Company registration surges as the jobless turn to self-employment amid coronavirus
Statesman Report
KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has registered 15,817 new companies since January this year, data shows, with 2,365 new firms registered in September 2020 alone, a 69 percent increase compared to the corresponding period last year.
The impact of the coronavirus on workers and poor people in Pakistan is stark, with estimates that the poverty headcount could rise from 24.3 percent to a base case of 29 percent, and a worst-case scenario of 33.5 percent, the finance ministry predicted earlier this year.
At least three million people will lose their jobs, the ministry had said, one million in the industrial sector and two million in services.
The Pakistan Institute of Development Economics, an autonomous research organization set up by the government, has projected job losses could reach 18 million.
Owners of small and medium sized businesses say workers laid off due to the coronavirus outbreak and ensuing lockdowns have turned to self-employment as a viable option.
“The SECP has allowed the registering of a limited company with sole proprietorship; that has encouraged many, mostly young and fresh graduates to seek the answer to the unemployment,” Zulfikar Thaver, President of Union of Small and Medium Enterprises (UNISAME), told Arab News. “Self-employment is the best answer … The workers who lost jobs are coming to SME [small and medium enterprise] sector to start their own business, mainly focusing on the online trades.”
SECP officials say reform in the watchdog’s rules has made the registration process shorter and easier, which has led to an increase in activity.
“The increasing trend in registration of new companies is due to simplified and hassle-free procedures of company incorporation,” Sajid Gondal, a director at the SECP told Arab News. “The SECP has recently undertaken a series of reforms for providing ease of business registration. Following reforms, a company can be registered in SECP within four hours through eService.”
SECP recently also combined the process for name reservation and incorporation to introduce a single application form for company incorporation. Incorporation and other regulatory fees have also been reduced significantly and facilities provided for payment of fees through mobile and Internet banking.
“SECP has launched an exclusive startup portal to encourage technology innovation in Pakistan,” Gondal said. “The portal features a list of startups, simplified user experience for registration, access to mentors and incubation centers, online guides and video tutorials for Startup companies.”
Data shows that the trading sector took the lead in registration with the incorporation of 2,624 companies followed by 1,880 IT companies that were registered between January 2002 and September 2020.
1,721 construction companies, 1,609 companies in the services sector, 856 real estate development firms, 664 food and beverages companies and 551 tourist firms were also registered in this period.
Foreign investment was reported in 388 new companies including from Saudi Arabia, Singapore, the UAE, the UK, the US and Yemen.
Of 2,365 new companies registered in September 2020, 68 percent were registered as private limited companies, 29 percent as single member companies and three percent as public unlisted companies, not for profit associations, under section 43 and limited liability partnership (LLP). Ninety nine percent of the companies registered themselves online in September 2020.