KARACHI: A warning from a senior minister has deeply shocked the trade and industry leaders, but they are tight-lipped when asked for comments on the situation.

Recently, Interior Minister Mohsin Naqvi said the governance system had completely collapsed and was no longer capable of addressing critical challenges, and called for the creation of new administrative units.

However, the statement was closely analysed by trade and industry leaders, but they were not ready to publicly comment on the implications of the “collapsed governance system.”

A leading industrialist described it as a political statement, not an economic one.

Calls it a political, not economic statement

“In fact, we are facing a number of problems that hinder the growth of the economy, and these should be addressed on a war footing,” said Mr Saqib Fayaz Magoon, Senior Vice President of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI).

We are stuck with the high cost of energy, which has increased production costs too much, preventing our exportable products from competing in the international market, he said.

“We need ease of paying taxes, ease of doing business and reforms in the FBR for smooth functioning of trade and industry,” stressed Magoon.

However, most trade and industry leaders were reluctant to discuss the collapse of the system, instead attributing it to a political framework. When asked whether they would invest in a collapsed political system, they said they needed more time to understand the country’s situation.

Many said the statement has sent another wave of uncertainty, while the country is already facing political and economic challenges. They said the US-Iran war has yet to end, energy prices are fluctuating, while the entire Middle East region is under threat of further destruction.

“The fuel prices have hit us hard, Gulf markets are out of reach, foreign investments remain a dream, and the domestic investors are awaiting the end of the Gulf war,” said another industrialist.

He said that unless the war is over, domestic and foreign investments would not grow.

Some sources in the business circle supported the minister’s assertion that the governance system was collapsing, which would force trade and industry to be more cautious. This would hit economic growth, which is already struggling to emerge from the 3.2 to 3.7 per cent range.

Investment is the key to economic growth. The Gulf war has created significant uncertainty for both domestic and foreign investors, but a strong political system could deliver an efficient working environment in the country, said an investor.

Industrialists said the high cost is another obstacle to attracting investment.

Foreign direct investment plunged 34pc to $1.64bn in FY26 from $2.48bn in the preceding year.

Published in Dawn, August 6th, 2026