Karachi: Security is nobody's business

Businesses from a volatile Karachi are being shifted to Dubai, Malaysia, and even Bangladesh

By Amir Zia
The News On Sunday
Nov. 7, 2010

For a vast number of people in Karachi, it is life on a razor's edge. With criminals and political zealots enjoying a free hand, ordinary citizens seem to live in a constant fear and uncertainty in the country's industrial hub, which witnessed a sharp increase in crime, extortion, kidnappings, targeted killings and political and religious violence since the Pakistan People's Party (PPP)-led government assumed power in early 2008.

Along with old power players, new gangs of thugs and criminals have emerged in recent years. They take pride in affiliation with this or that political party, seeking their pound of flesh in this brutalised city. No social class, ethnic background or religious belief guarantees one safety in Karachi. It is just a matter of luck for how long you can escape the long hands of criminals, who can make your life hell anywhere -- from an affluent neighbourhood to the low-income one; from a bustling market to any of the industrial estates of the city.

The result is not just an intangible psychological pressure under which people of Karachi now live, but the constant fear and insecurity have hit hard the small and big businesses, markets and the industry.

"In Karachi, we have not just to deal with demons of constant power failures and rising cost of doing business, but also with criminals and extortionists," Sultan Chawla, president of the Federation of Chamber of Commerce and Industry (FPCCI), told TNS. "The situation is getting from bad to worse."

Indeed a new "breed" of extortion mafia has emerged that appears more brutal, politically connected and fearless than the old one. Police, of course, are helpless and have lost confidence of the people.

Chawla said that extortionists distribute receipts or what is called "parchi" to shopkeepers, businessmen and industrialists for forced donations. "This is taking its toll. If you are constantly insecure and under pressure, you can't make long-term or even medium-term investment decisions."

And Chawla's perspective can be substantiated on the ground. In the congested, polluted, crime-ridden old parts of Karachi, including Kharadar and Meethadar, where from small shop owners to large-scale whole-sellers operate businesses, life has become tougher in recent months.

Here, shopkeepers and traders receive so-called donations slips amounting to a couple of thousand to up to two hundred thousands rupees on monthly basis. Failing to meet this demand means threats, a robbery or a bullet for the owner or his near and dear one.

And it is not just the story of one or two neighbourhoods. This lawlessness is rampant all over the metropolis, where police and other state institutions seem to have conceded complete or partial powers to criminals, drug barons, land encroachers, extortionists and political and religious zealots of all shades and kind.

A retired army doctor had to shut his clinic located in one of the main markets of the affluent DHA neighbourhood and shift it to some other place after he received a series of anonymous phone calls demanding millions worth rupees "bhatta". He went to the police, but realised that it was a futile exercise. He felt more insecure and exposed to the danger in a city where even doctors remain on terrorists' hit-list. "Going to the police proved a waste of time… they treated me as I myself was a suspect," said the doctor requesting anonymity. "Life is more precious. I had to shut my clinic -- one of the oldest in the neighbourhood."

Kheirun Nisa, 55, a housemaid, was stopped by two gunmen in the volatile Malir neighbourhood. It was the first of the month and like most working-people, she carried her salary -- six thousand rupees -- in one of the pockets of her long Balochi-style kurta. The gunmen took away her hard-earned money. She did not go to police. She just wept.

While the plight of the common people goes unnoticed, the business community has started making noises following the October 19th massacre of 13 shopkeepers in Kabari Market. Business leaders say that the Kabari Market incident occurred because shopkeepers refused to pay extortion money.

A leading businessman, who is also an advisor to the Sindh chief minister, said, requesting anonymity, that there has been a total breakdown of law and order in Karachi.

"At the Kabari market, up to 60 armed men came… some of them blocked the escape routes, while other started shooting ruthlessly. They identified people first and then killed them in cold blood," he said. "There is no law now. This city has become a gangsters' city. All the ethnic groups have their gangs of criminals. And each one of them is fearless and cold blooded."

While President Asif Ali Zardari, Interior Minister Rehman Malik and many other top government officials have vowed to provide protection to businesses and industries, there seem to be a lack of political will to do the job as the Sindh province coalition government remains divided.

The result is a steep rise in violence, killings and crimes in Karachi since early 2008. According to the Citizen Police Liaison Committee (CPLC) data, the number of killings more than doubled to 777 in 2008 compared with 344 in 2007. In 2009, more than 800 people became victims of what police describe as targeted killings. And from January to October this year, 1,212 people have been killed in hit-and-run attacks or tortured to death after being kidnapped.

"So far, October has been the bloodiest month this year in which 169 people lost lives in targeted killings," said CPLC chief Ahmed Chinoy. "Out of these 169, one was a doctor, three were policemen and the remaining 26 were political activists. Who were the other 139 victims – no body knows."

And it is not just the killings. There has been a 50 percent rise in kidnappings during the last three years compared with 2007 in which around 60 kidnapping for ransom cases were reported. But for the last three years, this average is hovering at around 90 kidnappings a year, the CPLC data shows. Similarly, vehicle and mobile phone snatchings have also surged in the city.

