Dubai
Two consecutive terror attacks in Pakistan’s financial capital, Karachi, delivered a blow this week to the country’s ability to attract foreign investment.
The Pakistan Taliban claimed responsibility for attacks on Jinnah International Airport on Sunday night and on a security force academy near the airport on Tuesday.
An attack on any airport, especially on Karachi Airport, will alarm a lot of foreign investors, said Huma Yusef, London-based Senior Analyst on Afghanistan and Pakistan at Control Risks.
Jinnah International is the country’s largest international and domestic airport and connects to holiday destinations in Thailand as well as economic capitals Dubai, Istanbul and London.
Western airlines do not currently fly to Pakistan leaving other international airlines such as Emirates, Etihad Airways and Qatar Airways to serve the country.
Foreign direct investment (FDI) into Pakistan has fallen in recent years from $4.5 billion in 2009 to $2.1 billion in 2012. It recovered to $2.7 billion in 2013, according to data from the State Bank of Pakistan.
Asif Durrani, Pakistan’s Ambassador to the UAE said in a phone interview that the Pakistan economy is “resilient” and that the oil and gas, coal and hydro power generation and the communications sectors are attracting FDI.
However, Anjalika Bardalai, London-based Asia Senior Analyst for the Eurasia Group, said the Karachi attacks underline existing security issues deterring foreign investment flows.
“The security situation since 2009 has been absolutely dire,” she said.
Saad Zaman, Chairman of Burj Captal, a Karachi based investment firm, said Pakistan is an “attractive opportunity but you need a stable environment.”
Sikander Sultan Khawaja, executive vice president of the Pakistan Business Council (PBC) in Dubai, meanwhile, said that Pakistani expatriate businessmen are bullish on the investment opportunities despite security concerns.
“We are all investing back into Pakistan … overall, the sentiment of Pakistani businessmen is very positive,” he said.
However, security remains an underlying issue.
“Security has obviously been a concern and I think that the incidents of the last two days are a reflection of overall perceptions,” Zaman said.
Questions have been raised over the Pakistani government’s ability to protect assets sensitive to militant attacks following this week’s incident.
Yusef, however, pointed out that on Sunday the security forces successfully blocked the militants from reaching the commercial passenger terminal. On Tuesday, the attackers fled after a gunfire battle with security forces.
