Mattias Martinsson advocates for investor-friendly tax reforms in Pakistan

As the budget announcement on June 12 approaches, concerns have been raised by Mattias Martinsson, the Chief Investment Officer of Tundra Fonder, a Swedish mutual fund focusing on frontier markets like Pakistan. Martinsson has highlighted the potential impact of high taxes on capital markets and proposed a turnover-based tax system similar to Vietnam's as a more efficient alternative.

The recent drop in the KSE-100 Index due to rumors of increased taxes has underscored the need for a more investor-friendly tax regime. Martinsson pointed out the higher turnover in Vietnam compared to Pakistan and the challenges faced by foreign investors in accessing Pakistani equities.

Emphasizing the importance of equity markets as a valuation reference, Martinsson urged the government to attract more foreign direct investment by improving market attractiveness. He noted Pakistan's structural balance of payment deficits and the necessity to enhance export capabilities to lure FDI with lower expected returns.

Recognizing Pakistan's potential for a strong equity market, Martinsson advocated for the removal of the capital gains tax for foreign investors to stimulate investment and economic growth. He stressed the importance of expanding the market and increasing valuations for the benefit of both the government and the people.

The discussions led by Mattias Martinsson shed light on the challenges and opportunities in Pakistan's capital markets. As the country aims to attract more foreign investment and boost economic growth, the proposed tax reforms could play a crucial role in shaping the future of its financial landscape.