The minister for finance and revenue in Pakistan, Senator Muhammad Aurangzeb, has called for reforms to attract domestic investment and develop the country’s private equity market, with a focus on mobilizing funds held by banks, insurers and other institutional investors.
Muhammad Aurangzeb made the remarks while chairing the third meeting of a committee tasked with developing a National Private Equity Framework.
The committee reviewed progress on regulatory and tax reforms, domestic capital mobilization and efforts to identify investment opportunities to support a robust private equity ecosystem in Pakistan.
Aurangzeb emphasized the need for a transparent, commercially viable and investor-friendly framework that would help mobilize domestic savings, attract institutional investment and support private-sector-led economic growth.
Participants discussed opportunities arising from business acquisitions, consolidation, new projects and exits by existing investors. They also considered the potential to build a pipeline of investment opportunities over the next five to ten years.
A key focus of the meeting was the mobilization of domestic institutional capital, including resources available with banks, insurance companies, mutual funds, pension schemes and development finance institutions, alongside potential participation from local corporations and family offices.
The State Bank of Pakistan briefed the meeting on recent regulatory changes, including an increase in the permissible investment limit for banks in a single private equity fund from 10 percent to 20 percent.
The Committee discussed suitable investment structures and mechanisms to facilitate the deployment of these resources into private equity funds and commercially viable businesses and projects.
On taxation, the Committee reviewed recommendations for establishing a clear, competitive, and predictable tax framework for private equity funds.
Discussions included the proposed treatment of private equity funds as pass-through vehicles, with taxation applied at the investor level, as part of efforts to develop a globally competitive private equity ecosystem.
The finance minister stressed the importance of comprehensively evaluating relevant international taxation models and adapting them to Pakistan’s economic and regulatory environment.
He emphasized that any proposed tax arrangements must support legitimate investment activity while preventing opportunities for tax arbitrage, unintended distortions, or regulatory inconsistencies.
The Committee also underscored the need for a coordinated approach across regulatory and taxation authorities to ensure consistency in the treatment of different investment vehicles and facilitate the development of a well-functioning private equity market.
The Finance Minister directed relevant stakeholders to build on the progress achieved, address outstanding regulatory and taxation issues, and advance work on domestic capital mobilization and the identification of viable investment opportunities to move the National Private Equity Framework towards implementation.
Reiterating the Government’s broader reform priorities, Senator Muhammad Aurangzeb emphasized that the development of a robust private equity ecosystem should contribute to deeper domestic capital markets, improved access to long-term risk capital, greater private-sector investment and sustainable economic growth.