on which to rundown offers.

Types Types The two noteworthy stock exchanges in the U.S.


are the New York Stock Exchange (NYSE) and the
The elements discussed in front leads to make up of NASDAQ(The Nasdaq Stock Market-US, is an the
stock market.
second-largest exchange in the world by market
capitalization, behind only the New York Stock
Exchange.) stock trade. These are classified as stock
Importance Importance

Whereas, stock market is made up the mainstream of stock The stock exchanges have posting necessities for organizations to
exchanging volume and estimation of stocks. A stock market is list their stocks and to stay recorded. Most individual and
general term for all types of stock trading. institutional financial specialists purchase just trade recorded
stocks, it is vital for organizations to be trade recorded on the off
chance that they need to develop their reasonable worth. Stock
exchange is made up by an association that promotes stock
trading.

Purpose Purpose

Though, securities markets (security is a tradable financial asset) Stock exchanges work under a profit intention.
are just broad meeting spots for stock dealers to lead exchanging
activities.
Consideration Consideration

The stock market is all stock exchanging through different The stock exchanges are discrete organizations that advance the
parkways. Speculators are more inspired by the consequences of precise stream of stock purchasing and offering.
individual stocks, common and trade exchanged stores, and the
different stock market lists.

Clearing House Clearing House

Stock market doesn’t work as a clearing house(Settlement of Stock exchanges also work like clearing house which helps to
eradicate the risk factor to the buyer and seller.
services)
History History

