A few days ago, a national daily carried this story: a businessman from Karachi hasn’t visited his production facility for the last six months, because he was too afraid of getting kidnapped. According to the man, criminals are harassing factory owners, extorting money and hurling threats. As a result, many businessmen now prefer staying at home rather than visiting their factories.
There are many such stories of criminal intimidation and violence against the members of the business community in Pakistan. What was once peculiar to Karachi and KPK is now spreading elsewhere. This is already hurting our economy making Pakistan an unfriendly place for doing business. If this situation persists, it may emasculate our already feeble economy.
It is ironic that when businesses are facing adverse circumstances at home, our leadership is wooing international businesses, taking pains to seduce foreign investors - especially the Chinese, the Arab and Turkish - “to invest undeterred in Pakistan.” The question is, will foreigners invest in a country where local businesses shun investment?
To start with, Pakistan is far from being an ideal place to do business. Here, property rights are not secure, contracts are not enforced, civil litigation takes a life time, initiating a new venture is a trying process, access to capital is difficult and expensive, energy is scarce, the tax regime is exploitative, and regulations are characterized by red- tape and corruption.
These challenges are highlighted by the World Bank‘s “Doing Business Report 2014.” The report evaluates countries on a ten indicators matrix. Unfortunately, Pakistan has performed poorly on all ten indicators, landing onto 110th place in a global ranking of 189 nations.
The indicators on which we performed worst include the ease of getting an electricity connection, the simplicity of tax documentation and the effective enforcement of contracts. In terms of starting a business, Pakistan is the 105th most friendly state in the world, where it takes 21 days to start a business with a plethora of paperwork.
In South Asia, Sri Lanka is the most business friendly nation, where government has introduced a host of reforms, facilitating easy access to capital, curtailing bureaucratic hurdles, and making it easier for businesses to operate.
In addition to general obstacles, now the most egregious threat to Pakistani businesses springs from criminal activity. We are now amongst the top ten nations with the highest rate of kidnappings for ransom. The situation is most appalling in Karachi, where armed thugs from political parties and religious outfits are targeting big and small businesses, and where extortion, kidnappings and killings have become the rule of the day.
Many local entrepreneurs are seriously considering disinvestment from Pakistan for better overseas options such as Sri Lanka, Bangladesh and Far Eastern countries, while many have moved to the Punjab.
Though Punjab has been considered a comparatively safer option for investment, recent events tell a different tale. The cracker attack on a small businessman from Lahore, who refused to give into extortion, brought sharp reactions from the members of the business community, according to whom, the incidents of extortion are increasing in the city. The matter has been hidden largely because many incidents go unreported.
In the face of burgeoning criminal activity, the reaction of law enforcement officials is not surprising. When an aggrieved reaches out with his complaint, in most cases, our saviors in black and khaki tell him to keep low and quiet.
Pakistani hotel tycoon Sadruddin Hashwani said in an interview, that it seems to be the government’s policy to keep out domestic investors and look for foreign ones. Though the FDI plays an important part in national growth, it requires essential backward and forward linkages, which in most cases, are provided by local businesses. No attempt of foreign investment can produce long lasting results without the expansion of local business activity, as it is the real engine of growth.
It’s like truism now, to say that no nation can grow without a robust business sector. Grants from friendly countries, the sale of sovereign bonds, and an IMF package are just economic painkillers. Our political leadership can keep globetrotting in branded suits, but no one will seriously consider Pakistan as a place to invest, unless the economic climate and the law and order situation improves.
What we require is the overhauling of our economic structure, with the aim of making Pakistan a business friendly country. For that, government needs to cut down on the red tape, trim bureaucratic interference, streamline and simplify commercial procedures and improve the law and order situation. Without these measures, no policy will succeed in putting the economy on a firm footing.
The writer is a freelance columnist and has worked as a broadcast journalist.
Email:adnanfalak@gmail.com
Tweets at:@adnanfsher