Pakistan Strategy: There’s many a slip between the cup and the lip-II
- Our preliminary understanding of the notifications of Tax Reform Package suggests three key surprises; (i) the scheme is way more comprehensive on definition of domestic assets, (iii) tax cuts are more generous and (iii) domestic foreign currency assets are also part of the scheme.
- The terms of the scheme are simple and comprehensive and if allowed to prevail may serve the purpose of bringing undeclared domestic and foreign assets in the economy.
- The investors have questioned the timing of announcement and government’s ability to provide an iron-clad, sustainable legal protection to investors. While the former is understandable, in our view, the latter is still a question mark to us given lack of wider political ownership of the scheme.
- We are not overly worried over FATF’s comments on the scheme. That said, we believe all eyes are on legal case on a similar issue in the Supreme Court where proceeding of the case suggests broader understanding for the need of similar asset regularization scheme.
- We remain cautiously optimistic on the scheme and highlight (i) politics, (ii) legal challenge on the moral ground, and (iii) generous terms of the scheme as three major risks.
BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.
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