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Economy of Karachi

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Clifton is fast becoming residential and commercial hub of Karachi
ICBC Tower in Clifton Karachi

Karachi is the financial and industrial capital of Pakistan. As of 2019, Karachi has an estimated GDP (PPP) of $164 billion.[1][2] The city accounts about half of the total collections of the Federal Board of Revenue, out of which, approximately half are customs duty and sales tax on imports.[3] Karachi produces about 30 percent of value added in large-scale manufacturing,[4] 25% of the GDP,[5] the World Bank identified Karachi as the most business-friendly city in Pakistan.[6] In 2010, research by the global human resources company Mercer found Karachi to be the most inexpensive city in the world.[7]

GDP

Pakistan and its two largest city economies. Source:[8]

A substantial chunk of Sindh’s GDP, around 95% is attributed to Karachi[9][10] (the GDP of Sindh as a percentage of Pakistan’s total GDP has traditionally hovered around 25%/30%).[9][10][11][12] Karachi’s GDP was estimate in 2015 to be around 25% of the total GDP of Pakistan. As of 2014, it was reported as $114 billion.[13] A PricewaterhouseCoopers study released in 2009, which surveyed the 2008 GDP of the top cities in the world, calculated Karachi’s GDP (PPP) to be $75 billion (projected to be $193 billion in 2025 at a growth rate of 5.5%). It confirmed Karachi’s status as Pakistan’s largest economy, well ahead of the next two biggest cities Lahore and Faisalabad, which had a reported GDP (PPP) in 2008 of $40 billion and $20.5 billion, respectively.[14] Karachi's high GDP is based on its large industrial base, with a high dependency also on the financial services sector. Textiles, cement, steel, heavy machinery, chemicals, food, banking and insurance are the major industrial sectors contributing to Karachi's GDP.

Revenue collection

In line with its status as a major port and the country's largest metropolis, it accounts for most of Pakistan's revenue generation. According to the Pakistan Federal Board of Revenue's 2006-2007 year-book, tax and customs units in Karachi were responsible for 70.75% of direct taxes, 33.65% of federal excise tax, and 23.38% of domestic sales tax.[3] Karachi also accounts for 75.14% of customs duty and 79% of sales tax on imports.[3] Therefore, Karachi collects a significant 53.38% of the total collections of the Federal Board of Revenue, out of which 53.33% are customs duty and sales tax on imports.[3] Revenue collected from Karachi includes revenue from some other areas since the Large Tax Unit (LTU) Karachi and Regional Tax Offices (RTOs) Karachi, Hyderabad, Sukkur and Quetta cover the entire province of Sindh and Baluchistan.[3] Karachi's contribution to national revenue is around 55%.

Business districts

I. I. Chundrigar Road (formerly McLeod Road), also known as the Wall Street of the city, remains the historical commercial hub of Karachi and is its main CBD. However over the years, notable business and trade activity has appeared in other conurbations of the city, including the Shahrah-e-Faisal thoroughfare, MT Khan road, Mai Kolachi road and the Clifton and Defence areas of the city.

The recent trend of ICT (information and communications technology), electronic media and call centres has become a significant part of Karachi business hierarchy. Call centres for foreign companies have been targeted as a significant area of growth, with the government making efforts to reduce taxes by as much as 80 percent in order to gain foreign investments in the IT sector.

Even Dr. Arif Alvi, President of Pakistan, has launched an initiative to help promote education, research and business opportunities in Artificial Intelligence, Blockchain, and Cloud-based computing which will educate IT technology to 10,000 students annually.


Karachi has more than 3000 Software Companies and growing day by day which accounts to almost half of the whole countries IT Industry.

Media

The city has also firmly established itself as the electronic media capital of the country; most of Pakistan's media television channels are headquartered here, including Abbtakk News, CNBC Pakistan, Dawn News, TV One, Indus Media Group, ARY Digital, BOL Network, AAJ TV, KTN NEWS, KTN, KASHISH TV and Geo TV. They generate huge revenues for the city in advertising and provide jobs and entertainment. As a sign of the growing strength of the electronic media sector, GEO TV is planning to start an additional 10 channels and for this purpose is setting up a 50-acre (200,000 m2) studio in the city.

Pakistan Stock Exchange

Pakistan Stock Exchange, formerly Karachi Stock Exchange is Pakistan's largest and oldest stock exchange with at least 540 companies listed during 2020.

It was declared the “Best Performing Stock Market of the World for the year 2002” with KSE-100 returning 112.2%.[15]

According to Bloomberg, Pakistan ranked third in 2014. And for the third consecutive year was among top 10 markets in the world (Source). International magazine "Business Week" declared KSE as one of the Best Performing Markets of the world. Similarly, the US newspaper "USA Today" termed Karachi Stock Exchange as one of the best performing bourses in the world.

