‘Capital markets need more government assistance’
...Sanjay Sharma, SPSE's outgoing CEO.
Words and photo by Dionisia Tabureguci
SANJAY SHARMA is a few months away from calling it quits in a ballgame that has been both rewarding and frustrating. As outgoing chief executive officer of the South Pacific Stock Exchange (SPSE), he has seen some progress in the development of the country’s capital markets but, he admits, some dreams are going to take a little longer to come true.
On the eve of his departure to greener pastures, Sharma candidly singles out the lack of government commitment to the development of the potentials in the capital markets as the biggest stumbling block in effort put into building up of this section of the economy.
“Unless and until the government gives the support, we’re not going to move forward. We need government intervention in order to move the capital markets and we need the capital markets to develop. Unless capital markets develop and unless we have a vibrant capital market, economic development will not happen. It’s that simple,” says Sharma.
For many years now, the development of the capital markets has been a curious challenge for those directly involved in it. Progress has been slow amid an environment where doomsayers outnumber the believers and those who do have surplus cash to invest will find that the choice list is very short.
Local institutions awash with investment funds do participate but then choose long-term tenements on stocks, so worsening the supply problem.
The coveted family owned companies are not likely to come on board any time soon while so very little is done to see how foreign owned companies like banks and hotels could be persuaded to take part in wealth sharing locally through a public listing apart from just providing employment.
Sharma believes that a little bit of aggression from stakeholders could help nudge the market along, if not speed up things a little. He has seen the market grow in his four years as CEO, has seen what the market can do for companies wishing to raise capital for whatever purpose, has witnessed how some listed companies have used the market as a flexible tool to suit their purpose. A rights issue, a merger, the listing of a high-risk company like Yaqara Group Limited are among some of SPSE’s defining moments.
Somehow though, something has not quite ‘clicked’. “The government is doing its part but it’s not doing enough,” says the former banker and tax auditor. “It hasn’t focussed enough on the opportunities in the market. It is doing a lot but in order to develop the market, there has to be the right incentive. A tax free status would be a major attraction for some companies.”
A concerted effort, he adds, should also be made to get especially the banks and hotels to share their loot with locals and the government should seriously think of putting in place a mechanism to do that, especially when automation is replacing human labour and the efficiency driven culture has meant that these businesses are not here to create jobs but to maximise shareholder value by making the most out of very little.
“I am not against them making money. What I’m trying to say is that there is no multiplier effect of the degree that we used to have. I think it is going away. Two decades ago, I would say they had it but not anymore. We need direct benefits now. So I think the government should seriously think about changing the formula. We need to have a prerequisite where it says that if they want to come and do business here, please get listed on the market so the wealth created is not just benefiting people in Australia or New Zealand but Fiji investors too.”
In a country where politics have yet to transcend racial issues and focus on sustainable economic direction, Sharma’s vision of a well functioning capital markets may seem like wishful thinking. But it is shared by those who believe in the potential of the capital markets as an economic stimulus and better wealth sharing.
As Sharma prepares to depart in search for better opportunity in Australia, he hopes his idea of a vibrant market where family owned companies, banks, hotels and other big businesses in Fiji’s economy are listed and their values are enhanced through price discovery, comes about in the not too distant future.
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NOTE: This article was published in the Fiji Business Magazine (www.islandsbusiness.com) as: Sharma moots change in investment formula, p 7, February 2006 edition.
Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.
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...Sanjay Sharma, SPSE's outgoing CEO. Words and photo by Dionisia Tabureguci
SANJAY SHARMA is a few months away from calling it quits in a ballgame that has been both rewarding and frustrating. As outgoing chief executive officer of the South Pacific Stock Exchange (SPSE), he has seen some progress in the development of the country’s capital markets but, he admits, some dreams are going to take a little longer to come true.
On the eve of his departure to greener pastures, Sharma candidly singles out the lack of government commitment to the development of the potentials in the capital markets as the biggest stumbling block in effort put into building up of this section of the economy.
“Unless and until the government gives the support, we’re not going to move forward. We need government intervention in order to move the capital markets and we need the capital markets to develop. Unless capital markets develop and unless we have a vibrant capital market, economic development will not happen. It’s that simple,” says Sharma.
For many years now, the development of the capital markets has been a curious challenge for those directly involved in it. Progress has been slow amid an environment where doomsayers outnumber the believers and those who do have surplus cash to invest will find that the choice list is very short.
Local institutions awash with investment funds do participate but then choose long-term tenements on stocks, so worsening the supply problem.
The coveted family owned companies are not likely to come on board any time soon while so very little is done to see how foreign owned companies like banks and hotels could be persuaded to take part in wealth sharing locally through a public listing apart from just providing employment.
Sharma believes that a little bit of aggression from stakeholders could help nudge the market along, if not speed up things a little. He has seen the market grow in his four years as CEO, has seen what the market can do for companies wishing to raise capital for whatever purpose, has witnessed how some listed companies have used the market as a flexible tool to suit their purpose. A rights issue, a merger, the listing of a high-risk company like Yaqara Group Limited are among some of SPSE’s defining moments.
Somehow though, something has not quite ‘clicked’. “The government is doing its part but it’s not doing enough,” says the former banker and tax auditor. “It hasn’t focussed enough on the opportunities in the market. It is doing a lot but in order to develop the market, there has to be the right incentive. A tax free status would be a major attraction for some companies.”
A concerted effort, he adds, should also be made to get especially the banks and hotels to share their loot with locals and the government should seriously think of putting in place a mechanism to do that, especially when automation is replacing human labour and the efficiency driven culture has meant that these businesses are not here to create jobs but to maximise shareholder value by making the most out of very little.
“I am not against them making money. What I’m trying to say is that there is no multiplier effect of the degree that we used to have. I think it is going away. Two decades ago, I would say they had it but not anymore. We need direct benefits now. So I think the government should seriously think about changing the formula. We need to have a prerequisite where it says that if they want to come and do business here, please get listed on the market so the wealth created is not just benefiting people in Australia or New Zealand but Fiji investors too.”
In a country where politics have yet to transcend racial issues and focus on sustainable economic direction, Sharma’s vision of a well functioning capital markets may seem like wishful thinking. But it is shared by those who believe in the potential of the capital markets as an economic stimulus and better wealth sharing.
As Sharma prepares to depart in search for better opportunity in Australia, he hopes his idea of a vibrant market where family owned companies, banks, hotels and other big businesses in Fiji’s economy are listed and their values are enhanced through price discovery, comes about in the not too distant future.
----
NOTE: This article was published in the Fiji Business Magazine (www.islandsbusiness.com) as: Sharma moots change in investment formula, p 7, February 2006 edition.
Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.
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1 comment:
Good words.
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