Islands Business - SHARMA MOOTS CHANGE IN INVESTMENT FORMULA

All businesses doing business in Fiji should be listed on SPSE.

Dionisia Tabureguci

Share the wealth... SPSE outgoing chief executive Sanjay Sharma wants foreign-owned businessess to list on the stock exchange.

Sanjay Sharma is a few months away from calling it a day 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, Sharma candidly singles out the lack of government commitment to the development of the capital markets as the biggest stumbling block in efforts to build up this section of the economy.

“Unless and until the government gives its 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 the capital markets develop and unless we have a vibrant capital market, economic development will not happen. It's as simple as that,” 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 limited.

Local institutions awashed 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 onboard any time soon while very little is done to get foreign-owned companies like banks and hotels to be listed to share their wealth locally apart from 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. He has also seen what the market can do for companies wishing to raise capital for whatever purpose and also 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 not enough,” says the former banker and tax auditor.

“It hasn't focussed enough on the opportunities in the market. 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 said, should also be made to get 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's 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 pre-requisite 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.”

As Sharma prepares to depart for Australia, he hopes his idea of a vibrant market where family-owned companies, banks, hotels and other big businesses are listed and their values are enhanced through price discovery, comes about in the not-too-distant future.