By September, 2020, the year of global crisis and recession, PSX-100 was leading the global markets in correction with a return at 38.5% making PSX the best performer in Asia and fourth-best performing stock market in the world.[16]

Further information: Karachi Cotton Exchange and National Commodity Exchange Limited

Industry

Main article: Industry in Karachi

There are many cottage industries in the city as well. Karachi is also known as software outsourcing hub of Pakistan. It has a rapidly flourishing 'Free Zone' with an annual growth rate of nearly 6.5 percent. An expo center has also been set up in Karachi, which hosts many regional and international exhibitions including the IDEAS Defence Exhibition. [1] Dozens of new manufacturing units are also being built near the Pakistan Steel Mill. Farm businesses line the SuperHighway route. The Sindh Industrial Trading Estate (SITE) in Manghopir is the biggest industrial area of Pakistan. Other industrial zones are located in Landhi, Korangi, FB Area, North Karachi and Port Qasim.

Karachi is also home of major automobile manufacturing companies. Toyota is in the process of increasing production capacity to over 120,000 units per annum. Suzuki Motor Company is also located in Karachi. The manufacturing plant located in Bin Qasim has a production capacity of 150,000 vehicles per year. Among others, Millat Tractors, Daihatsu, HinoPak Buses and Trucks manufacturing plants are also located in Karachi. The now-defunct Adam Motor Company was formerly located in the city.

Work is being done to promote the development of higher value added textile products, most notably by Ayesha Tammy Haq, an attorney who also has a television talk show. She set up Pakistan Fashion Week, a showcase for Pakistan's emerging fashion industry.

The industrial estates in Karachi.

Name of Estate Location Established Area in Acres
SITE Karachi SITE Town 1947 4700[17]
Korangi Industrial Area Korangi Town 1960 8500[18]
Landhi Industrial Area Landhi Town 1949 11000[19]
North Karachi Industrial Area New Karachi Town 1974 725[20]
Federal B Industrial Area Gulberg Town 1987 [21]
Korangi Creek Industrial Park Korangi Creek Cantonment 250[22]
Bin Qasim Industrial Zone Bin Qasim Town 1970 25000[23]
Karachi Export Processing Zone Landhi Town 1980[24] 315[25]
Pakistan Textile City Bin Qasim Town 2004 1250[26]
West Wharf Industrial Area Keamari Town 430[27]
SITE Super Highway Phase-I Super Highway 1983 300[28]
SITE Super Highway Phase-II Super Highway 1992 1000[28]

Banking sector

View of the I. I. Chundrigar Road, heart of the financial district of Karachi

Karachi is the hub for Pakistan's banking and financial services sector and is home to Pakistan's Central Bank, the State Bank of Pakistan.

Nearly all banks that operate in Pakistan have their corporate headquarters in the city. These include:

See also: List of Banks in Pakistan

Trade Logistics

Despite the growth and development of transport infrastructure elsewhere in the country, Karachi remains the country's transport hub. The city's two ports, Port of Karachi (Pakistan's largest) and Port Qasim, are central to nearly all shipping in Pakistan. The airport of Karachi, Jinnah International Airport (also known as Quaid-e-Azam International Airport) is the largest and busiest airport in Pakistan and handles 6 million passengers a year. The airport also receives the largest number of foreign airlines; a total of 27 airlines fly to Jinnah International, predominantly from the Middle East and South East Asia. All of Pakistan's airlines use Karachi as their primary hub, including Pakistan International Airlines, Aero Asia International and Airblue.

Fisheries

Karachi is the biggest fishery hub in Pakistan. Fisheries play an important role in Karachi's economy. They provide employment to about 300,000 fishermen directly. In addition, another 400,000 people are employed in ancillary industries. It is also a major source of export earning. The Karachi Fish Harbour and Korangi Fish Harbour are two major fish harbours in Karachi. Fish are one of Karachi's main exports.

Challenges

Karachi is allegedly the worst affected by controversial population census '17 placing it at 14.91 million, whereas all estimates and reality checks point above 30 million.[33] With about 1100km2 of city proper, the population density would stand beyond 30,000 per km2, thereby ranking it at least 6th most dense city proper. The courts have been moved on the matter of 5% census audit. As of Q1-2021, even 2017 census is not published due to controversies and litigation.

That alone causes a spread of issues branching from flawed allocation of funds and representation in Parliament to housing, to mass transit, to environment and just about every facet of life in urban and suburbs.

Beyond that the city faces governance crisis bound by provisions of 18th Amendment in Constitution of Pakistan, giving all local body formation powers in hand of Province, with absolutely no room for intervention by federation; Rendering it a provincial dictatorship. Sindh Local Government Act 2013, thereby took away major municipal authorizations from Karachi Metropolitan Corporation under Mayor's Office, including planning and development, building control, solid waste management, water supply, sewerage and the like.

