THE Pakistani market has shown its disapproval of the callousness of power players bent on sacrificing all it takes to achieve their goals.

The buildup of the political crisis, compounded by geography and scale, has sent the capital, commodity and currency markets reeling. Last week saw a bloodbath at the Karachi Stock Exchange, which recorded a single-day fall of over 1,300 points on Monday. The KSE 100-Index dipped by around 600 points over the week.

As the perception of the government’s fragility gained, the rupee, which held its ground for some time, started to waver. The dollar resumed its upward march on the value chart. The rush of nervous traders on the buying counter depressed the rupee, as supply failed to match the sudden spur in demand. Breaking the psychological barrier of Rs100, the dollar was traded at around Rs101 in the open market by the close of last week.

There were reports of scarcities of essentials from different towns and cities, and of piling inventories at warehouses and farm gates. But prices at the wholesale commodity market in Karachi were stable last week.. If the crisis persists for any longer, however, the situation is expected to change.


“Nothing will happen. Settlement will come about and the economy will start moving ahead on the path to progress. The stakes are too high and no one wants their bets to crash,” said Muhammad Sohail, CEO of Topline Securities


Business — still counting the cost of the over week-long closure during Eid — is disturbed at the evolving political scenario. Export commitments are being missed and upcountry movement of imported cargo nearly halted owing to disruptions in production and transportation in the wake of anti-government protests and administrative measures in the largest province.

The jittery business community dreads the return to what it describes ‘the lost decade of the 90s’. It believes that the reoccurring bouts of political uncertainty hurt business and make the economy under-perform. The average growth rate during the decade, 4pc, was the lowest in the region.

A majority of business leaders contacted for comments did not favour the subversion of the democratic order, but also seemed reluctant to oppose the movement against the Nawaz government in Punjab.

Some businessmen in Karachi, however, wished for a military takeover or a government under the military’s tutelage.

“Pakistan is not ready for democracy as yet. The institutions are too weak and the politicians corrupt and inefficient, not capable of establishing the rule of law. It might not be an ideal solution, but in these circumstances, this is the way to go,” a local business leader, who is an avowed admirer of General Musharraf, told Dawn.

Despite its nervousness, the business community sees the situation beyond its ambit of influence, and does not feel the need to evolve a collective stance. None of the trade bodies, chambers or private sector think tanks met in the past week to review or strategise over how to pull through the crisis. “Business has to deal with rulers irrespective of their hue and stripes. We, therefore, can’t afford to be partisan,” explained a businessman.

“We wish and hope that the political issues are resolved and normal economic activity is resumed quickly,” Kamran Y Mirza, CEO of the Pakistan Business Council, gave a measured response.

Asad S Jafar, President of the Overseas Investors Chamber of Commerce and Industry, said his members have not met formally, but the relevant sub-committees have shot into action, as they are expected to in any unusual situation.

“We take a long-term view and see the current conflict as part of the transition phase Pakistan is going through. Democracy takes time to grow roots. I hope that the system continues, as subversion of the system is not an answer to the complex set of problems the country is confronted with. It is hoped that the issues are resolved peacefully and normalcy is resumed,” he told this writer.

Eizaz Sheikh, former president of the All Pakistan Cement Manufacturers Association, gave an interesting assessment from Lahore.

“Accountability is absolutely necessary for a functioning democracy. I fail to understand the anxiety in certain business quarters. It is not just positive, but necessary, to keep the rulers on track. I am hopeful that something good will come out of this costly exercise,” the business leader, who is vehemently opposed to military intervention despite the stability argument, said over phone.

“How can society tolerate an administration that permits direct fire on a crowd of unarmed people, even if they are fools? The government needs to mend its ways to become more responsive to what the people want, instead of thrusting its interpretation of development down their throats,” he made a point.

Shabbir Ahmed, a vocal leader of textile exporters in Karachi, said, “We want Nawaz Sharif of the yester years who understood our problems and was always ready to accommodate us”. He was referring to the PML-N’s earlier tenures.

“This time around, power is concentrated in a very small group of trusted friends and family of PM Nawaz; even ministers need Finance Minister Ishaq Dar’s nod before deciding issues that fall under their ambit,” he complained.

“The prospect of meaningful reforms appears far-fetched, and even normal policy decisions and implementation look difficult. The government is in virtual paralysis and the uncertainty could prevail for an extended period,” commented an executive waiting for the meeting of the Economic Committee of the Cabinet, which could not be held last week.

“Images streaming on television scare our business partners overseas. Do you have any idea how many business visitors cancelled their travel plans last week,” asked another Lahore businessman.

“Investors are bearish anyway; they are more reluctant to tie their capital in long-term manufacturing projects. The crisis, if allowed to linger, will dissuade foreign investors currently looking at Pakistan as a possible investment destination.”

Muhammad Sohail, CEO of Topline Securities, is confident that the phase will pass. “Nothing will happen. Settlement will come about and the economy will start moving ahead on the path to progress. The stakes are too high and no one wants their bets to crash,” the incorrigible optimist said.

Published in Dawn, Economic & Business, August 18th, 2014

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