September 04, 2006	Monday	Sha'aban 10, 1427

Without careful and intelligent handling, there exists a possibility of current political turmoil to assume the proportions of a crisis, which may induce the economic actors to take a back seat. This could make country a prey to regional and international powers, who are obsessed with promoting their interests at the cost of others.

If the current wave of political unrest subsides quickly, it would not significantly affect the economy, that is on an expansion path at over six per cent average growth rates. However, if the situation is allowed to linger on, that it could spell ‘danger’ for the economy.

The medium and small businessmen will be affected if the situation does not improve immediately. The next three months, including the holy month of Ramadan, is the peak business period in the country. The onus of responsibility to monitor and improve the situation lies with government but the opposition also needs to be cautious when devising its strategies. Exercising the writ of the government is important but ways other than the mode adopted so far are needed. At the same time, the political parties need to weigh their options against gains to the people and not in narrow context of short-term political mileage over opponents.

Hopping from crisis to crisis, national economy has developed very stubborn resilience. It has proved to be strong enough to cope with shutter downs and wheel jams. It does get depressed temporarily but bounces back with vengeance.

These views were expressed by the business leaders in Karachi and representatives of some of the high performing sectors that include capital market, automobiles, and cement sector over the present political scenario. Several attempts to contact official spokesman on the economic affairs in Islamabad and minister of state for finance Omer Ayub Khan proved futile. The Prime Minister and Dr Salman Shah were out of the country.

“The political climate affects the business environment. When political situation heats up investment sentiments cool off. For the last fortnight, we wake up to a bad news every other day. There is need for the government to come out with some positive news to perk up the investors sentiments”, said a key player in the Karachi stock market who owns a chain of businesses and is tipped to be one of the richest men in the country.

“In my view for the next year and a half, the situation is going to be little shaky, till the time elections are held and power is transferred to the elected party. For now, it will take time but the situation will improve. As for the capital market, the current levels are supported by the strong performance of listed companies and not just positive perceptions. It, therefore, can hold ground for quite sometime”, the high profile broker commented.

A senior business tycoon who represents his class at a number of forums acknowledged that military governments are more popular with the business community. Elaborating on reasons he said that during Martial Laws there is stability and continuity in policies.

The power is also centralized so it is easier to negotiate for our demands with the government. Whereas in a democratic set up when it is free for all. Every Tom and Dick and Harry poses to be one in power throwing his weight around, aggravating the problems of the business class. He, however, did oppose the high-headed attitude of a military government that he said alienates the people from the state. Like in the case of Nawab Akber Bugti, this business veteran felt that the government has further complicated the already tangled political situation.

“The outburst of reaction in form of blasts and strikes will drive customers out of local markets. If the situation is allowed to persists for next few months it would translate into huge business losses to local businessmen and retailers who traditionally do roaring business in period preceding Eid”, he said.

“The last three months of the year are also crucial for exporters who have deadlines before the Christmas shopping season picks up in the West. We are hoping that the government will understand the sensitivity of the situation and act accordingly to contain the damage incurred because of the mishandling of the Balochistan situation”, he asserted.

“Business and investment are like migratory birds. It travels to lands that offer favourable environment. Political strife and uncertainty can drive the investors out who are already showing signs of fatigue, waiting for issues related to infrastructure to be resolved”, second generation business leader of Karachi Amin Bandukda said commenting on the impact of political developments on the economy of the country.

A young professional heading research section of a leading brokerage house said that finance professionals were surprised over the extent of support the opposition was able to muster in the national assembly. “It showed that opposition is not as weak as many of us like to believe”. He said that the measures such as the banking and the capital market reforms implemented by the government have increased the depth of the economy making it even more resilient.

He felt that the psychological sentiments do matter in the capital market but the physical performance of listed companies decide the fate of bourses. “In Pakistan most listed companies have given out very good results and these very companies will support the market level and continue to provide stability”, he said. A self-proclaimed socialist turned businessman said that his group was about to finalize a joint venture deal with a major international investment group but at the last minute it backed out. “They decided not to engage their capital in a volatile political situation and left for more stable environment in the region”.

He warned of what he called spacious neighbours waiting to pounce on an opportunity to capitalize on every bad news originating from the country. “Who would like to see the Gwadar Port develop into a regional business hub? Who would like Iran-Pakistan-India pipeline project to materialize that has a potential to alter the dimensions of geo-regional equation? Who favours Pakistan developing its mineral treasures in Balochistan with Chinese assistance? No one”, he said. “Any gain in Pakistan is perceived to be a loss by these powers”, he asserted. “We do not really need enemies. We have proved times and again that we can inflict on ourselves more daunting blows than any external force”, a retired economist in Islamabad said. He ruled out any foreign hand in the making of the current crisis. He, however, did agree that there are many forces who would like to fish in Pakistan’s troubled waters.

Economic mismanagement comes in way of realisation of true economic potential. It is hoped that the military-led government will make a conscious effort to pacify the situation to allow the economic actors to deliver.