BUSINESSES ON LOOKOUT FOR HAVENS
TARIQ AHMED SAEEDI
Apr 30 - May 6, 2012
Life has never been certain notwithstanding the advancement of a society. In the pre-industrial era, it was uncertain because of uncontrollable plagues or power lusts threatening the human lives. Today in the modern age while natural troublemakers have somehow been reined or get predictable, the latter seem constant in plaguing the world.
Having belief that they understand the present grave situation in Pakistan in the backdrop of failure of the state to ensure protection of lives and properties of the common citizens, observers say it is an offspring of a self-centredness of the incumbent government busy day in and day out to keep firm hold on power.
So much so, the government has shut eyes to the real issues battering the economy so hardly that san corrective measures the economic malaise would mutate into the social disaster.
Among other serious issues is the sagging confidence of industrialists and business communities over the efficiency of law enforcement agencies in giving them protection against the extortionists, criminals, and ragtag cohorts fed on the affiliations with some so-called political parties.
Extortions, snatching, kidnapping, and killings in the broad daylight have become common for the flabbergasted citizens of Karachi, which is the financial capital of Pakistan.
Once upbeat, now business community is losing energy and turning cautious in revving up businesses in the city. The dejection has prevailed the scene for last three or four years, but in recent time it has further worsened reflecting in the shrinking business activities in the industrial areas and bustling shopping markets around the city.
Law and order is out of control as criminals are hanging around small and medium business nerve system of the port city to extort money from small and medium shopkeepers. Kidnapping for ransom is probably the next step in case of noncompliance of them with their demands.
The government inched forward to bust the rackets of such groups, but security control does not seem its cup of tea. The state's reactive approach has already caused closedown of several businesses in the city. Either they have moved abroad or relocated offices in other parts of the country. Latter is said to be happening very rarely since security threats have become ubiquitous nationwide the day Pakistan hopped on the bandwagon of war on terror. In fact, industrial units, which were feeding many families directly or indirectly, have been relocated to Malaysia, Bangladesh, and Sri Lanka, according to the media reports. Unemployment is a natural outcome of relocation.
No records are made of the businesses forced to leave the country due to lawlessness. High cost of doing business is also prompting exporters and local companies to move to the foreign countries that promise them attractive returns on capital investments and setting up units there.
Lawlessness was not the only factor behind the emigration. Energy crisis has also hit hard the economic activities. Besides, textile factories are investing in profitable destinations in the region by opening up representative offices there.
Quite contrary to general perception or delusion that it is a market expansion strategy, typical examples of relocation show that foreign market incentives looked extraordinary to emigrants due to unfriendly investment climate and business environment in the homeland. Even packing up an established business of a small shop is not an easy decision. It is not difficult to understand what can compel a big company to stop operation or convert manufacturing plants into warehouses. A conservative estimate put the amount of losses of divestments to domestic economy in billions of rupees annually.
Global retail behemoth Wal-Mart, which used to procure textile goods in bulk from Pakistani factories in the recent past, partly or significantly shifted its purchase orders to Bangladesh or other regional countries, it was learnt.
Pakistan is said to be the favourite apparel outsourcer to the top-notch American companies. Not only Wal-Mart, but other multinational retailers such as Target, Nike, Quicksilver, Kohl's, Sears, Gap, Old Navy, Macy's, etc. also buy quality apparels in the country.
However, overall textile exports underwent a major decline during July-Mar 2011/12. Textile exports fell nine per cent to $9.01 billion from $9.95 billion in the corresponding period last fiscal year.
Foreign direct investment (FDI) dropped nearly 100 per cent to $599 million in the first nine months of the current fiscal year when compared with $1.16 billion FDI in the same period last fiscal year.
Industrial areas in other parts of the country are reeling from gas and electricity shortages. Punjab's southern belt that accounts for major share in the textile export sector of the country is adversely affected by electricity and gas outages that have forces several companies to relocate to attractive destinations abroad.
Although one cannot single out the reason of massive industrial relocations since it is blend of energy crisis, political instability, unsecured business environment, etc., it is for sure that local capital is on lookout for safe haven world over.
A wide number of power looms and textile units have been closed down in southern Punjab. The federal textile minister Makhdoom Shahabuddin put the number at 200,000 power looms. "More than 40 per cent of textile industry has been shifted to Bangladesh in last five years," All Headline News (AHN) reported him as saying.
These enterprises, previously based in southern Punjab, employed 60,000 workers feeding indirectly 200,000 families, said the report published by the Florida-based wire service.
The minister was of the view that prime motive of the relocation was to benefit from trade concessions Bangladesh and Sri Lanka received from the U.S. and European Union, an argument that was rejected by the outgoing companies besides holding no water in view of the unbearable business and security conditions in the energy-starved country.