Though, the first stock market founded in 1600’s but the concept The concept of stock exchange was started from the mid of
started from 13th century. 1500’s.
LSE
• THE LSE IS THE SECOND LARGEST STOCK EXCHANGE OF PAKISTAN.
• THERE ARE 152 MEMBERS OF THE LSE OF WHOM 81 ARE CORPORATE
AND REMAINING ARE INDIVIDUAL PERSONS.
• THE LSE HAS TWO BRANCHES – ONE IN THE CITY OF FAISALABAD AND
THE OTHER IN SIALKOT.
• THE LSE IS THE MOST DYNAMIC STOCK EXCHANGE IN PAKISTAN; FOR
EXAMPLE, IT WAS THE FIRST TO SHIFT FROM A TRADING PIT SYSTEM TO
AN AUTOMATED TRADING SYSTEM IN 1994; IT ALSO PIONEERED
INTERNET-BASED TRADING FOR ITS MEMBERS IN 2001.
• THE BENCHMARK OF THE LSE IS THE LSE-25 INDEX.
ISE
• IT IS THE SMALLEST OF THE THREE EXCHANGES.
• IT CURRENTLY HAS 120 MEMBERS INCLUDING 94 CORPORATE AND 26
INDIVIDUAL MEMBERS.
• IT WAS FELT THAT THE ESTABLISHMENT OF THE ISE WOULD FACILITATE
GROWTH IN THE LESS-DEVELOPED NORTHERN PART OF PAKISTAN.
• ON 1ST JANUARY 2004 THE ISE ESTABLISHED ITS OWN BENCHMARK
INDEX, THE ISE-10. BEFORE THIS, KSE-100 INDEX WAS USED A BENCHMARK
FOR TRADING.
KARACHI STOCK EXCHANGE (KSE)
• THE KSE IS THE OLDEST AND THE LARGEST STOCK EXCHANGE IN
PAKISTAN; IT IS ALSO THE SECOND OLDEST STOCK EXCHANGE IN THE
WHOLE OF SOUTH ASIA.
• MEMBERSHIP BECAME FIXED AT 200 IN 1966 AND THIS LIMIT STILL
REMAINS; A PROSPECTIVE MEMBER THEREFORE HAS TO BUY A SEAT ON
THE KSE FROM ONE OF THE EXISTING MEMBERS.
• TOTAL MEMBERS ARE 200; OUT OF WHICH, 183 CORPORATE MEMBERS
AND REMAINING ARE INDIVIDUAL.
Exchange was incorporated in 1949 as a company Limited by
Guarantee. As a result of demutualization, the Exchange stood
corporatized and demutualized as a public company limited by
shares under the name of ‘Karachi Stock Exchange Limited’,
with effect from August 27, 2012. Subsequently, the three stock
exchanges namely Karachi Stock Exchange, Lahore Stock
Exchange & Islamabad Stock Exchange were integrated into
Pakistan Stock Exchange Limited (PSX) on January 11, 2016.
Jobber: Manufacturer, principal or wholesaler who dealt only on
the Stock Exchange with brokers, not directly with the public.
MARKET INDICES
• VARIOUS INDEXES HAVE BEEN INTRODUCED TO GAUGE THE SHARE PRICE
PERFORMANCE OF THE MAIN PAKISTANI STOCK EXCHANGES.
• THE KSE-50 SHARE INDEX WAS USED AS THE MAIN INDEX OF KSE UNTIL
NOVEMBER 1, 1991 WHEN THE KSE-100 WAS INTRODUCED TO CAPTURE
CHANGES IN OVER 80.0% OF TOTAL MARKET CAPITALIZATION.
• THIS INDEX IS CURRENTLY USED AS THE BENCHMARK FOR MEASURING THE
PERFORMANCE OF SHARE PRICES BY THE KSE.
• THE KSE-100 INDEX IS COMPRISED OF 100 COMPANIES: 34 COMPANIES
ARE SELECTED ON THE BASIS OF HAVING THE LARGEST MARKET
CAPITALISATION IN EACH OF THE 34 KARACHI STOCK EXCHANGE
SECTORS.
• WHILE THE REMAINING 66 COMPANIES ARE INCLUDED ON THE BASIS OF
THEIR MARKET CAPITALISATION IRRESPECTIVE OF THE INDUSTRY AND ARE
TAKEN UP BY THE LARGEST MARKET CAPITALISATION COMPANIES IN
DESCENDING ORDER.
RE-COMPOSITION OF THE KSE-100
INDEX
• THE INCLUSION OR EXCLUSION OF A COMPANY FROM THE KSE-100
INDEX IS DONE BI-ANNUALLY (1ST APRIL AND 1ST OCTOBER EACH YEAR)
• COUPLE OF RULES ARE USED IN RE-COMPOSITION:
• SECTOR RULE
• TIME-BASED RULE
• VALUE-BASED RULE
• CAPITALISATION RULE
• TIME-BASED RULE
RE-COMPOSITION OF THE KSE-100 INDEX
• SECTOR BASE: THE ADDITION/DELETION OF A COMPANY ON BASIS
OF TOP MARKET CAPITALISATION IN THE 34 SECTORS IS BASED ON
COUPLE OF RULES:
• TIME-BASED RULE: A COMPANY IS ELIGIBLE TO BE SELECTED IN
THE KSE-100 INDEX IF IT MAINTAINED ITS POSSESSED ITS
LARGEST MARKET CAPITALISATION FOR TWO CONSECUTIVE
DECOMPOSITION PERIODS (I.E., ONE YEAR).
• VALUE-BASED RULE: A COMPANY WILL BE INCLUDED IN THE
INDEX IF ITS MARKET CAPITALISATION IS MORE THAN 10% OF
THE EXISTING COMPANY OF THE INDEX WITH LARGEST MARKET
CAPITALISATION OF A SECTOR FOR LAST ONE
DECOMPOSITION PERIOD (I.E., 6 MONTHS).
RE-COMPOSITION OF THE KSE-100 INDEX
• CAPITALISATION RULE: ONLY ONE RULE (TIME-BASED)
APPLIED WHILE ADDING/DELETING OF A COMPANY
ON THE BASIS OF LARGEST MARKET CAPITALISATION
IRRESPECTIVE OF THE SECTOR.
• TIME-BASED RULE: A COMPANY CAN BE SELECTED IN THE
INDEX IF ITS CAPITALISATION EXCEEDS THE MARKET
CAPITALISATION OF THE LAST COMPANY IN THE INDEX
FOR SUCCESSIVE TWO DECOMPOSITION PERIODS (I.E., 1
YEAR)
MARKET INDICES
• THE INCREASE IN THE INDEX IS REFERS AS ‘BULLISH’ TREND AND DECREASE

IN INDEX IS KNOWN AS ‘BEARISH’ TREND.


