Terror Attacks Roil Business in Pakistan’s Economic Heartland
PAKISTAN - 17 NOVEMBER 2009
By James Rupert and Farhan Sharif
Nov. 17 -- A spate of attacks in Pakistan’s Punjab as Islamic militants work more closely with the Taliban has raised business concern in the province that generates more than half of the country’s economic growth.
Forty-two people were killed last month in Punjab, home to Pakistan’s largest bank and companies producing clothing for retailers Levi Strauss & Co. and Gap Inc. Recent increases in surveillance and arrests are unlikely to reverse the violence that killed more than 220 people in the province in the first 10 months of this year, 20 percent more than 2008, said Ayesha Siddiqa, a Punjabi researcher on military and security issues.
The Karachi Stock Exchange 100 Index fell 2 percent last month, the most since January and only the third negative month this year, as bombings and militant assaults in major cities nationwide hurt investor confidence.
“The implications of this war spreading to Punjab are pretty severe,” said Standard Chartered Plc economist Sayem Ali in Karachi. Punjab represents 55 percent of Pakistan’s gross domestic product, he said. With foreign direct investment down by 60 percent in the three months to September, “our domestic security problems cloud companies’ strategies for coming back into Pakistan any time soon.”
Since the army began its biggest anti-Taliban offensive on Oct. 17 near the border with Afghanistan, bombings have killed about 350 people nationwide, mostly civilians.
Cricket Ambush
While Punjab has seen fewer terrorist attacks than Pakistan’s ethnic Pashtun northwest, guerrillas in Lahore attacked three police headquarters last month and ambushed the Sri Lankan national cricket team’s bus in March. Militants last month raided the army headquarters in Rawalpindi, also in Punjab. The province is home to about half of the country’s 180 million people.
The government must continue to stand up to the guerrillas or “the violence will continue to spread and investors will not feel safe anywhere” in Pakistan, said Habib-ur-Rehman, who manages $48 million of stocks and bonds at Karachi-based Atlas Asset Management Ltd.
Punjab is home to much of Pakistan’s textile sector and the nation’s largest bank by market value, MCB Bank Ltd. Textiles account for two-thirds of the country’s exports in a $165- billion economy.
Pakistan’s overseas direct investment fell 58 percent to $463 million in the three months ended Sept. 30, from $1.1 billion a year ago, according to data from the central bank.
Surveillance Cameras
“We have to keep so many security guards, set up surveillance cameras at the factories,” said Raza Mansha, chief executive of D.G. Khan Cement Ltd., Pakistan’s second-biggest cement maker, based in Lahore, Punjab’s capital and the country’s second-largest city. It “adds to our non-productive expenses and gives foreign visitors a bad impression.”
D.G. Khan Cement and MCB Bank are part of the Nishat Group, Pakistan’s largest industrial group. D.G. Khan shares fell 16 percent in October and have risen 4.3 percent this month. MCB was down 4 percent in October and is up 7 percent this month.
The benchmark share index has gained 56 percent this year after losing 59 percent in 2008. It rose 2.6 percent yesterday.
Interior Minister Rehman Malik told reporters last month that at least two Punjab-based groups -- Jaish-e-Muhammad (Soldiers of Muhammad) and Lashkar-e-Jhangvi (the Army of Jhang, a southern Punjab city) -- were operating jointly with the Taliban and al-Qaeda to attack the Pakistani state.
Limited Crackdown
Still, Pakistan’s crackdown on jihadist groups in the province has been limited, and won’t reverse the decades of growth that have made the militant groups a durable part of the political landscape, said Siddiqa.
“The state’s response really has been business-as-usual -- selective pressure” rather than a systematic campaign against Islamic radicalism, Islamabad-based Siddiqa said in a phone interview.
For Umer Mansha, chief executive officer of Lahore-based Nishat Mills Ltd., that’s a worrying message. His company produces garments for San Francisco-based Levi-Strauss, the closely held maker of blue jeans and Dockers pants, and Gap, based in the same U.S. city and operator of the Old Navy and Banana Republic chains.
“Textile buyers like to come, see and feel the product,” Mansha, whose company is also part of the Nishat Group, said in an interview Nov. 12. “Buyers are simply not willing to come here. It’s very hard to get new clients.”
More Than Last Year
More than 10,000 Pakistanis -- civilians, security forces and militants -- have died in the country’s violence this year, a rate 75 percent higher than last year’s record, according to the New Delhi-based Institute for Conflict Management.
“The tactics used in recent attacks in Punjab, plus the literature recovered by police in making arrests, shows that there is more coordination and contact now between Punjab militants and the Arabs of al-Qaeda,” said Muhammad Amir Rana, director of the Islamabad-based Pak Institute for Peace Studies.
Punjab Home Ministry and police officials didn’t respond to phone calls and e-mail messages asking how many alleged perpetrators have been detained in the province.
The “poverty of southern Punjab in particular, and the covert support and funds that militants have had” from Arab donors and Pakistan’s military, “have let them build durable organizations,” said security researcher Siddiqa. “Militancy in Punjab is now a fixture.”
