Having braved a loss of around Rs 126 billion on trade and business front, the country’s fragile economy is bracing for more setbacks on the back of political uncertainty that keeps the sentiments of risk-averse investors and violence-hit consumers in negative zone till this Day of Independence.
With Karachi stocks market having shed more than 2,200 points (4.7 per cent) and the rupee depreciated against dollar up to Rs 100 on inter-bank market, the foreign investors, stocks brokers, traders and currency dealers are “cautiously” looking at Islamabad where the PTI and the PAT leaders are agitating to send the government of PM Nawaz Sharif packing.
As street protests continued Thursday risking politico-economic stability in the country, the businessmen blame the PML-N government for creating the “hype” the cumulative negatives of which are causing the national exchequer huge losses, driving up the cost of doing business and bringing a bad name to Pakistan in the comity of nations.
“The biggest loss is that trade activities at seaports have halted,” Abdullah Zaki, president Karachi Chamber of Commerce and Industry, told Pakistan Today.
In a statement, Pakistan Ship’s Agents Association (PSAA) said thousands of containers, laden with imported and exported cargo, had piled up at the country’s ports, resulting in congestion and badly hampering port operations and shipping activities.
“On average 3,000 containers per day laden with export cargoes arrive from up-country and 2,000 containers laden with import cargoes leave Karachi Port or Port Qasim for up-country,” said 70-member PSAA.
Hundreds of containers, the shipping agents said, were detained by the law enforcers in Punjab and Islamabad to use the same as barricades for the marchers. The KCCI president estimated the losses to trade and industry at Rs 126 billion.
“The loss is multi-dimensional. Export orders could not be shipped on time nor raw material could be supplied to the industry that have closed eventually,” Zaki added. Also endangered is the inflow of much-needed foreign investment that rose beyond $ 4.3 billion in FY14 for first time in past six years.
“All this is closely being observed. Obviously, foreign investors like other stakeholders are upset with the current situation,” M Abdul Aleem, secretary general of Overseas Investors Chamber of Commerce and Industry (OICCI) told Pakistan Today.
Aleem, also chief executive of the chamber, however, said what mattered most to foreign investors was a change in the government’s investment “policy” that, he thought, was unchanged.
“You can not change investment decisions (on a daily basis),” said the OICCI official whose members’ average annual investment in Pakistan ranges from $ 1 billion to $1.5 billion. “Yes, the tension is there,” he conceded.
Warning of an uncontrollable economic disaster ahead, FPCCI president Zakariya Usman said exports were braving millions of dollars losses on daily basis. “We have $25 billion yearly exports. You calculate it and will know the daily losses to exports only,” he said.
Applying Usman’s formula would reveal that political unrest is costing exports more than $ 68 million per day. “Foreign importers would lose confidence in Pakistan,” the FPCCI chief warned.
The currency dealers said the troubled supply of dollars to big cities, from where the US currency is exported abroad, created shortage of the greenback. “This shortage appreciated the dollar up to Rs 100.10 on Tuesday on the interbank,” said Shoaib Khokhra, CEO of DD Exchange Company.
Exchange rate on open market, the money exchanger said, always remains 20-paisa above the inter-bank one. “The rupee closed at Rs 99.35 yesterday (Wednesday),” he said having no idea what fate would Thursday’s marches bring for the rupee in days ahead.
Small businesses stand no exception and are facing equally adverse impact of the politics of agitation. Atiq Mir, chairman All Karachi Tajir Ittehad, said the consumers’ fear that “something is going to happen” had left the markets deserted in recent days. “The businesses have shrunk by about 80 per cent, “said Mir whose alliance represents over 500 markets in this commercial hub of the country.
Stock Broker Aqeel Kareem Dhedhy, best known as AKD, points a finger at the government for creating what he calls it an “unnecessary hype” to deteriorate the political situation to this extent. “This hype made the stocks market lose 1300 points on a single day, devalued the rupee, stuck the containers at ports, disrupted supplies to industries and most of all led to uncertainty,” viewed Aqeel, who heads the AKD Group.
Believing that politics was directly linked to economy, the business tycoon flayed the PML-N government for taking the country into hostage for the entire month. “The government is responsible, straightaway,” he opined.
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