The future of financial services in Pakistan
To become a credible player, country needs to introduce globally accepted regulations.
KARACHI:
Whilst Pakistan ‘s economy has not been heavily reliant upon the financial services sector for its economic prosperity, it has, nonetheless felt the ill effects of the recession the global economy at large is suffering from.
The impacts of the global economic downturn have manifested themselves in the shape of reduced international trade flows, reduction of foreign investment and reduced inflows of capital from the Pakistani Diaspora who feel the financial pinch in foreign economies that they are working in. All however, is not doom and gloom, whilst the rest of the world is navel gazing and assessing the way in which banks and financial services providers should conduct themselves in a bid to prevent a repeat of the current financial crisis, Pakistan has a real opportunity to make inroads into developing and strengthening its financial services industry during this global hiatus in financial services activity.
The arguments for resources being devoted to the focused growth and strengthening of Pakistan’s financial services industry are compelling as they will introduce a myriad of benefits to both Pakistan’s national and international economic standing. For example, a strong and internationally respected financial services industry in Pakistan will boost the prospect of foreign investment, both in Pakistan ‘s financial markets and the wider economy at large as international financiers put great store in having a sound and credible regulatory regime governing the markets that they invest in. An obvious example of where this has happened and continues to happen is the UK ‘s financial services sector. The introduction of the Financial Services Act in 1986 opened the floodgates of foreign financial institutions setting up offices in London. The importance of the financial services regulatory regime was emphasised by new legislation introducing a new regulatory regime in 2000 and the critical nature of financial services regulation is currently being emphasised by the Independent Commission on Banking Reform’s recommendations being wholly accepted by the UK government and resulting in another wave of regulatory reform.
It is insightful that the world’s leading financial service market has regularly and consistently overhauled its regulatory regime in a bid to enhance confidence in its markets and that this has resulted in significant economic benefit to the economy as a whole. If Pakistan is to be a credible player in the global stage of international finance, it must follow the global trend of introducing an internationally recognised set of regulations and standards that bring it on par with markets such as London , New York , Hong Kong and Singapore.
Introducing a regulated environment that meets international standards instills confidence as a commonality of approach and understanding is introduced to Pakistan’s markets which promotes confidence for international practitioners, as whilst practitioners in financial markets often speak different languages, in financial services terms, the language spoken across all major financial services markets is very similar indeed.
The development of a comprehensive regulatory regime which allows Pakistan to operate efficiently and profitably in the global financial markets of the 21st century is no mean feat but one which is well worth it. There is a strong case for a review of the regulatory regime governing Pakistan‘s financial services and it is hoped that this is done during the current lull in the global economy rather than deferred. One also hopes that the required changes are introduced sooner rather than later as ultimately they are needed if Pakistan is to take its place in the new world economic order by having internationally recognised financial markets that will benefit from the shift of economic power from the West to the East.
The writer has spent 10 years with the HSBC Group in global and regional roles and is currently the Chief Operating Officer of Eton Financial
Published in The Express Tribune, September 3rd, 2012.
Whilst Pakistan ‘s economy has not been heavily reliant upon the financial services sector for its economic prosperity, it has, nonetheless felt the ill effects of the recession the global economy at large is suffering from.
The impacts of the global economic downturn have manifested themselves in the shape of reduced international trade flows, reduction of foreign investment and reduced inflows of capital from the Pakistani Diaspora who feel the financial pinch in foreign economies that they are working in. All however, is not doom and gloom, whilst the rest of the world is navel gazing and assessing the way in which banks and financial services providers should conduct themselves in a bid to prevent a repeat of the current financial crisis, Pakistan has a real opportunity to make inroads into developing and strengthening its financial services industry during this global hiatus in financial services activity.
The arguments for resources being devoted to the focused growth and strengthening of Pakistan’s financial services industry are compelling as they will introduce a myriad of benefits to both Pakistan’s national and international economic standing. For example, a strong and internationally respected financial services industry in Pakistan will boost the prospect of foreign investment, both in Pakistan ‘s financial markets and the wider economy at large as international financiers put great store in having a sound and credible regulatory regime governing the markets that they invest in. An obvious example of where this has happened and continues to happen is the UK ‘s financial services sector. The introduction of the Financial Services Act in 1986 opened the floodgates of foreign financial institutions setting up offices in London. The importance of the financial services regulatory regime was emphasised by new legislation introducing a new regulatory regime in 2000 and the critical nature of financial services regulation is currently being emphasised by the Independent Commission on Banking Reform’s recommendations being wholly accepted by the UK government and resulting in another wave of regulatory reform.
It is insightful that the world’s leading financial service market has regularly and consistently overhauled its regulatory regime in a bid to enhance confidence in its markets and that this has resulted in significant economic benefit to the economy as a whole. If Pakistan is to be a credible player in the global stage of international finance, it must follow the global trend of introducing an internationally recognised set of regulations and standards that bring it on par with markets such as London , New York , Hong Kong and Singapore.
Introducing a regulated environment that meets international standards instills confidence as a commonality of approach and understanding is introduced to Pakistan’s markets which promotes confidence for international practitioners, as whilst practitioners in financial markets often speak different languages, in financial services terms, the language spoken across all major financial services markets is very similar indeed.
The development of a comprehensive regulatory regime which allows Pakistan to operate efficiently and profitably in the global financial markets of the 21st century is no mean feat but one which is well worth it. There is a strong case for a review of the regulatory regime governing Pakistan‘s financial services and it is hoped that this is done during the current lull in the global economy rather than deferred. One also hopes that the required changes are introduced sooner rather than later as ultimately they are needed if Pakistan is to take its place in the new world economic order by having internationally recognised financial markets that will benefit from the shift of economic power from the West to the East.
The writer has spent 10 years with the HSBC Group in global and regional roles and is currently the Chief Operating Officer of Eton Financial
Published in The Express Tribune, September 3rd, 2012.