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 1. ISSUE
As a country of choice, I choose Pakistan and demonstrating its risk assessment for doing business
investments in tourism and hospitality sector. Pakistan is the world's 36th-largest country by total area,
covering just under 800,000 square kilometers. Iran, India, China, and Afghanistan are among the
nations that border this one.

Despite having good things of this country when investors are coming forward to doing business, they
are facing numerous issues such as:

1.1 Political instability:

Pakistan has become a political flashpoint because of rising political tensions and the struggle for power.
Pakistan is a democratic country where frequent government changes and military intervention are a
norm. Due to political conflict, multiple investment projects on tourism sector are facing crisis.
Opposition party’s strike, protest, and ruler party towards hardline against opposition party bring unrest
situation among the cities.

Terrorist attack
Throughout the country, there is an elevated risk of terrorism and sectarian violence. Tehreek-e Taliban
Pakistan (TTP), an umbrella organization of groups primarily based in the former Federally Administered
Tribal Areas, poses the most serious terrorist threat (FATA). (Anon., n.d.)

Figure 1 Terrorist incidents Pakistan (Wikipedia)

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1.2 Economical:
Concerns about Pakistan's economy are growing once more as foreign reserves decline, the value of the
local currency declines, and inflation remains at decades-high levels.

1.3 Depleted Infrastructure:

One of the most important concerns encountering Pakistan's tourism industry is poor road access, an
underdeveloped hospitality sector and routes, and a lack of basic tourist facilities.

1.4 Bribery and corruption

Petty bribery, nepotism, and the abuse of power are just a few ways of the many ways corruption
manifests itself in Pakistan. People frequently need to pay small bribes even to access basic services.

2. BACKGROUND
Pakistan is a geographically diverse country, boasting some of the world's highest mountains in the
north and sandy beaches on its coast in the south. Because of this many investors have already invested
in many sectors. Many hotels and motels are being built by iconic design to attract the tourist for
providing accommodation. Over decades Pakistan got many foreign investment FDI country from China,
UK, Hong Kong, and many others. Beijing is now Islamabad's biggest creditor; China has significantly
increased its ability to influence Pakistan's economy in recent years. The International Monetary Fund
estimates that by April 2021, this external debt had grown to $90.12 billion, with $24.7 billion ($27.4
percent) of Pakistan's total external debt owed to China (IMF). (Younus, 2021)

Whenever we are scrolling Facebook, YouTube, or other social media we are fascinated by Kashmir’s
beauty but lack of connectivity, poor road conditions it takes time to visitor to go there and investors
those who gives many hotels and motels over there are not getting enough profit due to lack of tourists.

Tourism in Pakistan has been severely affected by terrorist activities. Pakistan was viewed as "unsafe" by
the international community because of the rise in terrorist activity. It was difficult for Pakistan's tourism
industry and economy to grow because of its frequent bombings, targeted killings, drone attacks, and
bloodshed. Many of international tourists are discouraged to travel Pakistan these reasons.

3.Analysis
Challenges to doing business in tourism and hospitality sector:
3.1 Social challenges:
When international tourist comes to visit a particular place sometime, we can see that some of drivers
or street hawkers are taking advantage for taking extra money for selling products. And these types of
things already witnessed many people on social media. Some tourism company nowadays provide
guides so that tourists can move freely without hassle.

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3.2 Negative media coverage:
Pakistan's image has undergone globally as a result of media depictions that only highlight the country's
tragic accidents, bombings, violence, and other societal problems. If a company boosting, it’s tourism
advertisement on social media due to media news tourist might be less than expectations. (Elahi, n.d.)

3.3 Regulatory process:

To build and develop international standard hotels in Pakistan, the investor must go through several
stages, including approval of the building plan, classification of the hotel, registration of the hotel,
license application, training of hotel staff, and optimization of the hotel with international standards,
among others.

3.4 Online rental apps:

Nowadays many companies use their property for rental purposes where travelers can easily find their
homes. In countries like USA, UK, Canada and in other countries Airbnb is one of the popular apps or
sites for booking house or hotel. In Pakistan Airbnb is available only these cities Karachi, Lahore,
Islamabad, Peshawar, Quetta, Murree, Faisalabad, Hyderabad, Sargodha, Sialkot, Bahawalpur, Sukkur.
(Anon., 2022)

Those who have houses for rent except these areas can’t get easily foreign tourist since foreigners are
familiar with Airbnb so a good proper place also essential for tourism business.

3.5 Lack of government support

When a country facing economic crisis, terrorism threat that moment government must give full support
to the private sector so that they feel encourage to invest. But Pakistan has lack of support in this side.

4.Risk assessments
The tourism industry operates in a fast-paced environment with many interconnected sectors. As a
result, it is constantly changing and vulnerable to unexpected crises. Health threats such as the 2020
global coronavirus pandemic, natural disasters such as earthquakes and floods, political unrest, and
terrorist attacks are all examples of crises.

Environment risk:
Pakistan faced several disasters in recent years by floods, earthquakes and other natural disasters.
Recently Kaghan valley which is one of the tourist spots has witnessed devastating flood. Due to the lack
of tourists in the valley, those working in the tourism sector are losing tens of millions of rupees. More
than 50,000 people are employed in tourism-related activities in the valley, according to a careful
estimate. However, since fewer tourists visited the area after the floods, many people unemployed for
the past two months. (Ali, 2022)

Political risk:
Political unrest is very common in Pakistan. Recently we have seen that former prime minister
Imran khan wounded by an assassin and saved by chance. (Mogul, 2022) So, this is troublesome
for everyone who are doing business.
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Economic risk
The current government faces numerous challenges, including surging inflation, massive
depreciation of the Pakistani rupee against major world currencies, rising fuel prices, and
depleting foreign currency reserves.

Net reserves of $8.8 billion

Commercial bank reserves of $5.67 billion

Current account deficit for the year of 2021-2022 is $17.41 billion

A balance of trade deficitof 2021-2022 is $44.71 billion

Figure 2 Source BloombergTax.com

Many of foreign investors are showing lack of interest for foreign direct investment because of Pakistan
under strain economy.

By following number of strategies, a company can adopt to manage risk such as:

Avoid the risk:

If company check the possible date of flood or disaster, they can cancel their tour time of that tim

Reduce the risk

Reduce the risk by implementing initiatives such as appropriate safety standards, providing appropriate
equipment, ensuring buildings safety, and implementing adequate health and safety procedures.

Transfer the risk

For tourism business third party insurance companies are very effective to reduce the risk.

Recommendations
Throughout the report I have already discussed how businesses are being challenge on tourism sectors
and some of crucial risks are impacted on this sector. As Pakistan is blessed with natural beauty,
historical scenes so there is emerging economic growth possibilities have this sector. I would suggest
some recommendations

Formulations and implementation policies:

Governments should implement broader tourism policies, rules, and regulations that explore the
socioeconomic goals for tourism growth while also encouraging private sector participation in order to
attract investments and encourage tourism both nationally and internationally.