Shehbaz Sharif Calls for Export-Led Growth as Naya Nazimabad REIT Lists on PSX

Prime Minister Shehbaz Sharif has called for a stronger focus on exports and private-sector investment, questioning the performance of industries that have received government subsidies for decades without generating a significant rise in exports.

Speaking at a gong-ringing ceremony marking the listing of Naya Nazimabad Apartment REIT at the Pakistan Stock Exchange (PSX), the prime minister said incentives for the construction sector were beginning to produce results.

He said Karachi’s construction industry was also showing signs of growth.

PM Questions Long-Term Industrial Subsidies

Shehbaz Sharif said several industrial sectors had received subsidies since the 1960s. However, he said these measures had not produced a significant increase in exports.

According to the prime minister, higher subsidies had instead been accompanied by rising prices, weaker productivity and quality concerns. He also said the country had not achieved the desired level of import substitution.

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He described the situation as a difficult reality that needed to be addressed through economic reforms.

“We have to show export-based growth in our economy,” he said, urging exporters to contribute to sustainable economic expansion.

The prime minister also referred to meetings with major international bankers during his recent visits to the United States and the United Kingdom. He said the bankers had appreciated the government’s reform efforts.

Shehbaz Sharif also recalled a conversation with the IMF chief, who, according to the prime minister, described Pakistan as “a new Pakistan.”

The prime minister responded that it was instead “a new team.”

Construction and Capital Markets

Shehbaz Sharif said the federal budget had provided tax breaks worth Rs2.3 trillion. He congratulated the teams behind the Naya Nazimabad and Lahore projects.

He also credited government institutions and officials for economic progress and thanked the NAB chairman for the recovery of land that he said was worth trillions of rupees.

The prime minister said Pakistan had also achieved progress in issuing Eurobonds. He highlighted foreign exchange reserves of $21.4 billion and growth in workers’ remittances.

Naya Nazimabad Apartment REIT received PSX approval in August, completed its book-building and public subscription processes in September, and was listed on September 17.

Aurangzeb Outlines Growth Strategy

Finance Minister Muhammad Aurangzeb said economic growth could reach 4% in 2027, compared with 3.7% recorded the previous year.

He said Pakistan could potentially achieve 6% growth in the short term through consumption-led expansion. However, he warned that such growth could increase pressure on the balance of payments and revive a boom-and-bust cycle.

The government, he said, was instead pursuing an export-led growth model.

Aurangzeb said the number of income tax filers had risen by 45% to more than 5.7 million, compared with 3.9 million a year earlier. He added that reforms were also being pursued to increase activity in the capital market.

Housing Finance and REITs

The finance minister said Rs60 billion had been released under the Prime Minister’s Apna Ghar Programme, while banks had approved Rs340 billion in financing under the scheme.

“The real issue is no longer the issuance of loans,” Aurangzeb said, adding that the banking sector had taken steps and the supply side now needed to respond.

He said Arif Habib and the Association of Builders and Developers (ABAD) had a role to play in expanding housing activity. REITs, he added, could serve as a bridge between financing and the real estate sector.

The Naya Nazimabad offering comprised 44.06 million units, representing 15% of the REIT scheme’s total units. SECP said the listing increased the number of listed REITs on PSX to seven.

PSX Participation Expands

Aurangzeb recalled his first visit to PSX on March 29, 2024, when the KSE-100 Index stood at about 67,000 points. He said the index was around 170,000 at the time of his address.

He said 11 IPOs had taken place during the year, which he described as the highest number in two decades. He also said investor participation had more than doubled over the previous two and a half years.

According to the finance minister, Gen Z and millennials accounted for 85% of stock market participation during the preceding 12 months.

Recent PSX data show the KSE-100 had moved above 170,000 during September, although the index remained volatile around that level.

Government Seeks Private-Sector Leadership

Aurangzeb said fiscal stability remained essential for sustained economic growth. He said the government’s role was to create a conducive environment for private-sector activity.

“The private sector has to lead,” he said.

He added that the government wanted to make macroeconomic stability sustainable and avoid another boom-and-bust cycle.

The finance minister also said Pakistan needed to adapt to the “new economy,” which he said extended beyond cryptocurrency and included wider opportunities in emerging services.

He concluded by saying the government was working to expand the bond market to retail investors. The Capital Markets Development Council was also preparing recommendations for the prime minister.