Investors shy away: Target killings, political uncertainty cripple businesses

Industrialists fear huge flight of capital to other countries.


Farhan Zaheer July 15, 2011

KARACHI:


Unchecked target killings and continuous political uncertainty in Karachi have left businessmen perturbed who think the government is not doing enough to improve law and order in the financial capital of the country which also discourages new investments.


Not only are foreign investors shying away from coming to the city, but also domestic investors are considering shifting their businesses to some other city or even abroad. According to businessmen, some of the manufacturing units have already been shifted to Bangladesh, which offers cheap labour and a healthy environment.

American Business Council (ABC) Vice-President Saad Amanullah Khan said the government wanted to tackle the uncertainty in the city but “it should do it much faster”.

“Of course, the condition of Karachi is not good,” he said, adding “foreign direct investment in the country is going down and the Karachi situation is adding to the economic woes of Pakistan.”Khan, whose chamber represents 67 American companies in Pakistan most of whom are Fortune 500 companies, said Pakistan needed stability to attract foreign investment. “Foreign investor does not have personal preferences, he goes after stability and then infrastructure before making investment in any country,” he said.

Like foreign investors, local investors are equally worried about personal security in Karachi. An official of Sindh Board of Investment said strikes, shutdowns and uncertainty in Karachi were a cause for concern for investors.

“All political parties know the significance of stability in Karachi whether they are in government or opposition and everybody knows that no one can afford uncertainty in the city owing to its role in the overall economy,” he said.

Karachi Chamber of Commerce and Industry (KCCI) President Saeed Shafiq said, “I do not think that even local investors are willing to invest in present conditions,” as they were depressed about the overall economic uncertainty in the country.

“We have given numerous proposals to the government for controlling violence in Karachi, but the situation is still similar to what it was a few years ago,” Shafiq said. Quoting statistics, he said 155 people on an average were killed in Karachi every month, but the government had been unable to control the situation for the last six months.

“We always hear that police have arrested target killers but we never see them being prosecuted. Criminals get themselves released through courts owing to unsatisfactory investigation and weak legal system,” he said.

SITE Association of Industry Chairman Wahab Lakhani said law and order, particularly in Karachi, was so bad that the industrialists feared a huge capital flight from the country. “We do not see any new local investment coming in and many industrialists are even looking for opportunities in UAE and Bangladesh to relocate their industrial units from Pakistan.”

Korangi Association of Trade and Industry Chairman Johar Ali Qandhari commented that no new industry was being set up in the city and similarly no business expansion was seen in the recent past in the Korangi industrial area, one of the biggest zones of Karachi with over 4,000 industrial units.

Referring to frequent shutdowns in Karachi, he said one way or the other businesses were either partially or totally closed for 100 days in a year.

Industrialists believe that the city is fast heading towards de-industrialisation as old industries are vanishing slowly and the industrial land is turning into commercial plazas.

Published in The Express Tribune, July 15th, 2011.

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