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Global CEOs losing confidence in Pakistan. Even business hub Karachi has a security problem

The OICCI, an industry body, has told interior minister Sanaullah Khan that 70% of the CEOs whose firms operate in Pakistan hold security among their top concerns.

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Multinationals operating in Pakistan are a worried lot and they think the deteriorating security situation in the country will further hit a rather gloomy business climate in the country. An industry body, the Overseas Investors Chamber of Commerce and Industry has now reached out to interior minister Rana Sanaullah Khan over the worsening law and order situation, particularly in the commercial capital Karachi.

The Members Security Survey 2022 of the OICCI reveals that the confidence businesses hold in Pakistan’s law enforcement agencies is slowly slipping away, with the high incidents of crime being reported in the country. The OICCI head told interior minister Sanaullah Khan that 70 per cent of the CEOs whose companies run operations in the country have said that security is among their top concerns while carrying out business in Pakistan. In the 2021 survey, 60 per cent of the surveyed CEOs had flagged the issue.

Also read: Pakistan’s start-up industry is collapsing. Swvl to Airlift—it can’t afford it anymore

Data collected from local businesses, including suppliers, vendors and even consumers tells that street crime in the country has increased, with around 56 per cent of the respondents in agreement.

Zubair Chhaya, CEO of Kite Limited said that while the country stays in a state of relative peace due to a decreased rate of serious crimes, unemployment and poverty has increased thefts and other crimes, which has made the process of conducting business difficult.

In 2007, Pakistan ranked 74th in the World Bank’s ease of doing business report. Since then, the country has seen a steady decline in its ranking and stood 147 in 2018. These reports reflect Pakistan’s failure in resolving a constantly fluctuating economy and a devalued rupee.

Despite a recent favourable shift in World Bank rankings from 136 to 108 in 2020, the country’s business practices are at risk once again. Research was conducted in 2019 in order to determine the reason for a decline in exports in Pakistan. Some of the reasons were unfriendly socio-economic environment, high electricity charge and lack of transparency in policies. The latter two remain solvable by the Pakistani government, which has taken steps to resolve the issues recently. But the former reflects a deeper problem that speaks more of the unemployment and poverty within the country, which has led to the rise in lawlessness that businesses seem to fear.

The rise in crime incidents in cities such as Karachi has several factors responsible. Karachi police chief says that that migration of people into the city is one of them, with people settling scores and exacting revenge due to personal enmities. According to him, the easy availability of drugs and weapons also remains one of the major reasons for the rise in street crime in Karachi, with a total of 785 drug peddlers arrested by the police, many of whom were repeat offenders.

Businesses in Pakistan are also dealing with a rising number of land grabbing incidents. “Whether public or private property, precious land is fearlessly being taken over by some highly organised and powerful groups of land grabbers,” The Express Tribune quoted Muhammad Idrees, President of Karachi Chamber of Commerce and Industry (KCCI) in a March 2022 report.

Also read: Land for a ‘Pakistani IIT’ is now a Bakra Mandi

Foreign Direct Investment in Pakistan too has been declining, according to Ahsan Mehanti, the CEO of Arif Habib Commodities due to security issues that have created economic uncertainty in the country.

More recently, the suicide bombing that killed three Chinese teachers from the Confucius Institute, in Karachi, carried out the Balochistan Liberation Army, has also estranged the country’s ties with its close ally and economic support China.

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