Life returned to ‘normal’ last Saturday morning after mobs that rampaged through the streets in major cities, blocked highways and disrupted businesses across Pakistan for three days, ‘withdrew’ following an ‘agreement’ between the government and the Tehreek-i-Labbaik Pakistan (TLP).
But the latest disturbances, which severely interrupted the domestic supply chain, production and export shipments, left many wondering: Is this country — wrecked by long years of political instability, violent flare-ups and terrorism — good enough for them to make long-term capital investments?
After all, Pakistan is ranked at the bottom of an index that measures 194 economies on the basis of the likelihood of disorderly transfer of government power, violent demonstrations, armed conflicts, social unrest, international tensions, terrorism, and ethnic, religious or regional conflicts. Only three countries—Afghanistan, Yemen and Syria—found a place below Pakistan in 2016 on the Global Economy.com index on political stability and absence of violence.
‘Who in their right mind will make long-term investments in a country with a high risk of periodic production losses or shutdowns?’ asks Syed Nabeel Hashmi
“Calls from my foreign buyers started pouring in soon after protestors took to the streets and blocked the roads,” Ijaz Khokhar, the country’s largest martial arts uniforms exporter, told Dawn by telephone from Sialkot.
“They [the buyers] were worried over how long the road blockades would continue and whether their supplies would get delayed. In the recent past we have seen our foreign customers turn to other countries for their needs in order to avoid supply disruptions and delays, even if it costs more.”
Industrial and commercial activities were disrupted across the country during the three days of one of the worst waves of violent protests and lockdown of major cities in recent years.
Many factories in Karachi, Lahore, Faisalabad, Sialkot, Gujranwala and other major cities were forced to slow down production because of workers’ inability to get to work and raw material shortages caused by road blockades.
Inventories piled up at factories and dry ports, and trucks transporting export cargos from upcountry to Karachi were stranded on highways. Daily wagers and small to medium sized businesses with limited raw material inventories suffered the most.
“Honda and Suzuki have shut down their (assembly) lines and Indus Motors is operating only the night shift,” Syed Nabeel Hashmi, a leading manufacturer and exporter of auto-parts from Lahore, told this reporter last Friday. “Auto-part vendors in Lahore were still operating but started facing raw material shortages.”
Many businesspersons this correspondent spoke with supported the right of individuals and groups to organise peaceful protests but showed their displeasure on the way the present government and its predecessors have dealt with mobs that periodically take the country hostage and paralyse public life.
“Public protests are a democratic right of every citizen and group and part of everyday life elsewhere in the world. But when the protesters turn violent and start hurting others, damaging property, disrupting economic activities or trying to hold the country hostage to force the hand of the government, they lose this right.
“It is at this point when the state should intervene and forcefully impose its writ to protect the life and property of its peaceful citizens,” a leading Faisalabad-based exporter, who refused to speak on record, argued.
He, however, regretted that governments in Pakistan respond very timidly to the ‘pressure groups that use violence and vandalism’ as their main tool to bring the administration down to its knees.
“Every time violent protests erupt, the incumbent governments in Pakistan seek to pacify mobs to get them off the streets instead of punishing them for the damage they do to the life and property of others.
“The present administration has proved no exception despite the prime minister’s [last] Wednesday warning to deal with the TLP troublemakers with an iron fist.
“This kind of tepid response always emboldens violent groups to return to the streets later with greater violence, which encourages others to follow the same path and erodes the writ of the state.”
Former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers Syed Nabeel Hashmi was of the view that it was hard to guess the direct and indirect production and export losses.
“But one thing is clear; manufacturing in this country cannot flourish in these conditions. Such flare-ups are a clear disincentive for both local and foreign investors.
“Who in their right mind will make long-term investments in a country with a high risk of periodic production losses or shutdowns? If such occurrences make me nervous to invest in my own country, how can we blame foreign businesspersons and companies for not showing interest?”
And who is better aware of this reality, the long-term economic consequences of such disturbances, than Pakistan? Foreign investors are no longer willing to return here because they have serious fears about the safety of their capital and employees.
This is how a senior executive of a foreign food company explained: “It is not terrorists, mobs or protests that make foreign investors nervous; it’s the flaccid response of a state to, and its inability to deal with, such situations that scares them away.”
Published in Dawn, The Business and Finance Weekly, November 5th, 2018