Protests, profits and losses: PTI's march and its business impact
Businesses are struggling as Pakistan Tehreek-e-Insaf’s (PTI) protests continue in full swing amid the government’s effort to contain them.
With the option of negotiations seemingly off the table, the threat of a deadlock between Islamabad and the PTI is imminent.
To combat violent protests and riots, Islamabad has taken measures to prevent such activities. The most significant of these has been the suspension of internet services.
While the suspension of internet might seem like a minor inconvenience to individuals, the fact of the matter is that it is extremely disruptive for business activities.
Businesses who operate online stores witnessed a decline in the flow of traffic to their websites and consequently a drop in sales. However, businesses who get the shortest end of the stick are those that cater to international customers.
This is because any delay in the delivery of services to customers abroad can result in an immediate termination of the contract, which Pakistani businesses currently hold. One such sector that has been suffering is the IT industry that is responsible for bringing in over $3 billion annually. Prime Minister Shehbaz Sharif recently set his sights to boost Pakistan’s IT exports to $25 billion – a goal he can bid farewell to if internet service remains compromised.
Aside from internet issues, transportation companies have been especially hard-hit due to the closure of major highways such as M-1 – M-4, M-11 and M-14. In Punjab and Islamabad, aside from the restrictions on intercity travel, even intra-city movement has been hindered due to the closure of major roads.
This is likely to spell bad news for other businesses as well, especially those that require the delivery of goods from warehouses to stores. This is because closed roads will increase delivery times, which might result in businesses failing to meet supply commitments to other vendors.
Another major concern plaguing economists and lawmakers in Islamabad alike is that of the protests affecting the inflow of Foreign Direct Investment (FDI). In the first quarter of FY 2024-25, Pakistan managed to increase its FDI by 48 per cent. However, when international investors witness political instability, they are likely to hold back further investments while even pulling investments out.
The protests come at a time when Pakistan’s economy and businesses are starting to recover, and this might just derail the strides that Islamabad has made in the positive direction – economically speaking. As the proverbial saying goes, when two elephants fight, it is only the grass that gets hurt. That is, unless you happen to be manufacturing anti-riot gear and non-lethal weaponry in Pakistan.
As per reports, Islamabad’s police requested extensive anti-riot gear such as 40,000 teargas canisters, 50,000 rubber bullets and 5,000 anti-riot kits. If protests last longer, it is entirely possible that more purchase orders will be issued. The protests could boost sales of businesses such as ATS Pakistan and Garmocorp that manufacture anti-riot gear, thus supporting this niche sector of the Pakistani economy.