Troubled Times

By Amir Zia
Money Matters
The News
August 29, 2011

Now the only certainty for the trading and business communities in Karachi is a lingering uncertainty and fear, which makes normal business and trading activities next to impossible

The month of Ramazan should have been the busiest shopping period of the year, but this season, most major markets, bazaars and shopping malls in Karachi wear a deserted look as violence, lawlessness and bloodletting reign supreme in this volatile city of an estimated 18 million people.

Criminal-cum-political mafias remain not just locked in bloody turf-wars – which so far have claimed more than 200 lives in the first 25 days of August – they now hold the entire city hostage. The "easy money" for bands of criminals comes mainly through the vast extortion racket as well as robberies and kidnappings for ransom. Our trading and business communities – which remain the prime target of these mafias – can evade taxes in this land of the pure, but they have to pay hefty amounts to their tormentors as "protection money" in order to survive and run businesses.

The sense of insecurity and lawlessness is taking its toll on businesses across the city.

“Compared with the previous years, our Eid sales this season remained down by almost 80 percent in the first 20 days of Ramazan,” said Siddique Memon, chairman of Karachi Traders Action Committee. “People are too afraid to come out for shopping, while we are afraid to keep our businesses open,” he said underlining the gravity of the situation.

Although there has been some semblance of normalcy with shoppers returning to bazaars after the Muttahida Qaumi Movement’s (MQM) “day of mourning” kept businesses shut on August 23, Memon said that the sales’ turnover in the last 10 days of Ramazan still remains at least 30 to 40 percent down compared with the past year.

On different occasions, ethnic and political violence have kept markets shut for four days in Karachi, which is unprecedented in Ramazan – the main sales season for both retail and wholesale outlets. In July, six working days were lost for the retail and wholesale businesses as well as for the service and manufacturing sectors. Then, there were days, when sporadic violence, threats by extortionists, political protests and fighting among different groups forced closures in different pockets of the city on a number of occasions.

Now the only certainty for the trading and business communities in Karachi is a lingering uncertainty and fear, which makes normal business and trading activities next to impossible.

The mood in the market is certainly grim. Many shopkeepers, who piled up stocks for the business season of Ramazan on 30 to 40 days credit, desperately wait for buyers.

“I don’t know how I will make payments to my creditors,” said the owner of a leading garment store at the posh Zamzama Boulevard, which is considered largely a safer area. “On the one hand, we are hit by the lack of business and on the other, we are a target for criminals,” he said requesting anonymity.

The main retail and wholesale markets semblance of normalcy – located in the old parts of the city – suffer the most because of their proximity to Lyari, which has been transformed into the hub of crime and violence in recent years.

The activists belonging to the controversial Peoples’ Amn Committee, which was officially disbanded with much fanfare by the Pakistan Peoples’ Party (PPP) government in March following pressure from the MQM, continues to operate – allegedly indulging in a range of criminal activities – from extortion to kidnappings for ransom.

There are militants belonging to the other parties also, including the Awami National Party (ANP) and the MQM, who operate in the city. However, police mainly blame the Aman Committee for the recent surge in crime and lawlessness.

Despite all the tall claims made by the government, police and other law enforcement agencies have remained reluctant to take on the criminals, who allegedly have patrons in the corridors of power, background interviews with senior police and industry officials say.

A shopkeeper, who identified himself only as Ahmar, said that he receives the so-called “donation receipts” from the Aman Committee at his shop located in the Timber Market. “Those who comply, make more such payments, while those who defy get death threats.”

Memon said that the government has failed to protect both shopkeepers and shoppers at around 300 markets spread across the city. “No route and place is safe now … one is afraid to travel from a bazaar to his or her own house,” he said. In the past, the government used to deploy around 2,500 policemen for security of these markets during Ramazan, but this year only 600 personnel have been deployed, he added. “We are forced to make our own security arrangements, which are costly.”

The lawlessness in many localities of Karachi appears akin to that of troubled semi-autonomous mountainous region in the country’s north, where the Taliban and Al-Qaeda militants are challenging the state's writ.

Senior police officials admit that there are several localities in Karachi which remain “no-go areas” for the law enforcement agencies. These localities are considered safe havens for the crime mafias, terrorists, drug peddlers and weapon dealers.

Although the challenges of extortion and crime are not new for the megapolis, there has been a sharp surge in these incidents following the 2008 general elections, which brought the PPP-led government to power.

No wonder that businesses and economic activities have taken a severe hit as people remain afraid to make fresh investments and open new businesses. Those who can afford to, are shifting businesses and families abroad or to other parts of the country.

Kaiser Bengali, a leading economist and a former advisor to the PPP Sindh provincial government, said that the impact of lawlessness does not remain confined to the retail and wholesale businesses, but hits the entire economic spectrum.

“When there is a law and order problem or a shutter down, even import-export gets affected,” he said. “Our exporters lose business because of unreliability of their supplies. The overall tax revenue collection is also affected because of production losses and closure of services industry.”

Dr. Ashfaque Hasan Khan, another leading economist, who served as an advisor to the finance ministry, said that daily wage-earners, including labourers, small shopkeepers and traders, suffer the most because of the forced closures and turmoil in the city.

“The impact of all the work hours lost in a day due to strikes and violence, along with the losses to the services industry, manufacturing, and trade can easily be up to 15 billion rupees or more,” he said.

No wonder that the investment climate remains negative in the city where 748 people were killed in ethnic, political and religious violence in 2010 and 242 in 2009, according to Human Rights Commission of Pakistan. This year, the number of killings has already crossed the 1,200-mark by the end of August, which includes more than 450 targeted murders, media reports say.

Dr. Khan said that Karachi, the main industrial and commercial hub of Pakistan, provides almost 68 percent of the total revenues to the national exchequer. “This means that the government loses more than three billion rupees only under this head, if a working day is lost in Karachi, which creates a snowball effect.

All the major political parties – including the ones in the ruling coalition – have so far failed to come up with a roadmap to restore peace and the rule of law in this beleaguered city besides making short-sighted and mostly inflammatory statements. For many people of the city, these parties have become part of the problem rather than offering a solution. The scepticism of the people appears justified because in most cases, criminals operate under the flag of this or that political party.

No wonder, there has been a growing crescendo at various levels that the army should be called in to deal with the situation. This reflects the growing frustration among ordinary citizens toward this democratic dispensation, which has failed to resolve contradictions and meet challenges despite repeated claims and promises.

The army may bring short-term relief, but the real challenge of making civilian institutions work, deliver and establish the rule of the law appears neither on the agenda nor is part of the mainstream discourse.

The Karachi situation can be manageable provided there is political will and direction – which unfortunately appears missing both in the ranks of the government and its, past and present allies.

As Karachi moves from one bloody cycle of violence to another after temporary truces, there hardly appears any ray of hope for the people of this city where the business of crime is easier and offers better yields than that of legitimate commercial ventures.