In Pakistan, as elsewhere, the continuing multiple crises are opening up new opportunities for a gradual shift in policy and business practices as changing ground realities tend to destabilise the status quo.

This emerges from the views of firm owners about present business conditions, future business outlook as well as the increasing number of new firms incorporated with the Securities and Exchange Commission of Pakistan (SECP).

The private sector is under enormous distress and its investments have dried up consistently, says the Federation of Pakistan Chamber of Commerce and Industry. The Overseas Chamber of Commerce and Industry (OCCI) warns policymakers of a ‘mass industrial layoff’ caused by curbs on the import of industrial raw materials.

An OICCI survey shows that one of every two respondents is either decreasing production or laying off staff. And half of the participants are either considering restructuring or shutting down partially/fully. Perhaps, the long-term solution lies in restructuring. Earlier, the OCCI stated that some of its members were also trying to reduce imports by using local raw materials.

An owner of a distribution firm dealing with indigenous engineering products and not imported goods says his business growth is stable, but cash inflows are a problem. Risks to businesses not dependent on imports are much reduced.

While 61 per cent of business owners say their future expectations were ‘negative’, 38pc expect the situation to improve, notwithstanding 90pc saying the country is headed in the wrong direction, according to the latest edition of Gallup Business Confidence Index (GBCI) released on April 7.

Despite dismal business conditions, as many as 2,595 new companies were registered by SECP in March, showing year-on-year 10pc growth.

Notwithstanding the daunting challenges in transitioning from the incorporation stage to commercial operations, the number of companies registered by the SECP grew steadily over the past few years.

And Information Technology sector, which disrupts old ways of doing things and begets innovative ideas, took the lead with the incorporation of 397 companies, reflecting a continuing trend witnessed lately.

The Emirates Telecommunications Group (ETG) on April 9 announced its decision to buy $400 million majority stakes in a supper app developed by Uber and its subsidiary Careem. And Careem, which is available in 10 countries, says it will invest the new funds to expand its services — that includes food, grocery and remittances — across the region.

In light of the ETG transaction, critics argue it is not clear how many new firms will acquire stakes in running businesses, improve supply chains or boost value-added production in the stifling regulatory environment without needed social and physical infrastructure. And there is a severe shortage of skilled and trained manpower to use the IT sector to boost value-added production.

The number of firms enrolled by SECP in various economic and social sectors includes education (121), health care (44), pharmaceutical (39), power generation (37), mining and quarrying (48), chemicals (34), engineering (49) and fuel energy (24).

The number of new trading companies has dropped from the first to the third position following the fall in domestic commodity production and curbs on imports.

When high interest or taxes rates are considered a ‘burden’, big business groups resort to inter-corporate financing to set up subsidiaries or outsource some non-core activities to the informal sector.

The top priority should go to governance for attracting investment in priority areas and ensuring the completion of projects on schedule and without costly delays.

Under an agreement signed on April 7, Saudi Fund for Development will provide $240m for Mohmand Dam Project. But for two decades, the Rs107 billion scheme for the supply of water to Peshawar from the dam has remained in limbo.

And substantial capacity of solar and wind power projects coming into operation in Sindh remain unutilised owing to the much delayed completion of transmission lines to dispatch electricity to the national grid and end load shedding.

While foreign direct investment inflows from some traditional sources are stagnant or declining, the SECP has enrolled 80 new firms with proposed foreign investment from 33 countries. In an emerging multipolar world, Asian and African countries are cautiously investing in the Pakistani market, possibly waiting for better times.

Friendly countries like China, Saudi Arabia and UAE are helping Pakistan to salvage the current International Monetary Fund (IMF) programme, secure the Fund’s last tranche of over $1bn and avoid a default in the near- term.

The IMF is no longer the only crisis lender. Gulf countries including Saudi Arabia now offer emergency cash, often depositing money at the borrower’s central bank, say analysts at The Economist. China has become a big creditor to the poorest countries whose needs are smaller but urgent.

And modern economies are far more flexible, far more able to cope with change, says Paul Krugman. He explains: “We are seeing Europe now making a gradual planned green energy transition under the worst possible circumstances — sudden, unexpected and drastic — and handling it pretty well.”

The Europeans are reducing their dependence on Russian fossil fuels in the aftermath of the Ukraine war.

Similarly, 18 countries have agreed to trade in the Indian rupee as the world is trying to de-dollarise the international dollar market. The countries include the UK, Germany and Singapore.

Looking at the crisis from a historical perspective — a senior analyst says, “Pakistan stands on the verge of change.”

Published in Dawn, The Business and Finance Weekly, April 17th, 2023