March 26, 2007	Monday	Rabi-ul-Awwal 6, 1428

BUSINESSMEN look worried over developments sparked by an official announcement on March 9 that declared the chief justice of the Supreme Court as ‘non-functional. The countrywide street protests by lawyers was followed by reports about resignations by judges and a senior law officer. The first manifestation of their discomfort was evident from their low turn-out at the groundbreaking ceremony of the Textile City by Prime Minister Shaukat Aziz held at the Governor House on March 21.

Also, the government is seen as too much focused on state sponsored mega projects and sensitive political issues to lend a sympathetic ear to industrial class in distress.

The businesses which have thrived for the past seven years do not like political uncertainty which could cast dark shadows over the economy.

“Is the foreign money flowing into the local market?'', a top business leader whispered while stating that rates of contract carriages and goods vehicles are rising gradually. Yet another remarked sarcastically that professional banner writers are getting scarce even in small towns of Sindh and Punjab.

The finance ministry too reportedly fears an upset in macro-economic growth targets, if the current political trends persist. In that case, business confidence, propped up by a high GDP growth for past 3-4 years, would sag.

Currently, the economic growth is on track but pressure on external sector is mounting. While the GDP growth is expected to go beyond seven per cent during 2006-07, the official assessment is that trade gap may exceed $13 billion. The current account deficit is now expected to surge to $8.8 billion against targeted $6.3 billion.

Also worrisome is the high inflation rate which is pushing up production cost and creating problems for the local industry in boosting exports as well as catering to the domestic market. Inflation is eroding the purchasing power of the consumers. Another report of the finance ministry had recently endorsed the assessment of independent economists that income disparities have become more pronounced over the last five years.

Obviously, business confidence is linked with macro-economic indicators like inflation rate, external imbalance, growing household and regional income disparities and unemployment-a recipe for a socio-political unrest which can upset everything that the rulers claim to have achieved.

While the industrialists have been pleading with the government to review policies to bring down their production cost and agriculture, the top functionaries are busy in executing mega projects from one province to the other.

Failing to get government attention, most of the businessmen too stayed away from the prime minister's function at the Governor House. ``There were hardly two dozen businessmen'', a textile exporter confided. Most of the seats were occupied by the government officials and security personnel. Businessmen are angry because they are kept waiting for two to three hours by government functionaries and are treated shabbily.

The prime minister did not give any good news to the businessmen as he turned down all suggestions of tax relief from the textile industry. But he indicated a reduction in prices of land at the Textile City located some 20 miles away from the Governor House where the ceremony was held. That businessmen are also showing their reluctance to participate in the much trumpeted 3-day Expo 2007 to begin from March 29.

Even a discount offer to set up stalls at the Export Centre, was turned down by top businessmen of textiles, sports and leather goods. For the last several months, the government had been marketing Expo 2007 in foreign countries as a national mega event in which 500 top businessmen are expected to participate and more than 1,000 foreign delegates have been invited to attend. More than 500 foreign delegates are expected to be special guests of the recently created Trade Development Authority of Pakistan (TDAP).

A top garment manufacturer and exporter termed these special guests as ``free loaders.”``They just wasted my time'', he remarked. ``I set up a stall in Expo 2006 but did not receive a single visitor'', a leader of leather industry remarked. The industry has been pressurised to set up 10 stalls at the Expo 2007.

Businessmen are also grumbling over the increasing production cost for a long time, not only because Pakistani goods is receiving a battering from Chinese, Indian, Bangladeshi, Viet Namese and Indonesian goods in the international export market but even their home market is slipping out of their hands.

In a way, the State Bank of Pakistan (SBP) shared business concerns its annual report for 2005-06 released after an inordinate delay in December 2006. The central bank did predict continuing inflationary pressures and enlargement in external sector imbalances which are now more pronounced as the year 2006-07 is about to enter the last quarter. The SBP is yet to release the second quarter report for October- December 2006.

In December last, the SBP had warned of rise in food prices on increasing domestic demand of key staples such as milk (now Rs32 a litre in the market from Rs28), and surging international food grain prices. The SBP cautioned that that ``domestic wheat prices may rise despite an anticipated bumper crop if speculators seek to take advantage of the rising international prices''.

Commodity traders refer to a shortfall of 4-5 million tons in Indian wheat crop to meet domestic demand and also a five per cent decline in crops in Australia that may provide opportunity of hoarding grains to local speculators. What measures the government has taken to ensure a steady supply of wheat till next season are not known.

In an election year, the shortage and rise in prices of wheat and persistent inflation, possible closure of industries and unemployment and growing gap between rich and poor may put the government in a tight corner.

Some businessmen are of the view that elections may not be held at all and postponed indefinitely. Statements by federal minister Babar Ghouri, the PML leader Chowdhry Shujat Hussain are cited freely. `But if elections were to be postponed, can the mega projects-- behind which the shelter is being sought--, can put a check on the brewing social commotion'', a former president of the FPCCI asked.

The President has, however said that the elections would be held on schedule.

“Howsoever, businessmen appear to be insulated from politics, they are active participants'', a former President of the KCCI and an ex- legislator who is now inactive, said. Politics is a game of securing and protecting business interests and businessmen do influence political course of events, often, behind the scene.