Ishq-e-Rasool Day: Economic damage could be as high as Rs76b

Nationwide shutdown hurt the economy; doubled by property damage.

KARACHI: Business shutdowns on account of “Love of Prophet Muhammad (PBUH) Day” have cost the national economy close to the tune of Rs76 billion, a number that does not include the cost of the property damage due to the many protests that turned violent throughout the country.

Economic analysts who spoke to The Express Tribune on the condition of anonymity said that their estimates are based on average economic output of a given workday. Given the near total shutdown of the entire economy, with hardly any businesses open, they estimate that the economy lost as much as Rs76 billion in economic output.

The Karachi Chamber of Commerce and Industry estimates that the shutdown of the commercial capital’s industrial zones alone cost the economy close to Rs14 billion in losses. That hefty loss, however, was not even close to being the bulk of the losses in Karachi, since despite having the largest industrial base in the country, Karachi’s economy is mostly services based, which were shut down almost completely throughout the city.

Leading industrialists in the city said that they had shut down their businesses to show solidarity with the nation, especially since it was declared a federal holiday by the government. But many nonetheless expressed frustration at the fact that most of the protests against the blasphemous movie – made in the United States, and completely unavailable in Pakistan since the YouTube ban – had turned violent, causing massive property damage, in addition to several fatalities.

Business lobbyists, however, were keen to show their support of the protests, even as they decried their violent nature. “It is no ordinary matter that caused the government to declare a public holiday,” said Ehtesham Uddin, chairman of the Korangi Association of Trade and Industry, a leading business lobby in Karachi. “The issue of the anti-Muslim film is sensitive and we understand the sensitivities of the nation on this matter.”

Many others also expressed what seemed to be a fear of arousing religiously motivated anger against their businesses and cited that fear as a reason for their decision to close their businesses. Many of the people who spoke to The Express Tribune for this article declined to be named, for fear of being targeted as being insufficiently the film.

“It is a religious issue,” said the chairman of an industrial association who do not want to be named, “Nobody can afford any misunderstanding with their workers at this time.”

Exporters had a particularly tough time, since many are often selling in highly competitive markets where their ability to deliver orders on time is a critical element to succeeding in the business. The closure of both ports in Karachi badly hurt their businesses.

Yet the closure of business alone was not what hurt the exporters. “But more than anything else, the arson and looting that we saw on Friday is more dangerous for our image and our clients in outer world,” said one leading exporter in Karachi who wished to remain anonymous.

The closure of the ports, in addition to the shutdown of mobile communications nationwide, is also likely to have a negative impact on the government’s collection of tax revenues, since the overwhelming bulk of government revenues still come from the port. No estimates were immediately available of just how much the government is expected to lose.

Traders in Karachi’s old city, which hosts the largest wholesale commodity markets in the country, said that the one-day shutdown likely cost them between Rs3 billion and Rs5 billion in lost business.

The closure of the wholesale markets is also how Friday’s shutdowns affected the rural economy: while nearly all of the violence and unrest took place in cities, it also shutdown the urban and semi-urban markets that the rural economy relies on to sell their products. Without those markets, economic activity even in rural areas ground to a halt, even though there were no reports of violence in villages.

Published in The Express Tribune, September 22^nd, 2012.

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