Source: Bloomberg
PAKISTAN - 17 NOVEMBER 2009
By James Rupert and Farhan Sharif
Nov. 17 -- A spate of attacks in Pakistan’s Punjab as Islamic militants work more closely with the Taliban has raised business concern in the province that generates more than half of the country’s economic growth.
Forty-two people were killed last month in Punjab, home to Pakistan’s largest bank and companies producing clothing for retailers Levi Strauss & Co. and Gap Inc. Recent increases in surveillance and arrests are unlikely to reverse the violence that killed more than 220 people in the province in the first 10 months of this year, 20 percent more than 2008, said Ayesha Siddiqa, a Punjabi researcher on military and security issues.
The Karachi Stock Exchange 100 Index fell 2 percent last month, the most since January and only the third negative month this year, as bombings and militant assaults in major cities nationwide hurt investor confidence.
“The implications of this war spreading to Punjab are pretty severe,” said Standard Chartered Plc economist Sayem Ali in Karachi. Punjab represents 55 percent of Pakistan’s gross domestic product, he said. With foreign direct investment down by 60 percent in the three months to September, “our domestic security problems cloud companies’ strategies for coming back into Pakistan any time soon.”
Since the army began its biggest anti-Taliban offensive on Oct. 17 near the border with Afghanistan, bombings have killed about 350 people nationwide, mostly civilians.
Cricket Ambush
While Punjab has seen fewer terrorist attacks than Pakistan’s ethnic Pashtun northwest, guerrillas in Lahore attacked three police headquarters last month and ambushed the Sri Lankan national cricket team’s bus in March. Militants last month raided the army headquarters in Rawalpindi, also in Punjab. The province is home to about half of the country’s 180 million people.
The government must continue to stand up to the guerrillas or “the violence will continue to spread and investors will not feel safe anywhere” in Pakistan, said Habib-ur-Rehman, who manages $48 million of stocks and bonds at Karachi-based Atlas Asset Management Ltd.
Punjab is home to much of Pakistan’s textile sector and the nation’s largest bank by market value, MCB Bank Ltd. Textiles account for two-thirds of the country’s exports in a $165- billion economy.
Pakistan’s overseas direct investment fell 58 percent to $463 million in the three months ended Sept. 30, from $1.1 billion a year ago, according to data from the central bank.
Surveillance Cameras
“We have to keep so many security guards, set up surveillance cameras at the factories,” said Raza Mansha, chief executive of D.G. Khan Cement Ltd., Pakistan’s second-biggest cement maker, based in Lahore, Punjab’s capital and the country’s second-largest city. It “adds to our non-productive expenses and gives foreign visitors a bad impression.”
D.G. Khan Cement and MCB Bank are part of the Nishat Group, Pakistan’s largest industrial group. D.G. Khan shares fell 16 percent in October and have risen 4.3 percent this month. MCB was down 4 percent in October and is up 7 percent this month.
The benchmark share index has gained 56 percent this year after losing 59 percent in 2008. It rose 2.6 percent yesterday.
Interior Minister Rehman Malik told reporters last month that at least two Punjab-based groups -- Jaish-e-Muhammad (Soldiers of Muhammad) and Lashkar-e-Jhangvi (the Army of Jhang, a southern Punjab city) -- were operating jointly with the Taliban and al-Qaeda to attack the Pakistani state.
Limited Crackdown
Still, Pakistan’s crackdown on jihadist groups in the province has been limited, and won’t reverse the decades of growth that have made the militant groups a durable part of the political landscape, said Siddiqa.
“The state’s response really has been business-as-usual -- selective pressure” rather than a systematic campaign against Islamic radicalism, Islamabad-based Siddiqa said in a phone interview.
For Umer Mansha, chief executive officer of Lahore-based Nishat Mills Ltd., that’s a worrying message. His company produces garments for San Francisco-based Levi-Strauss, the closely held maker of blue jeans and Dockers pants, and Gap, based in the same U.S. city and operator of the Old Navy and Banana Republic chains.
“Textile buyers like to come, see and feel the product,” Mansha, whose company is also part of the Nishat Group, said in an interview Nov. 12. “Buyers are simply not willing to come here. It’s very hard to get new clients.”
More Than Last Year
More than 10,000 Pakistanis -- civilians, security forces and militants -- have died in the country’s violence this year, a rate 75 percent higher than last year’s record, according to the New Delhi-based Institute for Conflict Management.
“The tactics used in recent attacks in Punjab, plus the literature recovered by police in making arrests, shows that there is more coordination and contact now between Punjab militants and the Arabs of al-Qaeda,” said Muhammad Amir Rana, director of the Islamabad-based Pak Institute for Peace Studies.
Punjab Home Ministry and police officials didn’t respond to phone calls and e-mail messages asking how many alleged perpetrators have been detained in the province.
The “poverty of southern Punjab in particular, and the covert support and funds that militants have had” from Arab donors and Pakistan’s military, “have let them build durable organizations,” said security researcher Siddiqa. “Militancy in Punjab is now a fixture.”
Source: Bloomberg
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