PERFORMANCE OF PSX 2016-17

• THE PERIOD, JULY 1, 2016 TO MAY 08, 2017, WITNESSED AN


OVERALL POSITIVE AND BULLISH TREND FOR THE STOCK MARKET IN
PAKISTAN. THE KSE – 100 INDEX DEMONSTRATED EXCEPTIONAL
PERFORMANCE OF EQUITY MARKET DURING THE PERIOD MAINLY DUE
TO IMPROVED MACROECONOMIC INDICATORS.
• PAKISTAN WAS UPGRADED BY THE MORGAN STANLEY CAPITAL
INTERNATIONAL (MSCI) FROM THE STATUS OF FRONTIER MARKETS TO
EMERGING MARKETS.
LEGAL FRAMEWORK OF PSX
MEMORANDUM & ARTICLES OF ASSOCIATION OF PSX

ACT:

• SECURITIES ACT 2015

• STOCK EXCHANGES CORPORATIZATION, DEMUTUALIZATION AND INTEGRATION ACT 2012

ORDINANCES:

• COMPANIES ORDINANCE, 1984

ORDERS:

• INTEGRATION ORDER ISSUED BY THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN

RULES:

• SECURITIES (LEVERAGE MARKETS AND PLEDGING) RULES, 2011 APPROVED BY THE FEDERAL
GOVERNMENT

• BROKER AND AGENTS REGISTRATION RULES 2001

• MEMBER AGENTS AND TRADERS (ELIGIBILITY STANDARDS) RULES, 2001

• THE COMPANIES (ISSUE OF CAPITAL) RULES, 1996


REGULATIONS:
• STOCK EXCHANGES CORPORATIZATION DEMUTUALIZATION &
INTEGRATION REGULATION 2012, APPROVED BY SECP
• AMENDMENTS TO STOCK EXCHANGES (CORPORATISATION,
DEMUTUALIZATION AND INTEGRATION) REGULATIONS, 2012- 4 OCT
2016
• JOINT INSPECTION REGULATIONS, 2015
• RESEARCH ANALYST REGULATIONS, 2015
• BOOK BUILDING REGULATIONS, 2015
• SECURITIES BROKER (LICENSING AND OPERATIONS) REGULATIONS, 2016
• AMENDMENTS IN RELATION TO SINGLE MEMBER COMPANIES (SMC)
• SECURITIES EXCHANGES (LICENSING AND OPERATIONS) REGULATIONS,
2016
• ACCESS TO INSIDE INFORMATION REGULATION 2016
ASSESSMENT OF MARKET PROFILE AND CORPORATE GOVERNANCE -PAKISTAN

• ONE OF WORLD’S FASTEST GROWING EQUITY MARKETS IN TERMS OF MARKET CAPITALIZATION.

• TOTAL MARKET CAPITALIZATION (IT IS THE MARKET VALUE OF A COMPANY'S OUTSTANDING SHARES ) REACHED RS.
9.33 TRILLION RUPEES (US$89 BILLION APPROXIMATELY).

• IN 2014, THE KSE-100 INDEX GAINED 6,870 POINTS THEREBY GENERATING A HANDSOME RETURN OF 27% (31%
RETURN IN US$ TERMS). AFTER A GAP OF SEVEN YEARS, RS73 BILLION WERE RAISED THROUGH OFFERINGS IN 2014 AS
COMPARED TO A MEAGER RS4 BILLION RAISED IN 2013.

• 2015: PAKISTAN STOCK MARKET WAS PLACED 1ST IN ASIA AND 5TH IN WORLD. PAKISTAN STOCK EXCHANGE RANKS
5TH IN WORLD(PERU, ARGENTINE, PHILIPPINE, THAILAND TURKEY’S RANKED 7TH MUMBAI STOCK MARKET IS PLACED
ON 16TH POSITION IN THIS RANKING.).

