ISLAMABAD, 15 October — Even normally when someone sneezes in the global market place, bulk of the formal Pakistani economy catches cold shivers. But 34 days that followed Sept. 11 have unleashed a wave of shock for Pakistani business and industry.
That holds true of the government, too, but Islamabad is pretending that Western largess will help it tide the situation over. However, that will depend as to how "useful" Pakistan is in furthering United States and Western objectives.
But a series of anti-American demonstrations are making life difficult for President Pervez Musharraf and his economic managers. Industry sources say that these demonstrations are scaring foreign importers away from the Pakistani market as they apprehend that if these demonstrations blow over, production will be disrupted and it will be difficult for the local industry to fulfill orders.
The latest estimate of Pakistan’s export losses now are projected at $3 billion. Increased shipping and air cargo costs and newly imposed war risk insurance premium may cost $75 to $100 million more than normal. Tax revenue losses, resulting from lower customs duty on reduced imports are estimated at Rs.10 billion. Income tax deposits for which the last date was Sept. 30, are 17.14 percent less than last year, because of depressed economic situation and despondency following Sept. 11, according to the Central Board of Revenue.
Fifty-five years after the country’s independence, most Pakistani industry still enjoys, or wishes to use, the infant industry status, along with the attendant tariff protection and fiscal incentives, at the cost of the much-wronged consumers and the taxpayers.
The opponents of Islamabad’s cooperation with Washington point out to the meager emergency economic assistance, totaling around $150 million that has been promised so for, by US, Japan and the European Union. In the Bush-vs-Osama Bin Laden war, the first casualty is Pakistani foreign trade. In 34 days that followed Sept. 11, the industry and business says, effective Oct. 1, it is forced to pay an additional $460 per container on foreign trade, to and from Pakistan, on account of war risk insurance (WRI), freight rate increase, and cargo insurance for export shipments.
Anis Marfani, vice chairman, Pakistan Knitwear and Sweater Exporters Association, says the exporters are forced to pay Rs.119 a kilo as transport cost for goods destined for Europe, up from Rs.67 a kilo before Sept. 11. "Foreign buyers have almost stopped placing new orders also because of the negative projection of Pakistan by the world media", says Marfani.
Sounding more pessimistic, Masood Naqi, chairman, Pakistan Readymade Garments & Exporters Association, feels fiscal 2002 may see a 50 percent reduction in exports. Commerce Minister Abdul Razzak Dawood had, in July, set an export target of $10.1 billion for fiscal 2002, up from the actual exports of $9.14 billion in fiscal 2001, of which 65 percent are textile-related goods. "We are fulfilling orders placed six to 12 months ago and speeding up shipments, in order to catch the Christmas and the New Year sales. The steep fall in new orders could mean a $2.5 billion to $3.0 billion reduction in export earnings," says Naqi.
Shabbir Ahmad, chairman, Pakistan Bedwear Exporters Association, says, the loss of exports can be much more than the government visualizes. Major airlines have canceled their cargo and passenger services to and from Pakistan, directly damaging exports.
Foreign buyers no longer visit Pakistan to place orders. Cost of imports and imported raw material inputs has gone up. The foreign raw material suppliers are reluctant even to accept letters of credit on sight which is almost a cash payment in advance for import shipments, expressing doubts over Pakistani banks to honor them."
Raees Tarmuhammad, chairman, Commodity Traders Association, says "at present stocks of essential goods are sufficient to meet the country’s current demand. But, if the war prolongs, there can be shortages.
