POLITICAL INSTABILITY, POOR LAW AND ORDER HITTING HARD TO THE ECONOMY
Apr 13 - 19, 2009
Political instability, civil conflicts, poor law and order situation, high cost of doing business and electricity crisis are hitting hard to the country's economy.
On one side, these factors are affecting local investment climate while the inflow of foreign investment is on downward side on the other hand.
According to third issue of the South Asia Economic Report (SAER), released by the South Asia Department and the Central and West Asia Department of the Asian Development Bank (ADB), political instability and civil conflicts have been found to be a major factor in reducing the attractiveness of South Asia as a host for foreign capital.
Afghanistan, Pakistan, and Sri Lanka continue to face political uncertainties and security challenges that are likely to hinder foreign direct investment. Financial experts told PAGE that the worsening law and order situation in Pakistan is causing serious blow to the country's economy, as both local and foreign investments are on downward trend. They counted corruption, poor governance, red tape regulatory obstacles and political uncertainty as basic reasons of deteriorating economic condition.
They were of the view that FDI is a vital requirement for sustained economic growth, because it can not only generate employment but also supplement domestic savings. Pakistan is confronted with serious challenges of national security and economic wellbeing, particularly in the areas of trade and energy, they added.
The government is facing a number of challenges foremost being economic difficulties and law and order perturbed situation, they said adding, socio-political stability leads to economic stability.
According to founder Chairman Pak-US Business Council and Vice-President SAARC Chamber of Commerce and Industry, Iftikhar Ali Malik, Pakistan's economy has been suffering a net loss of $7 billions annually in the aftermath of war against terror and rendering millions of people displaced in addition to endangering the security in the country. He said that 3.5 million Afghan refugees are still camped in Pakistan, which is liability on our territory.
He was of the view that the US must provide direct market access to Pak products on zero rate duty to help stabilize its bleak economy as Pakistan has suffered a colossal loss of $68 billion since turmoil in Afghanistan and war against terror.
Iftikhar Ali Malik also emphasized the need for assisting Pakistan to overcome its economic crisis by restoring quota system for Pakistan at par with all other under developing countries. He said that Pakistan always strongly condemned the acts of terrorism worldwide and has been US active associate against the menace of terror.
Malik further said US program of Reconstruction Opportunity Zones (ROZ) must be implemented instantly and make sure 100 per cent buy back as 550 textile weaving, spinning, textile make-up and garments units with full infrastructure needs immediately rehabilitation and direct US market access for stabilizing the national economy on war footings.
About power crisis, Malik said that the US should provide technology for coal fired generating energy to Pakistan to meet our ever-increasing demand for power, which is badly needed for sustainable economic and agriculture growth.
He said that due to unrest and turmoil in neighbouring country, major chunk of Pak food stock is smuggled to Afghanistan, which ultimately leads to acute good grain scarcity. He said that proper and timely USA assistance will ensure durable peace, stamp out terror besides strengthening the democratic system of government in Pakistan.
He said there is vast scope for US private sectors and investors in every sphere of life especially in agro, power, IT and textile sectors. He said that Pakistan fully supports US President Barack Husein Obama for war against terror. He said Obama's mechanism for holding parleys will also help a lot to eliminate extremism from the world.
Iftikhar Ali Malik said the US Chamber of Commerce (USCC) could play a pivotal role in this regard, being an important channel for trade ties between the two countries and link to American markets. He said that entire world especially the poor countries are confronting the worst ever economic recession after 2nd world war and this issue of vital importance is to be addressed on top priority to fully ensure peace and security in the world.
He said Pakistan is an emerging market rich in opportunities for US investment, and observed that US is already an important trading partner.
Another women business leader Shamim Akhter told this scribe that "with South Asia becoming the hub of international economic activity, restoration of peace in the region is all the more necessary.
She said that political stability is a pre-requisite for sound and sustainable economy. She said the country was confronted with serious challenges including terrorism but hopefully with joint efforts these challenges would be tackled. She said that prudent policies were necessary to keep the foreign investors intact.
Pakistan Industrial and Traders Associations Front (PIAF) Acting Chairman Khawaja Shahzeb Akram presented a three-point plan for the economic revival that includes steps to ensure uninterrupted supply of electricity to industrial units, cut in mark-up and measures to improve law and order situation.
He said the State Bank of Pakistan's quarterly report is an eye-opener and calls of urgent measures to increase exports and cut in fast widening trade deficit. He said that exports could not achieve desired goal unless and until the industry gets enough energy to keep its wheel on the move.
The PIAF Chairman said that high mark-up rate and deteriorating law and order situation were adding fuel to fire and needs a focused attention by the government.
He said that despite repeated government claims, no improvement had been witnessed in the regular provision of electricity to the industry and with every passing day the industrial production was going down thus heavily impacting upon the exports.
He said that the government should launch a campaign for creating awareness among the business community for export diversification and identification of new international markets.
About law and order situation, he said that the enemies of the country wanted to portray Pakistan as a failed state but everybody would have to play its role to make Pakistan a safer place for potential investors.
Khawaja Shahzeb Akram said that the business community was ready to play its role for the implementation of policies and all the time policies were made but they failed to yield results for the want of proper implementation. He said that there is a dire need to focus on these three areas to put the economy back on tracks as if the situation remains the same for some more time the growth rate would further come down.