• PRIVATE SECTOR CREDIT IN PROMOTING INVESTMENT AND ECONOMIC ACTIVITY CAN HARDLY BE OVER-EMPHASISED IN
A DEVELOPING COUNTRY LIKE PAKISTAN. AS IN A BANK-DOMINATED FINANCIAL SECTOR, COMMERCIAL BANKS ARE A
MAJOR SOURCE OF FUNDING FOR PRIVATE SECTOR BUSINESSES; BANK-CREDIT-TO-GDP RATIO THEREFORE BECOMES
ONE OF THE KEY INDICATORS THAT APPROPRIATELY CAPTURES THE SIGNIFICANCE OF CREDIT IN ECONOMIC ACTIVITIES.
COMMERCIAL BANKS' CREDIT TO THE PRIVATE SECTOR (IN TERMS OF GDP) IN PAKISTAN HAS NOTICEABLE DECLINE
SINCE FY08 , PLUNGING FROM 27 PERCENT IN FY08 TO JUST 13 PERCENT IN FY15.

• BLOOMBERG IS A MAJOR GLOBAL FINANCIAL ANALYST, PAKISTAN RANKED THIRD IN 2014 AMONGST THE TOP TEN
BEST PERFORMING MARKETS IN THE WORLD. ALSO, PAKISTAN HAS BEEN ABLE TO SECURE A PLACE AMONGST THE TOP
TEN FOR THE THIRD CONSECUTIVE YEAR NOW.

• OWNERSHIP AND CONTROL ARE CONCENTRATED.

• INSTITUTIONAL INVESTORS PLAY A LIMITED ROLE AT BEST.

• PAKISTAN IS A COMMON LAW COUNTRY WITH A STRONG SECURITIES COMMISSION.


Malpractices in corporate
governance
Irregularities in accounts

Non compliance with law

Nepotism

Exploitation of minority shareholders


Corporate failures in Pakistan due to lack of corporate
governance practices

Taj company

Involved in poor corporate governance practices

Running scheme through which it was able to receive huge amount


of deposits illegally.

Religious affiliation

Company owns liability to 25000 people


PTCL

• PRIVATIZATION OF PTCL WAS ITSELF A BIG CORPORATE SCANDAL.


• 2.6 BILLION DOLLARS DEAL INCLUDING UFONE AND PAKNET(BUY 1 GET 2
FREE).
• ONLY UFONE VALUE MORE THAN 6BN $.
• PRICING DECISION WAS MADE BASED ON OLD RECORDS INSTEAD OF
CURRENT MARKET PRICE.
• IN SEPT 2006 ETISALAT REFUSED TO HONOUR DEAL AND GOVT OFFERED
SECRET OFFER OF 304 MILLION $S AND COMMITMENT OF LAY OFF
20,000/- EMPLOYEES.

• SUPREME COURT OF PAKISTAN HAS ALREADY GIVEN


DECISION AGAINST ITS PRIVATIZATION
Crescent bank fraud

Entire board of directors were legally stopped from running their


offices on evidence of suspected fraud and irregular accounting.

External auditor predicted missing amount Rs. 6 billion

Also involved in illegal maintenance of parallel accounts,


concealment of bank assets, unauthorized of bank funding of
group companies, unlawful investments in real estate and stock
market
Engro group of companies

• INVOLVED IN UREA BUSINESS BUT WASN’T TO ESTABLISH ENGRO FOOD.


• RESERVATIONS UPON HYGIENE REQUIREMENTS
• SECP COUNTER CRITICISM CONSIDERING FACT THAT ENGRO HAD RICH
HISTORY OF SOUND CORPORATE GOVERNANCE.
MEHRAN BANK
• NAB RECOVERED 1.6 BILLION RUPEES BY SELLING BENAMI PROPERTY OF
ITS CHIEF.
• BIGGEST EVER RECOVERY IN WILLFUL LOAN DEFAULT CASE
• POOR PERFORMANCE LED THE BANK TO MALPRACTICES
Key issues
INVESTOR PROTECTION
• BASIC SHAREHOLDER RIGHTS ARE PROTECTED
• SHAREHOLDER PARTICIPATION IN THE AGM CAN CUMBERSOME
• CONCENTRATED CONTROL LIMITS INFLUENCE OF MINORITY
SHAREHOLDERS
DISCLOSURE
• IMPROVED QUALITY AND TIMELINESS OF FINANCIAL REPORTING
• REQUIREMENT TO DISCLOSE INDIRECT OR ULTIMATE BENEFICIAL
OWNERSHIP EASILY CIRCUMVENTED/AVOIDED
• CONTROVERSY OVER RELATED PARTY TRANSACTION DISCLOSURE AND
TRANSFER PRICING
• NO SYSTEM OF INDEPENDENT OVERSIGHT OVER THE AUDIT PROFESSION
Key issues
COMPANY OVERSIGHT AND BOARD
• NO CLEAR DISTINCTION BETWEEN OWNERSHIP AND CONTROL

