Growing Islamist violence has crippled the economy in northwest Pakistan, made tens of thousands of people unemployed and exacerbated the poverty that breeds fundamentalism, business leaders say. North West Frontier Province (NWFP), which borders Afghanistan and Pakistan's capital Islamabad, is rich in agriculture, minerals, stunning mountain scenery once popular with tourists and multiple local industries. But the 21st century has brought decline owing to extremist violence in the adjacent federally administered tribal areas (FATA) and the NWFP district of Swat, where the Taliban launched an uprising two years ago. "Around three-quarters of our industries have closed since the war in Afghanistan started but most have closed in the last two to three years," Sharafat Mubarak, president of the local chamber of commerce and industry said. Before the September 11, 2001 attacks on the United States which precipitated the invasion of Afghanistan and ensuing Taliban insurgency, 2,254 industries were functional in NWFP, of which just 594 operate today, he said. "We had more than 100,000 people employed in those industries but now just 18,000 are there and the rest have lost their jobs," Mubarak said. The decline has accelerated over the past six months, during which Pakistan battled Taliban fighters, agreed a ceasefire in part of NWFP and last month launched a renewed offensive as militants advanced further towards Islamabad. The UN says 1.7 million Pakistanis have been displaced this month because of fighting in the districts of Buner, Lower Dir and Swat in NWFP, bringing to more than two million the number displaced across the northwest since August. Once known affectionately as the "Switzerland of Pakistan" and frequented by Western holidaymakers, Swat is today a national symbol of horror where violence last year halved receipts from tourism, official figures show. The main industries in NWFP and FATA include marble, chemicals, rubber, plastic, food, tobacco, handicrafts, paper, leather and furniture. The match industry, the only export-oriented sector in NWFP and which once employed around 5,000 people, has hit difficulties as a substantial quantity of the required wood comes from the conflict-torn districts. Mubarak said banks have reduced their lending to local industry because of the growing instability and element of risk. "Only 32 billion rupees (395 million dollars) out of 852 billion rupees lent by banks in Pakistan were granted to industries in NWFP last year. The lending has further reduced this year," Mubarak said. "Thousands of people from the tribal areas who have been rendered jobless are at the mercy of the militants," he said. "It makes it so easy to hire unemployed youth for their cause. The government should stop this by helping us revive the industries," he added. Jahan Manan, head of the independent Centre for Public Policy Research, said the root cause of decline was Afghanistan, wracked over many years by civil war and insurgency. "NWFP's geographical position as a frontline province in international conflicts for the last 30 years has had a damaging effect on its economy. The unrest and insecurity discourage private investment," he said. The State Bank of Pakistan reported a decline of 13 percent in foreign direct investment in the country during the first 10 months of this financial year, which runs from July 1 to June 30, compared with the same period last year. "The security concerns in Pakistan's northwest and the global recession are both responsible," said Mohammad Sohail, chief executive of Topline Securities brokerage house. According to the finance ministry, Pakistan's decision to join the US-led "war on terror" meant massive unemployment in affected regions and increased rural poverty, as state spending focused on law enforcement, not development. Business leaders want the government to offer a package of incentives such as tax and duty exemptions to revive the economy, but for now the state is focused on dispensing millions of dollars in emergency aid to the displaced.