Jan 05 - 18, 2009

Impact of lawlessness is felt with full force by industrial activities that falter at the prospect of economic hardship and insecurity. President Karachi Chamber of Commerce & Industry, Anjum Nisar says improved law and order conditions can give industries a leeway to reduce high cost of doing business. Government's faultless control over security issues will directly result in to reduction of staggering costs accruing to companies for private security arrangements, he said while talking to PAGE.

Whenever law and order situation gets worst in Karachi and activities in the city come to standstill federal government losses approximately Rs. 200 crore daily on account of taxes. Four days business closures last month due to citywide riots roughly rendered Rs.3 to 3.5 billion tax losses to the government.

Beside immediate and calculated losses, different other outcomes emerge out of such disturbances. Indirect losses can not easily be measured as they are umpteen and long lasting, however, worsened law and order situation has undermining fallouts on industrial production as well as exports industry, he said. While the whole country suffers the intensity is really felt in Karachi due to its importance as economic hub and a bloodline of the country and its contribution of 70 percent to national exchequers.

He said exports from the country were greatly affected by disconcerted law and order. The Pakistan's image buildup in foreign nations following any such social disorder ingrains apprehension about booking exporting orders in the country by importers who limit their business tours and visits in the country thereby making exports suffered in long term.

"Provision of security to business community is a complete responsibility of the government," he said and added for a last couple of years the situation had created serious concerns within particularly business circle and society at large. "The cost incurred on private security deployment has no precedence in past. For example, privately hired staff keeping watchdog over rooftops of fuel stations is common in sight nowadays. Majority of companies are itself taking care of ensuring security arrangements around their premises. This finally becomes essential component of overall cost of doing business, rampantly swelling budgetary accounts of organizations. At least, small and medium sized companies can not afford such outsized non-productive expenditures and its immense pressures on narrow base budgets."

On additional expenditure of personal security, he says it is a principal causative factor that adds burden to already increasing cost of doing business. Investment decision draws upon mainly two elements: rate of return and protection. He says if one of any elements is missing investment becomes either extinctive or dawdling. "More importantly, industrial growth would decelerate were it not good to both things," he said and added in this case economic growth would travel on trajectory downward. Personal security is vital and investors and industrial excessive focus on it siphons off investment supply in industrial development.

Suffering of exporters prolongs when there prevail uncertain conditions in the country. Nonproductive costs make exporting products price uncompetitive in international trade and weaken and jeopardize international competition position of outputs. FDI can not also be attracted in a situation where local enterprisers themselves find investments in foreign countries lucrative and more secured, he replied promptly when asked about prospects of FDI in the country. "Capital outflow from the country must be taken into account."

In his visit to Karachi, Rehman Malik, Interior Affairs Adviser to PM had promised KCCI to establish industrial police stations at five industrial zones across the city, he said adding "but the promise remains unfulfilled". "I have requested in a letter to the president of Pakistan to look into the matter and reminded him of the promise that he himself made in which he assured the Chamber of provision of 25 armored police cars and 50 mobile vans," informs Anjum. "Otherwise, we think if situation in Karachi of law and order deteriorates current police force will not be enough in numbers to subdue unrest," he warns.

Ensuring security is a state responsibility, he reiterates. "Government has to provide security to business community." In spite of that KCCI has provided six police vehicles and 50 motorcycles to city's law enforcement agency, he asserted. All recurrent expenditures are borne by us, "nevertheless it is not our job". Although, companies are in group or privately spending on safety precautions and hiring services of private security guards they can't be able to meet overarching protection expenses without the government support.

Burglary, kidnapping for ransom, and heist and looting by security guards, have become common in recent times. People who are very responsible for guarding one's life and property have become perpetrators, creating sense of insecurity and fanning distrusts amongst public. KCCI president agrees that unemployment is the real cause of all this disturbance and antisocial behavior upsurge. When employers face amplification in business cost, cutting cost becomes instinctively essential measure to maintain competitive position, giving a margin to go for layoff as an option, he said while dilating on chain reaction. "Law and order goes downhill as unemployment increases."

To a question, he said, "there are no such issues of bhatta mafia nowadays". "The instances of forced money pulling from industrialists are extinct. Even if apprised we take up the issues to police authorities through our chamber-police liaison committee."

"Despite having good entrepreneurs it is a shame that we are sliding back in economic growth lower than India and Bangladesh," he dismayed. Among other things, high interest rate, energy crisis, inflation are keys to stimulate unemployment. Due to unjustifiable cost of money borrowing industrial process gets slowdown fallout. There is a need to introduce financial reforms. Implicitly, without security industrial and economic growth is not possible, he concludes.