Between hope and despair
Corporate Pakistan did not veil its anxieties but put up a brave face in a combustive political environment. It described the developments an outcome of the current phase of transition that is painful but inescapable.
Some top business tycoons contacted by Dawn gave measured responses underplaying negatives, dismissing panic in the stock and the currency markets as temporary. Some saw the tension on the Western border more disturbing for the progress being made in regional economic cooperation.
The hint a tentative election date set the ball rolling, some leaders felt, calling it a beginning of the end of a difficult period of uncertainty that business abhors
Many traders and second tier businessmen particularly in Karachi were disillusioned as another move to dislodge the PPP-led government backfired. For them, the current government is least efficient of all the ones Pakistan have had. They were hoping for a takeover by a military- backed technocrat led, clean regime to replace the current set of politicians and block the way for the next crop waiting in wings to assume power after elections.
The cleric-led long march on populist slogans started on January 13. The level of participation and the organisation was surprising as scores of thousands of people peacefully encamped in the open on roads of Islamabad for three days in harsh weather. The tension with India escalated as New Delhi over reacted to minor border skirmishes on the Line of Control. The timing of the adverse comments of visiting IMF team on the country’s economic management deepened the impression of fragility of the current setup. But, it was the Supreme Court decision against the Prime Minister and sixteen officials in a graft case that generated nervous energy in the market on fears of destabilisation. It led the Karachi Stock Exchange to shed 525 points in one go before the closing time on January 15. It was biggest single day fall in four years that wiped off Rs130 billion from market capitalisation.
The situation was not any different in the currency market as people rushed to purchase dollars putting already weak rupee under renewed pressure. In open currency market buyers outnumbered sellers by a big margin. The rupee crossed over 100 mark at many places though the inter bank rate was around Rs97.5 for a dollar. The general uncertain environment and repeated closures and disruptions in supply chain kept commodity and retail markets cool all over the country and affected the port operations because of logistic bottlenecks. It also impacted affected manufacturing and services sector as some factory- owners and exporters missed their production and delivery schedules owing to lower than normal workers’ attendance.
Bashir Ali Mohammad, chairman, Gul Ahmed Group refused to let his confidence in the country be bulldozed by political theatrics or the impulsive market reactions.
“As long it doesn’t get violent for me its fine. Every nation passed through initial turbulent phase before democracy grew roots. I am confident that the phase will pass and the country will emerge stronger”, he said over telephone when approached for comments.
“The Bangladesh model has failed. I see no wisdom in egging on short- term solutions because of the long- term cost. With all its flaws democracy, I believe, is the only workable system in the modern day and age. We need to learn to elect better people to improve governance and address problems in a befitting fashion”, he asserted.
An economist stated that the economy has demonstrated remarkable resilience during turbulent past. “It would, however, be dangerous for different segments of ruling classes, aspiring for commanding control, not to discount the cost of uncertainty and disruption to the economy”.
Yousuf Shirazi, chairman Atlas Group of Companies, partially endorsed views of the economist as he insisted that people tend to let their fears cloud their perception undermining the economic potential that the country holds and the progress made over its short history. “Pakistan’s economy is as viable as any other. It is sixth largest pool of population, fifth largest textile sector, huge reserves of coal, gold and other minerals and despite all problems grew at an average rate of five per cent over the past 65 years. It is no mean achievement for any country”, he builds his argument.
“I started my business with three people and half a million rupees. Today I directly employ 17000 workers and pay over Rs15 billion in taxes. How can I let momentary problems breach my trust on the country?” he asked.
“No one should give up hope. This country holds great promise for business and its people”, he pleaded.
Another senior business leader sounded frantic. “I hope better sense would prevail and the power brokers of the country would not let the situation get out of hand”.
“An economic meltdown in a divided society armed to teeth could turn ugly with a possibility of a spillover in the region”, he cautioned.
Aizaz Sheikh, CEO, Kohat Cement and All Pakistan Cement Manufacturers Association chief appeared more concerned over rising tension with India but sounded confident that the phase would soon be over.
“There is so much happening that we need time to absorb and understand what it means for us. I am all for the constitutional rule and hope that all stakeholders honour it. I wish that politicians and other power centres understand the urgency to make transition quick to cut short the phase of uncertainty and deal with other problems particularly relations with our neighbours”, he wished.
“A friendly neighbourhood is absolutely necessary for steady growth of business and the economy”, he stressed.
Several other businessmen reached over the telephone in Karachi and Lahore were not as supportive or optimistic. They expressed their hostility towards the current government in strong words and wanted a military backed government of technocrats.
Majyd Aziz, a popular business leader of Karachi was rather disappointed at the outcome of Dr Qadri’s march and NAB’s position on the case against the Prime Minister. In an interview after the Supreme Court decision he said: “This is the worst government Pakistan has ever seen”, representing sentiments of businessmen waiting for their unceremonious exit.
Sayem Ali, chief economist at Standard Chartered Bank expressed more anxiety over the position the IMF took.
In a published remark he said: “the key concern for the economy was the possibility of a delayed outcome of negotiations with the IMF for a new loan, which the country desperately needed in the face of falling reserves and huge outstanding debt”.