• INSUFFICIENT GUIDANCE ON DUTIES OF CARE AND LOYALTY


• BOARDS DOMINATED BY CONTROLLING SHAREHOLDERS
• INDEPENDENT DIRECTORS ARE THE EXCEPTION RATHER THAN THE NORM

• BOARD REMUNERATION IS NOT ADEQUATE TO ATTRACT QUALIFIED


INDEPENDENT DIRECTORS

ENFORCEMENT
• ENFORCEMENT IS CENTERED ON THE SECP AND THE STATE BANK OF
PAKISTAN. THE STOCK EXCHANGES ARE RESPONSIBLE FOR MONITORING
AND ENFORCING COMPLIANCE WITH THE CODE
Recommendations
ESTABLISH CORPORATE GOVERNANCE ENFORCEMENT PRIORITIES
• SECP SHOULD FOCUS ON ENFORCING THE RULES ON THE DISCLOSURE OF
OWNERSHIP AND RELATED PARTY TRANSACTIONS
• SECP SHOULD CONTINUE TO WORK TO BUILD ITS ENFORCEMENT CAPACITY
• DEVELOP A SYSTEM OF INDEPENDENT AUDIT OVERSIGHT
MOBILIZE THE PRIVATE SECTOR TO IMPROVE CORPORATE GOVERNANCE

• PAKISTAN STOCK EXCHANGE SHOULD CONSIDER A MARKET DIFFERENTIATION


STRATEGY
• INSTITUTIONAL INVESTORS SHOULD PLAY A MORE EFFECTIVE CORPORATE
GOVERNANCE ROLE
• BUILD A CORE GROUP OF EFFECTIVE INDEPENDENT DIRECTORS
Recommendations

LEGISLATIVE REFORM SHOULD FOCUS ON KEY AREAS OF CONCERN


• STRENGTHEN RULES FOR INDEPENDENT DIRECTORS, IMPROVE BOARD
COMPENSATION, AND CLARIFY THE ROLE OF THE CHAIRMAN OF THE BOARD

