KARACHI, Sept 21: Violent demonstrations on Friday along with the country’s economic activities coming to a complete halt could cost the economy dearly, and further erode foreign investment, something Pakistan certainly cannot afford.
At least five banks and equal number of cinemas halls were burnt in Karachi and Peshawar. In Karachi, the mobile market was vandalized, Civil hospital was attacked, KFC and some other franchises were burnt, services of mobile companies remained suspended for around 18 hours.
Many said today’s events reminded them of what happened after former prime minister Benazir Bhutto was assassinated in December 2007.
It is too soon to know the exact number of damages caused by the protests and complete shutdown but just to gain some idea, here are some facts: Benazir Bhutto’s assassination cost $2 billion in lost tax, revenue production and infrastructure damage, a figure Pakistan could come close to if demonstrations continue for another day or two.
Karachi loses Rs14 to Rs15 billion in revenue if economic activities come to a standstill for one day, this figure does not include any damages to property etc, according to Haji Fazal, President of FPCCI.
According to reports, it cost mobile companies around Rs2.6 billion when their services remained suspended for about 10 to 12 hours in August, so it is safe to assume their losses will be higher this time around.
These numbers are not very reassuring especially as according to some statistics over 60 per cent of the country’s population live on less than $2 a day.
Apart from the direct costs, there are indirect consequences which may be a severe blow to the country’s economy. Foreign investors are already apprehensive to invest in Pakistan due to security concerns and after Friday’s events, it is expected that foreigners will be even less likely to invest and in fact Pakistan might even see some capital outflow.
Foreign direct investment fell 66.8 per cent to $33 million in the first two months of 2012-13, compared with $99.2 million in the same period last year.
The deteriorating law and order situation could also make investors in the stock market jittery and may opt to square their positions when the market reopens on Monday.