KARACHI: IT IS a measure of the limited appeal of Karachi, Pakistan’s bumptious commercial capital, that eager taxi drivers try to lure their few tourist passengers to a laundry.

Admittedly, Karachi’s ”dhobi ghats” are perversely impressive in a modern world of Whirlpools; kilometres of downtown riverbank are strewn with shalwar kameez, carpets, undies and so on being pounded, washed and bleached under burning sun by scores of minions, a scene an Asian Hogarth might have conceived.

But a more eloquent statement of how Pakistan struggles to appeal, and why that is a worry for us all in an age of Islamist terror and suicide bombers, is that in a city bursting with a population equal to Australia, this supposed hub of south-Asian banking and business has just two international-standard business hotels. Both are shabby embarrassments to their global brands and neither have been full for years. By contrast, even Manila – capital of south-east Asia’s most infamous economic basket case – boasts the usual 30-odd Hyatts, Shangri-Las and Hiltons.

Is it any wonder? The Pakistani family that owns the Karachi Marriott has seen several of its other properties in Lahore, Rawalpindi and Peshawar devastated by suicide bombings in recent years, killing scores. Their Karachi flagship is sited next door to the US consulate here, which might provide comfort to travellers.

Or might not. Breakfast titter among the Marriott’s few foreign businessmen – usually bluff resource types sussing out Pakistan’s underdone energy sector – has a disquieting morbidity about it, diners speculating when, rather than if, this hotel will be bombed too.

Pakistan’s sad reality is that it repels business people. With its 170 million population – 30 million more than BRIC member Russia and just shy of Brazil’s 190 million – Pakistan should at least be knocking on BRICs’ door. Except its economic output is an eighth that of Russia, a ninth of Brazil’s. Singapore, with a 30th of Pakistan’s population, has a similar-sized gross domestic product (GDP).

With the demise of Dubai and advantaged by a deeper hinterland, Karachi should be Corporate Islam’s thrusting Mumbai or Hong Kong only, given Pakistan’s chumminess with roaring China and strategic proximity to Middle Eastern oilfields, boomier. Instead, it’s a corporate pariah, with little of Mumbai’s buoyancy and traffic jams or Hong Kong’s rocketing real estate.

Local plutocrats do not recommend venturing onto Karachi streets without a security detail. They themselves move around by armoured car. Last week, as I wandered cashless along I.I. Chundrigar Road, Pakistan’s Wall Street, looking for an ATM that worked, this simple act immediately attracted an impromptu police escort. One cop said I was ”very brave, as a foreigner” to walk alone in this, the business district.

Chronic national dysfunction is evident too at the State Bank of Pakistan, the country’s central bank, which claims it instils ”world’s best practices” of transparency and corporate governance and where this correspondent had been invited to interview Syed Salim Raza, the bank’s governor, whose brother happens to run the government-owned National Bank of Pakistan, the country’s biggest commercial bank.

The SBP meeting was arranged back in March. In mid-May, its PR flack asked for advance questions and pledged to arrange an entry visa. So far so good; but what happened next is the stuff of comedy, except it happens not just to visiting hacks but also to businessmen with deep pockets, making Pakistan lose much-needed investment with, by extension, international consequences.

First, the promised visa wasn’t properly organised, prompting a four-hour wait under eager threat of deportation at the airport while the bureaucracy sorted itself out. Such things happen; but the best, or worst, was to come on meeting the SBP governor.

We arrived early at the central bank. Our bona fides were in the security book at the SBP’s front gate, and we were waved through bomb-proof bollards by guards into the compound, running a gauntlet of touts, currency-wallahs and scrip-dealers.

We were ushered into Raza’s plush suite by his aides. Various hangers-on fussed to make us comfortable, offering tea, cakes, sweets and hospitality. We then realised we didn’t have a copy of the advance questions. We asked Raza’s secretary if she could kindly photocopy them. Her answer was an unexpected scoop.

”It won’t be necessary to copy your questions, Mr Ellis, because the governor has just resigned,” she said. Resigned? Raza was barely halfway through his basic three-year term. She explained that he had submitted his resignation on May 6, a month earlier.

As Pakistan’s markets took in our news of his shock resignation, we asked why we had been invited to the most dangerous city in one of the world’s most dangerous countries if they knew the boss planned to become the ex-boss. Why not postpone until things had become clearer internally? The embarrassed flack couldn’t answer, because of the complex politics of the moment. Raza’s younger brother, Syed Ali Raza, the boss at the National Bank of Pakistan, told us his elder brother had a ”bad back that had troubled him for a while”.

Two years since becoming an awkward democracy, Pakistan is in a parlous state. Military dictator Pervez Musharraf is gone, but so has the buoyant economy that marked his seven years in office. Musharraf was a winner from 9/11, positioning Pakistan for aid and debt relief from the US in return for Western support as a front-line state in the war on terror.

In 2005, Musharraf beamed in the adulation of no less than the World Bank, which noted that chronic corruption had abated and that Pakistan was south Asia’s most reform-minded economy, besting India. When he left in 2008, the economy was ticking along at 7 per cent, having expanded by a China-like 9 per cent in 2004-05.

But under the quixotic presidency of Asif Ali Zardari, the assassinated Benazir Bhutto’s widower, Pakistan has regressed dramatically. Zardari got an $11 billion emergency bailout in November 2008 from the International Monetary Fund, in return for a promise to institute deeper reforms in the economy. These reforms haven’t happened. The civil war has diverted money to the military, the rupee has fallen 40 per cent and sovereign debt has been downgraded near to default level. GDP growth estimates range from 2 per cent to 5 per cent at best. Pakistan needs at least 6 per cent to chew into an unemployment rate of 15 per cent, with jobs helping keep fundamentalists at bay. All that worries a great many people.