• REVIEW THE OWNERSHIP DISCLOSURE FRAMEWORK AND ADJUST AS


APPROPRIATE
• SHAREHOLDER RIGHTS SHOULD BE STRENGTHENED BY IMPROVING ACCESS
TO THE AGM, LOWERING THRESHOLDS FOR SHAREHOLDER REDRESS, AND
UPDATING RULES ON CHANGES IN CONTROL
• INCREASE THE ACCOUNTABILITY OF DIRECTORS
Recommendations
FOCUS FUTURE TECHNICAL ASSISTANCE ON HIGH-PRIORITY
IMPLEMENTATION
• DEVELOPMENT OF A NATIONAL ACTION PLAN
• TRAINING AND AWARENESS PROGRAMS SHOULD WORK TO
DEVELOP A CULTURE OF CORPORATE GOVERNANCE THAT EXTENDS
BEYOND THE SECP
• IMPROVE THE GOVERNANCE IN THE STATE OWNED ENTERPRISE
SECTOR
BUDGET AND CAPITAL MARKET TO BOOST ENTERPRISES
FACTORS OF ECONOMIC GROWTH
• INVESTMENT AND EXPORT AND EMPLOYMENT OF GREATER HUMAN AND FINANCIAL RESOURCES
ARE AMONG KEY SIGNS OF GROWTH IN BUSINESS ENTERPRISES IN AN ECONOMY.
• COST OF CAPITAL, TRADE OPENNESS, TAX AND REGULATORY REGIME, AN ENABLING
INFRASTRUCTURE INCLUDING ENERGY RESOURCES, THE ABILITY OF THE STATE TO ENFORCE
CONTRACTS, AVAILABILITY OF FINANCIAL INTERMEDIATION, AND IMPROVED SECURITY SITUATION
ARE SEEN AS KEY DETERMINANTS OF INVESTMENT ACTIVITY.
• LOW LEVELS OF INTEREST RATES ALLOWING PRIVATE SECTOR CREDIT TO INCREASE
IMPEDIMENTS TO PRIVATE ENTERPRISE
• INFRASTRUCTURE DEFICITS, HIGH COST OF COMPLIANCE WITH TAX AND REGULATORY REGIME IS
STILL PREVENTING FIRMS TO GROW.
• WEAK ENFORCEMENT OF RULES OF COMPETITION AND HIGHER SUNK COSTS FACED BY BUSINESSES
IN ENTERING AND EXITING MARKETS IS ALSO NOT ALLOWING NEW FIRMS TO GROW IN SMALL- AND
LARGE-SCALE MANUFACTURING AND VALUE-ADDED AGRICULTURE AND LIVESTOCK SECTORS.
• COMPLEXITY IN TAX REGIME PREVENTING START-UP FIRMS FROM FLOURISHING.
• IMPACT OF HIGHER NUMBER OF TAXES IS LOSS OF ECONOMIC EFFICIENCY. A TAX ON GOODS,
CAUSES CHANGES IN DEMAND AND SUPPLY. THIS IN TURN IMPLIES INCREASED LOCAL PRICES OF A
GOOD IN SHORTAGE AND ALSO HIGHER IMPORT BILL IF THE SAME GOOD IS IMPORTED.
• GST RATES ON SERVICES IN PAKISTAN ARE HIGHER THAN THOSE IN PEER ECONOMIES.
WAY FORWARD/REFORMS FOR UPCOMING BUDGET
• THERE SHOULD BE A REDUCTION IN NUMBER, RATE AND TYPE OF DIRECT TAXES.
• MULTIPLE AND DOUBLE TAXATION ACROSS PROVINCES, PHASING OUT OF FEDERAL EXCISE DUTY AND A MORE
TRANSPARENT STRUCTURE FOR TAXES ON TRADE.
• BALANCE IN TAX CONTRIBUTION BY DIFFERENT SECTORS OF THE ECONOMY.
• ALLEVIATE THE MANUFACTURING SECTOR FROM WHAT IT CLAIMS IS AN UNJUSTIFIED BURDEN OF TAXES AS
INCOME FROM AGRICULTURE AND SERVICES SECTOR STILL REMAIN OUT OF THE TAX NET.
• LARGE PART OF AGRICULTURE EXEMPT FROM DIRECT TAXES PROVIDES LITTLE RELIEF TO FARMERS IF
AGRICULTURE INPUTS REMAIN SUBJECTED TO GST AND CUSTOMS DUTY.
• EXPORT OF GOODS IN SEVERAL SECTORS IS EXEMPT FROM TAXES, EXPORT OF SERVICES IS NOT. BOTH
CATEGORIES OF EXPORTS REQUIRE A BALANCED TREATMENT.
• FEDERAL AND PROVINCIAL REVENUE AUTHORITIES ARE ALLOWED FULL AUTONOMY AT LEAST ALONG THE LINES
ALLOWED TO THE STATE BANK OF PAKISTAN
• I.T-ENABLED PROCESSES CAN HELP REDUCE THE INTERFACE BETWEEN TAX PAYERS AND OFFICIALS
• GEOGRAPHICAL INFORMATION SYSTEMS CAN HELP FORENSIC AND OTHER FORMS OF AUDIT.
• SEPARATION OF TAX POLICY AND ADMINISTRATION FUNCTIONS. IDEALLY, A DEDICATED NATIONAL TAX POLICY
UNIT SHOULD BE MAINTAINED AT THE MINISTRY OF FINANCE, WHILE TAX ADMINISTRATION FUNCTION MAY BE
LEFT TO FEDERAL BOARD OF REVENUE (FBR)
• HARMONIZATION OF PROVINCIAL TAX RULES AND REGULATIONS.
• TAX COMMITTEE OF FEDERATION OF PAKISTAN CHAMBERS OF COMMERCE AND INDUSTRIES SHOULD BE PART
OF THE ECONOMIC ADVISORY COUNCIL (EAC) AT THE MINISTRY OF FINANCE
• ESTABLISHMENT AN EAC TO ADVISE THE PROVINCIAL FINANCE MINISTERS.