Prior to the worldwide recession, Pakistan was considered an attractive region for investment owing to a liberal investment policy. However, in present times the situation has completely changed, with the country losing its high investment value for both domestic and international investors. One of the main reasons behind this issue is political instability. A weak government, inefficient political parties and instable political culture, amalgamate to create the basis for a politically instable state. Similarly, in Pakistan, there is deteriorating law and order situation and terrorism is on a rise since the 9/11. Terrorism is causing huge losses to the industrialized and trading sectors. The rising political obstacles in the country are having a negative impact on the economy and stock business. President Asif Ali Zardari is criticized from opposition parties after the Supreme Court struck down a reprieve that had protected the increasingly unpopular leader and several of his political allies from corruption charges. The ambiguity regarding corruption cases against some ministers, advisors and members of parliament has created uncertainty among the businessmen. Due to the IMF demand, the government decided to increase the power tariff which has led to unstable deliveries to foreign buyers and investors by our export oriented industries. The loss of export orders has now become common and large numbers of importers have shifted to other regional countries. The MNC’s prefer to invest in a location that is politically stable but in Pakistan due to strikes, riots, suicide bombings etc the risk of investment has increased. Therefore investors are finding their safety nets in countries such as India and China. Also due to the political structure in the country, the tax exemption provided to the elite section of the society is unfair and needs to be reduced. Moreover, practices such as red tapism and long awaited departmental procedures are barriers in...
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