Competitiveness Mishal in Media World Economic Forum

DAWN Reports: ‘Dip in regulator’s effectiveness rating’

The SECP’s regulatory effectiveness slipped from 55th position in the year 2012-13 to 106 in 2016-17, according to the forum’s findings.

The SECP has questioned the survey methodology adopted in the Global Competitiveness Report 2016-17. In the overall competitiveness index Pakistan has risen by four places to 122nd from 126 in this year’s report.

SECP to contest findings of the World Economic Forum report

The World Economic Forum (WEF) measures global competitiveness through hard and soft data. The hard data is collected from international sources and a country’s leading institutions, mostly in the public sector.

The soft data is acquired by a national level organisation through executive opinion survey (EOS), which takes the opinions of business executives. Mishal Pakistan carried out the survey.

The perceptions gathered through the survey become a key source of rating performance of an economic player and reflect certain economic indicators.

The company’s CEO Amir Jehangir said 236 leading businesses in Pakistan were reached out in EOS for the report of 2016-17, while 114 responses were used from last year. He said the EOS was used to measure performance on the Global Competitiveness Index 2016-17.

Mr Jehangir said the EOS methodology is universal — applied in all the participating countries with a similar survey form. The methodology also includes the same time frame — January till May each year.

The participants, according to Mr Jehangir, for the EOS are selected from the sectors on the basis of their respective share in the GDP. However, he said Pakistan falls under the top 10 countries for highest number of respondents.

The report also carries ranking of 16 other departments. Of these, the performance of nine departments deteriorated in 2016-17 when compared at a global level. The performance of the State Bank of Pakistan, Customs, Accountant General of Pakistan Revenue, Trade Development Authority of Pakistan and Civil Aviation Authority has also deteriorated.

The SECP spokesperson Bushra Aslam said the original report did not name the SECP for evaluation. “We are not aware of the methodology and cannot comment. However we are filing a petition to the WEF in this regard”, she said.

The report ranks the performance of the identified indicators with respective stakeholders in the country. Mr Jehangir said the deterioration in ranking of indicators also affect the ranking of the regulator.

Ms Aslam said the SECP’s recent achievements and successes have been completely ignored in the index. These achievements have been acknowledged by reputable international organisations such as the International Organisation of Securities Commissions (IOSCO) and the Morgan Stanley Capital International (MSCI).

As per the IOSCO assessment of Pakistan, the SECP has ensured compliance with 32 out of 37 principles. The organisation’s membership regulates more than 95pc of the world’s securities’ markets in more than 115 jurisdictions.

As a result of a robust reform agenda, improved image and activity in the Pakistani capital market, Pakistan was upgraded from the MSCI’s Frontier Markets to Emerging Markets on June 14. The spokesperson said for this purpose, the SECP and PSX had been continuously engaged with MSCI, and a number of meetings were held with its representatives and foreign institutional investors to highlight the recent capital market achievements and reforms in the pipeline.

An analyst of the securities market stated that no doubt the SECP had come up with more regulations in the recent past. However, it will be difficult to quantify their outcome because no improvement has been witnessed in listings on the stock exchange. The only improvement which has been observed is in an increasing number of private limited companies that are family-owned.

Published in Dawn, Business & Finance weekly, October 10th, 2016

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