KARACHI: The Securities and Exchange Commission of Pakistan (SECP) Thursday said it does not want to regulate the business of real estate in the country.
“The focus of the SECP is to ensure that the companies registered with it (that had the real estate as their principal line of business) operate under certain regulations in order to gain confidence of the public,” said the SECP release.
The reaction was in response to a recent statement made by the Association of Builders and Developers of Pakistan (ABAD) in which it said that the SECP’s proposed strict role in an upcoming bill would not be helpful for the property sector.
“The statement is completely misplaced. The SECP would like to clarify that the provision relating to companies’ real estate projects in the draft Companies Bill 2016 is restricted to the companies which run real estate as their principal business after obtaining the necessary No Objection Certificate (NOC) from the relevant local authorities,” the SECP release said.
It said the intent and purpose of the entire scheme was to provide increased investor confidence in the real estate schemes launched by the companies by providing complete mechanism for maintaining proper accounts and approval of authorities.
It is conceived that the prospective investor will be encouraged to invest in real estate project initiated by a company which has a transparent financial record.
The purpose of the proposed bill is mainly to ensure clean business activity by the company in the real estate sector, so that investor interests are protected and do not suffer in any way.
However, the office bearers of ABAD – an association that represent over 700 builders and developers of the country – believe that the proposed bill would adversely affect the construction industry rather than regulate it. The government and the real estate sector have recently agreed on a formula that will provide a new platform for the collection of withholding and capital gains tax.
However, for builders and developers, the new proposed bill is an extension to the government’s broader plans to strictly regulate the real estate sector in Pakistan.
According to the new law, office bearers of ABAD believe, a builder would have no say in the construction of any project launched by him as an independent entity because the SECP’s appointed people, who have no expertise of real estate sector, would decide on how the project would progress.