Investment in Pak at increased risk over political and security fallout: Report

November 14th, 2007 - 10:23 am ICT by admin  

“Political risk is back and should be worrying investors. The vast majority of countries worldwide are classified as emerging markets where, increasingly, national political agendas will impact the operational effectiveness of foreign investors,” commented Adam Strangfeld, Research Director at Control Risks.

In its annual study of levels of global political and security risks, Risk Map 2008, Control Risks rates 57 per cent of emerging markets at medium political risk or above, indicating significant threats to foreign investment.

In many cases trends towards economic nationalism, a retreat to authoritarianism and reform fatigue are prompting concerns that politics will increasingly impinge on investment decisions.

The Asian region is gearing up for another election cycle of great significance, including critical ballots in Thailand and Pakistan, with investor concerns over political and security risks on the rise, the report said.

Given their importance in relation to natural resources and manufacturing, the fact that 60 per cent of emerging markets are rated, in whole or in part, at medium, high or extreme security risk should also be of concern to investors.

“Additionally, within the global risk environment there is also a growing gap between transnational risks - including terrorism, armed conflict, the impacts of climate change and pandemics - and the measures in place to counter them,” the report opined.

These risks have the potential to cause large number of human casualties and severe shock to economies, but attempts at mitigation are faltering, it added.

The severity of security risks to assets or personnel is likely to make business operations untenable. There is no law and order; conditions may verge on war or civil war. Foreign companies must strongly consider withdrawal.

According to report, countries with extreme security risk are Afghanistan; Burundi; Congo (DRC); C

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