The advisor to chief minister said that police arrest criminals, but they get bail and acquittal through courts. "They are so organised that they even threaten judges. They give them details about their family members and threaten to kill or kidnap them with the help of their accomplices."

Mohammed Saeed Shafiq, president of the Karachi Chamber of Commerce and Industry (KCCI), told TNS that confidence of investors and businessmen had plunged to its lowest. "We have formed a special Police-Chamber Liaison Committee, which receives at least eight to 10 complaints regarding extortion every day, but this is only tip of the iceberg. Majority of people never approach us. Even overseas Pakistanis are scared of coming to Pakistan and making investments here."

While big industries and businesses manage to arrange private security, it is the small traders who remain worst hit due to lawlessness in the city. Chawla, president FPCCI, said countless businesses are being shifted abroad with Dubai, Malaysia, and even Bangladesh as some of the favourite locations. "When your life, money, property and honour are at stake, how can you think of business?"

With the government struggling to fulfill its promise of stemming crime and lawlessness in the country's financial capital, few have faith in its performance because criminals not just operate under the cover of political parties, but have started to patronise politicians.

News Analysis: Time For Empty Promises Now Over

Government needs to take tough decisions, widen tax base, reform power sector

By Amir Zia
The News, Business Section
Nov. 7, 2010

KARACHI: The message from global lending agencies appears stark for the Pakistan Peoples Party (PPP)-led government. The time for empty promises is now over. It has either to bite the bullet and implement the International Monetary Fund (IMF)-sponsored reforms or lead the country towards a graver economic crisis.
The recent talks between the IMF and the country’s economic managers in Islamabad have again highlighted the fact that there is no more free money for Pakistan. The disbursement of the sixth tranche worth $1.7 billion of $11.3 billion IMF loan — originally due in August — is being delayed as Islamabad failed to take practical steps to implement the promised reforms.
In the past, the IMF had been showing an unprecedented leniency towards Pakistan when it missed key performance targets ñ thanks to the United States, which wanted its ally focused in its fight against terrorism. But now the fund appears taking a firmer stance following US Secretary of State Hillary Clinton asking Pakistan in a categorical manner last month in Brussels that it must initiate “meaningful reforms to expand its tax base.”
“The international community has made it clear that it is not going to write cheques for us to run this country,” said Dr Ashfaque Hasan Khan, a former adviser of the Finance Ministry. “Why the taxpayers of the other countries foot our bill when Pakistan’s rich people are not ready to pitch in.”
And that remains crux of the matter. Pakistan needs to generate its own resources, tighten its expenses, control the budget deficit, introduce fiscal discipline and go for the painful reform process, which the PPP-led government has failed to do since it entered into the ongoing loan programme with the IMF in November 2008.
The IMF wants Pakistan to introduce a reformed general sales tax (RGST) along the lines of the value-added tax, eliminate subsidies provided to the energy sector, resolve the circular debt issue as well as the ballooning commodity credit, which now stands at around Rs400 billion. The fund also wants the government to ensure the autonomy of the State Bank of Pakistan by enacting law through parliament and ensure it has zero net borrowing from the central bank at the end of each quarter.
The broadening of tax base through RGST, which earlier the government promised to implement as VAT from the start of the current financial year, remains the most knotty issue given the fierce resistance by various interest groups, political allies and the opposition parties.
The RGST, a diluted version of VAT, had to be implemented by October 1, but even this deadline has slipped to December 1.
Analysts say that VAT remains a successful tool for revenue collection in more than 140 countries ranging from poor to middle-income and the rich, but in Pakistan vested interests prove successful in blocking its implementation.
Dr Khan said that VAT helps control leakages in the tax system and makes it difficult for traders to hide their income.
But the powerful chambers of commerce and industries of Karachi, Lahore and Peshawar successfully managed to win support of various political parties to build a campaign against VAT.
The powerful feudal lords have also been successful in keeping the agriculture income out of the tax net.
Can Finance Minister Dr Abdul Hafeez Sheikh convince his political bosses to take the bitter pill of expanding the tax base and go for reforms, which he so often talks about? The record offers little hope.
The implementation of the World Bank and the Asian Development Bank backed power sector reforms also remain a tough challenge. While raising the electricity tariff alone does not appear the solution, the government lacks focus and commitment to force the power distribution companies to cut line losses, which hover in the high range of 35-40 percent mainly because of the rampant theft and rickety system.
The government should also think withdrawing the facility of free electricity to more than 100,000 WAPDA employees.
While there is an apparent popular opposition to the IMF programme, which is widely seen as anti-people, the country seems to have no other option for now, but to continue with the reforms to put the ailing economy back on the track.
The IMF programme is seen as giving international community and investors’ a signal that not only the process of reforms continue, but there are proper checks and balances in place in this country where unfortunately the credibility and fiscal discipline of the government remains low.
So far, the IMF remains, what one analyst called “exceptionally friendly” towards Pakistan, which failed to honour commitments during the last couple of years, but now the fund appears to go for a firmer approach.
Indeed, in these tough times, difficult economic decisions have their political repercussions, but what the country needs now is some harsh decisions rather than continued politics of expediency.
The government has a choice either to become a willing partner in the reforms process or continue to drag its feet. The first option offers some hope, the second will only multiply the country’s economic woes.