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Unrest in Pakistan Disrupts Industry Exports

The next few weeks are an uncertain time for Pakistan mills after the assassination of Benazir Bhutto on Dec. 27 and the violent unrest that followed.

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LAHORE, Pakistan — The next few weeks are an uncertain time for Pakistan mills after the assassination of Benazir Bhutto on Dec. 27 and the violent unrest that followed.

Though it is relatively more secure in the northern textile cities of Punjab, like Lahore and Faislabad, Karachi, the country's largest city, main industrial and financial capital and port, has been on fire this past week and the security situation remains precarious there.

Abbas Hussain, the general manager, merchandising, of Matrix, an apparel sourcing company based in Lahore, who handles accounts such as Blue Marlin and Five Star, said, "There will definitely be labor issues if there are more transportation strikes. First, there was the countrywide three-day strike during the official mourning period from Friday the 28th to Sunday the 30th.

"We are hoping that this week things go back to normal, that is at least what we are telling our clients. We are anticipating shipment delays by two weeks. It is impossible to have a contingency plan under the circumstances. If you interrupt the flow of production, it takes time to build the momentum again, at the least three to four days. The political and security situation is so uncertain. We are certainly nervous."

However, Nadeem Saigol, vice president, operations, at Matrix, maintained, "The manufacturing sector in Pakistan is not substantially affected by political strife. Unlike regional political instability in Bangladesh, where manufacturing faced shutdowns for approximately 25 percent of the year due to political strife, Pakistan has not witnessed that kind of production loss either historically or currently. Pakistan does not have a tradition of a general strike lasting beyond two to three days or of sustained public strikes, despite media hype to the contrary.

"I think media perception has much more impact on export markets and, therefore, production in Pakistan, than any political reality on the ground no matter how serious," he added. "This is in sharp contrast to Bangladesh, where there were significant strikes-complete shutdowns for three months in 2007, with thousands of businessmen and political leaders arrested, but little or no media hype in the West."

Saigol said production losses of "perhaps a week or so will be more limited to Karachi, certainly less than that nationally, and even less in the industrial heartland of Punjab."
Fuad Mirza, chief executive of Leisure Apparels in Karachi, said security issues present more of a challenge in that multiethnic city of 15 million. Leisure Apparels mostly produces men's knit tops for U.S. importers like Oved Apparel in New York.

"After the three to four days in the last week of December, the factories in Karachi had been shut down, at 2 p.m. on Monday, the 31st, the first working day, when there was a very serious rumor that spread like wild fire that there had been another assassination and violence would ensue on the streets again. All the factories were again hastily shut down and their premises evacuated," Mirza said, adding that the company had a shipment leaving on Thursday, Dec. 27th, the day of Benazir Bhutto's assassination, "which we finally managed to quickly send on Monday morning before the factory got shut again in the afternoon. We're hoping our buyers will be sympathetic with us and not exercise a penalty due to the unavoidable delay."

Mirza described the situation in the country as tense. "There is definitely panic being created with rumors and random firing on Karachi's streets by unknown assailants. More than 600 cars were burnt on the roads of this city in the last few days and though we're hoping the situation will normalize, workers are right now averse to leaving their homes."

But Mirza said the knitwear industry in Pakistan is, in his opinion, "on its way out as it is. I am afraid that now that there is no U.S. quota, clients will have an added reason to stay away and prefer to go to mills in China, India, Sri Lanka and Bangladesh."