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| Sunday, 26 January 2003 |
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Reforms should encourage private sector growth - Choksy Regulation is necessary, but excessive regulation is unproductive as it hampers growth in the private sector, K.N. Choksy, Minister of Finance told the International Organisation of Securities Commissions Asia Pacific Regional Committee (APRC) and Enforcement Directors Meeting last week. Therefore, any reforms in the Securities and Exchange Commission should not only be geared towards regulation, but should also encourage private sector growth, he added. The Minister said that about 75 per cent of the new companies registered in Sri Lanka last year were incorporated as private companies, probably because entrepreneurs do not accept excessive official intervention. Therefore, the amendments to the securities laws to be moved in Parliament next week will ensure that investors can enter the Colombo Stock Exchange as public quoted companies. Another important aspect is building investor confidence and the amendments to the law will introduce a Cess Fund to effect this. A cess will be charged on every transaction of securities recorded on the exchange and the proceeds will be credited to the fund. It will secure compensation to an investor who suffers losses from the failure of a stockbroker or stock dealer to meet his contractual obligations. Minister Choksy said that worldwide uniformity is difficult at present. Ali Abdul Kadir, Chairman Securities Commission Malaysia and Chairman APRC said investor confidence is of paramount importance for successful and vibrant capital markets. The major corporate scandals in the recent past have resulted in investors losing confidence in the whole system. "Therefore, we have taken legal and investigative measures to curb the situation and also demonstrate to the investor that financial crime is not tolerated". He said that there is uncertainty worldwide due to the global political climate. Therefore, it is necessary to recognise the challenges and respond to risks. The formula to improve regulation is the commitment to work and forming memoranda of understanding between countries. Kadir said people are at present living in uncertain but exciting times. "Therefore, we should collectively improve our capabilities while striving hard to face the challenges that lie before us". |
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