Elites’ vested interests and investment climate – 14 Dec 2022

Pakistan will never attract genuine investment with this robber-baron, high-handed mindset

December is a month of grief for Pakistanis that has witnessed the break-up of Pakistan; the APS massacre with 148 deaths; and the carnage at the Parade Lane Mosque, Rawalpindi that claimed some 40 lives.

As recently as December 6, the incumbent rulers added yet another day of embarrassment to this month. The Capital Development Authority (read the government) sealed the iconic Centaurus Mall — on the pretext of non-compliance of regulations — within hours of an altercation between PM Shehbaz Sharif and the AJK Premier Sardar Tanvir Ilyas.

The authorities shut down 236 businesses, including dozens of international brands. As a result over 3,000 people, most of them daily wage earners, went out of work. Loss of livelihoods as well as big business activity at the Mall mattered little to the PM or his coterie.

This action only reinforced the ruthlessly royal mindset that rules the country. It is a class of people that get away for murder but can send the innocent and helpless even to the gallows.

The Mall was de-sealed late the same day after hundreds of workers took to the streets in protest. But what did Sharif and team end up doing? The signal it gave to the business community and the international brands was one of extreme caution: if you invest in Pakistan, risk is yours; you can be shut out or shut down any time.

Ironically the sealing of the Mall happened on the day when PM Shehbaz was reminding local and foreign investors of Pakistan’s “wonderful, huge business and investment potential” at the 21st Asia Pacific ICT Alliance Awards 2022 ceremony in Islamabad.

With the arbitrary closure of the Centaurus Mall I wondered if Pakistan has moved back in the last three decades or so. It reminded me of how the first Nawaz Sharif government had cancelled the Import Registration Licence of the Indus Motors. Chauhdry Shujaat Hussein, the then interior minister, allegedly wanted to take over the lucrative Toyota Production — hence the cancellation. The President of the Japanese company was shocked to know this. He sought a meeting with PM Nawaz Sharif, but was told he can meet the PM after two years.

The Japanese ambassador in Islamabad then swung into action, approached the PM and told him point blank: we cannot accept this blackmail; if the import licence is not restored, Toyota will wrap up operations in Pakistan. PM Nawaz eventually restored the registration.

Similarly, the historic Murree Brewery and the Hashoo Group of Companies (that also owns the Marriott and Pearl Continental Hotels) came under intense pressure in the mid-1990s, when former president Asif Ali Zardari expressed interest in buying some assets of these companies. The tax and police authorities were unleashed on the companies as part of harassment and intimidation.

“No way, we will die but not sell our brand to anyone,” the late Minoo Bhandara, the CEO of the Murree Brewery, had told me at his residence in Rawalpindi as he recounted the ordeal his company was going through those days.

Sadruddin Hashwani also endured similar harassments, prompting him to first move from Karachi to Islamabad and then to Dubai. He documented his experiences in his book Truth Always Prevails.

This represents a sad litany of official intimidation for the sake of vested interest. It also poorly reflects on sycophantic officials who bend forwards and backwards to please bosses to the total disregard for Rule of Law and the Ease of Doing Business.

Why should foreign investors stake their money in a country where top bosses tend to unleash tax and regulation officials on business and industrial houses — either for “raising revenues” or for arm-twisting into giving up businesses/industries of favourites? If there is no guarantee of protection against high-handed bureaucratic interventions, and where tax officials act like vultures to scare businesses either into paying bribes or exiting Pakistan, why should that country be a choice for any investor?

Pakistan will never attract genuine investment with this robber-baron, high-handed mindset that acts and reacts on personal whims against private enterprises. Investors want to optimise their profits not to share them with predatory officials or politicians.

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