Business under shadow of enduring insecurity
THE current wave of terrorist strikes in a residential area in Karachi after similar attacks in Quetta has demoralised the country’s business community that has already been enduring the brunt of criminal rings. This is forcing them to reassess their strategy to ride through what they call “a very difficult phase”.
They estimate that the real cost of lawlessness to the economy is many times more than the financial cost of damage to property and losses because of shutdowns. “It shakes confidence and saps energy of all economic agents which is more difficult to restore”, a nervous tycoon commented.
The financial cost of closure per day, the business community believes, is underestimated and puts it at over Rs25 billion against Rs9-10 billion reported for the country.
Curbing the tendency of their class for pomp and show and controlling their zest to get social endorsement of personal success through projection, businessmen seem to have decided to keep a low profile for now. It is to avoid the attention of rogue elements looking for targets.
Many corporate leaders declined to even discuss the topic over the telephone; those who did were extremely cautious, avoiding names and statistics. They conveyed the impression that the security challenge is actually too grave an issue for them. If the perception of threat to the rich failed to capture the actual danger partially, they said, it was because the trust on the state/custodians of law and order has depleted to the level where victims choose not to report crimes. In this regard, they mentioned cases of kidnapping for ransoms and demands for extortion money that often go unreported. Almost no business executive was ready to own up this position publicly because of fear factor.
They said they were doing all in their means to ensure security and manage the risk to life and property. Those who can afford, spend on private security which includes engaging security guards, closed circuit cameras, alarm systems and tracking devices in vehicles.
Some others were trying to fight fear through denial. Most have resigned leaving it all to their destiny. More pragmatic ones, however, have multiple plans in place to deal with an unforeseen tragic situation.
By and large the community acknowledged that for a long time they did not understand the horrors the militancy could create, and its direct and indirect cost to businesses and the economy.
“During 1980s and post-2011 we were more focused on inflow of dollars. For us it was an issue that was used by rulers for their own ends. Besides, we thought, the epic centre of the trouble was several hundred miles away. We never imagined it would haunt us in our drawing rooms and board rooms the way it did”, a well-respected corporate leader from Karachi said.
Some business leaders in Punjab blamed outside forces for the menace. “There are foreign governments involved fighting proxy wars on our soil. The government is too weak and dependent to move against those giants”, a former leader of a powerful textile lobby told Dawn from Lahore
The community was generally scared, or too scared. They were reluctant to take a position on militant outfits. The sense of insecurity appeared to be greatest in Khyber Pakhtoonkhawa and Balochistan followed by Sindh. Businesses in Punjab expressed deep concern but they sounded comparatively confident that the situation could be turned around if the quality of governance in the country improves.
“Sorry, I have no comments”, a trader who has a mobile shop in old city in Peshawar said. “You have no idea what we go through. Every time we speak we fear that it would annoy someone. In our part of the country people used to express their anger with guns, now they use bombs” he said, before hanging up the phone.
As compared to manufacturers, the trading community being more religiously inclined was more confused over the possible solutions particularly over the question of legitimacy offered to parties with soft attitude towards extremism.
About a dozen top corporate leaders were approached by this scribe to seek their opinion on the issue and their role in containing the hydra headed monster of terrorism eroding the fabric of the society.
The whole business spectrum from multinationals to big and small domestic firms understands that market can simply not function under stress of insecurity.
All business forums from Federation of Pakistan Chamber of Commerce and Industry to Overseas Chamber of Commerce and Industry to city and town chambers to such trade bodies as All Pakistan Textile Mills Association, All Pakistan Cement Manufacturers Association, etc., to retailers’ organisations reiterate their demand for peace whenever they forward their wish list to the government or news media.
“There have been passing references but the thrust of our efforts have been more to get energy issue fixed. Demanding peace has not helped. We need to play an effective role by engaging other stakeholders to suggest solutions to this very complex problem. I will take it up in the next meeting”, Pakistan Business Council CEO told Dawn over telephone.
Meanwhile the security-related business is booming in the country. The insurance business has attracted international companies in addition to half a dozen local companies offering insurance against terrorism. The last decade has seen rampant increase in security agencies and sale of security gadgets.
“The terrorism insurance gained currency in Pakistan in 2008 after the affected businesses were declined claims by insurers who attributed the loss to terrorism, the civil strife and arson. However, insurance coverage was extended to this segment “, a local businessman told Dawn.
He did not have ready data available but believed that some 30 per cent of top companies provide insurance cover against terrorism. He believed that it was high insurance premium that kept number of coverage seekers low.
“It is a very expensive option. There are some reinsurance issues that keep premiums very high. From all I know at least 80 per cent of businesses would seek insurance coverage if premium rates could be rationalised”, he maintained.
The loss to the economy because of closure for a day has been projected to the tune of nine to 10 billion rupees if the GDP is assumed to be worth three trillion rupees.
Businessmen feel that the actual cost is two times more than the projected number as the figure excludes the damage to the unreported economic activities and the opportunity cost to the businesses.