Effects of COVID-19 on businesses

On 11 March 2020 the World Health Organisation (WHO) has declared COVID-19 outbreak as a global pandemic. On 1st January the US also declared the outbreak of COVID-19 as public health emergency and banned travel from European nations to US. The world’s most affected economies are the European Union, Japan, US, South Korea, Taiwan and Vietnam. Likewise it affected 200 countries of the world including Pakistan that was already facing economic crisis and heavy trade deficit. The business community has been under great pressure on account of doing business at very high cost and the situation was getting bad to worst specially in the textile sector which has remained pride of Pakistani exporters. Frequent adjustment in power and gas tariff has been the main worry of business community but due to intervention of FPCCI they were able to convince the Prime Minister who accepted their demand and prices of electricity were not increased, otherwise the business community was all set to close their industrial units across the country. While things were getting in to shape sudden appearance of corona virus across the globe hit the world economy when everything came to stand still. The impact was so strong that business community was not at all prepared to face such havoc that there was no alternative except the government that could come forward and rescue the situation. Rightly so the government came forward to help the business community and announced certain economic relief package to construction sector where as package was needed in all the sectors of economy big or small. Small traders are the most hit as thousands of workers have been rendered jobless. Fixed expenditures that run in to millions are to be paid regularly whether industry is operational or shut down. Revival of construction industry and incentives given shall go a long way in meeting challenges and this will help revival of large number of industries associated with the construction activities but it will take time as the provincial governments have their own policies on lock down, as is apparent centre and provinces are not on one page specially Sind.
COVID-19 has played havoc in the entire world resulting in shutting down all type of communication by rail road air and by sea. All businesses came to sudden halt causing huge unemployment throughout the world. Closure of universities college’s schools and kinder garden nurseries created serious problems for the parents. It all started in December 2019 from Woohan city of China, seeing the magnitude of Corona virus China ordered complete lock down of city but not before the damage caused in initial days. The worst hit was Italy Spain and USA. Initially all countries took it lightly including Pakistan. People infected with Corona virus entered Pakistan in the shape of air travellers and pilgrims coming from Iran near Taftan border and they were allowed to go to their respective provinces, while some of carrying the virus with them. Government immediately came in to action and introduced tests of all incoming travellers from anywhere in the world. Finding situation dangerous lock down was ordered throughout Pakistan. CM Sind was the first one to start the lock down and finally it was enforced on all the provinces. This lock down resulted in complete shutdown of industry throughout Pakistan; it had devastating effect in Karachi the hub of economic activity. It resulted in massive lay off of labour working in various factories. The business community felt badly hurt as they were unable to meet the export orders coupled with devalue of Pak Rupee further aggravated the situation. President FPCCI and Karachi Chambers of Commerce and Industry had series of meeting with PM and other functionaries and requested for compensation packages for the industry and lowering down the interest rate. After detailed deliberations the government lowered the rate but it was not welcomed by the business community, however it was brought down to single digit 9 percent that is still considered on higher side.PM announced cash Rs 12000 to daily wagers and unemployed to 1.2 million as per data recorded by NADRA under Ihsas Program, besides distribution of free ration to poor and subsidy on essential food items was given on items of daily use to be sold through CSD
Pakistan already facing shortage of foreign exchange and it has hit us badly as we are mainly dependant on foreign remittances. More than 10 million expatriates are working abroad and each month they send money to their families which at present are equal to our exports. They are the real earners of foreign exchange for Pakistan. Majority of people are employed in Middle East, UK and USA and unfortunately these are the regions which are mostly affected by corona virus. This is certainly going to affect our remittances that would result in more unemployment and would also affect our exports. What is worrying people is the unending confrontation between the government and opposition. Question arises can Imran Khan steer the country out of present crisis single handily with borrowed mandate or to take opposition on board and develop consensus in the larger interest of state.