Beyond centralizing powers, the city, formerly a district, was declared a division, towns abolished in favor of independent districts, the count standing at 7 as of September 2020. This, along with presence of 6 cantonment boards covering allegedly at least 60% of city, introduced a divide in city's management and thence centralizing the co-ordination in hands of provincially administered bodies;[34] The damage of which was evident from chaos prevailing after August 2020 record rains and urban floods bringing commercial activity and peace to a halt, killing over 100 and displacing thousands.[35]

See also

References

  1. ^ "Karachi: The backbone of Pakistan". September 2020.
  2. ^ "| Finance Division | Government of Pakistan |".
  3. ^ a b c d e "Federal Board of Revenue Year Book 2006-2007" (PDF). Archived from the original (PDF) on 2010-09-25. Retrieved 2009-04-12.
  4. ^ Pakistan and Gulf Economist. "Karachi: Step-motherly treatment". Archived from the original on 2011-08-21. Retrieved 2007-10-15.
  5. ^ "ECONOMIC AND FINANCIAL ANALYSIS" (PDF). Supporting Public–Private Partnership Investments in Sindh Province (RRP PAK 46538). Retrieved 7 September 2020.
  6. ^ Dawn Group of Newspapers. "World Bank report: Karachi termed most business-friendly". Archived from the original on October 11, 2007. Retrieved 2007-10-15.
  7. ^ "Bloomberg; New York". businessweek.com. Archived from the original on 13 December 2010. Retrieved 27 April 2018.
  8. ^ "Urban world: Cities and the rise of the consuming class". Archived from the original on 2012-09-02. Retrieved 2012-09-02.
  9. ^ a b Social Policy and Development Center. "Provincial Accounts of Pakistan: Methodology and Estimates". Archived from the original on 2008-04-10. Retrieved 2009-01-01. {{cite web}}: |author= has generic name (help)
  10. ^ a b Dawn Group of Newspapers. "Sindh, Balochistan's share in GDP drops". Archived from the original on June 4, 2011. Retrieved 2009-01-01.
  11. ^ Dawn Group of Newspapers. "Sindh's GDP estimated at Rs240 billion". Archived from the original on June 14, 2008. Retrieved 2009-01-01.
  12. ^ Dawn Group of Newspapers (2 December 2004). "Sindh share in GDP falls by 1pc". Archived from the original on 2007-09-27. Retrieved 2009-01-01.
  13. ^ Centre for Risk Studies at the University of Cambridge Judge Business School. "Karachi factsheet: Lloyd's City Risk Index". Lloyd's City Risk Index 2015-2025. Lloyd's. Archived from the original on 24 November 2016. Retrieved 23 November 2016. {{cite web}}: |author1= has generic name (help)
  14. ^ "Global city GDP rankings 2008-2025". PricewaterhouseCoopers. Archived from the original on 13 May 2011. Retrieved 12 February 2010.
  15. ^ "CNN.com - Pakistan best 2002 market performer - Jan. 1, 2003". edition.cnn.com.
  16. ^ "Denmark and Pakistan: The Surprising Stock Markets That Outperformed in 2020". MarketCurrents WealthNet.
  17. ^ "Welcome to SITE Association of Industries". Archived from the original on 2015-10-01. Retrieved 2014-02-10.
  18. ^ "Welcome". www.kati.pk. Archived from the original on 5 October 2017. Retrieved 27 April 2018.
  19. ^ "LANDHI.ORG". landhi.org. Archived from the original on 31 August 2017. Retrieved 27 April 2018.
  20. ^ "North Karachi Association of Trade & Industry". nkati.org. Archived from the original on 7 March 2018. Retrieved 27 April 2018.
  21. ^ "FBATI- Federal B Area Association of Trade & Industry". www.fbati.com. Archived from the original on 21 March 2018. Retrieved 27 April 2018.
  22. ^ "Construction approved: Korangi Creek Industrial Park land up for grabs - The Express Tribune". tribune.com.pk. 20 November 2013. Archived from the original on 4 March 2016. Retrieved 27 April 2018.
  23. ^ "BQATI {Bin Qasim Association of Trade & Industry}". www.bqati.com.pk. Archived from the original on 23 September 2017. Retrieved 27 April 2018.
  24. ^ "Export Processing Zone Authority". www.pakistaneconomist.com. Archived from the original on 1 October 2017. Retrieved 27 April 2018.
  25. ^ "Welcome to EPZA". Archived from the original on 2014-02-17. Retrieved 2014-02-10.
  26. ^ "Textile City". Archived from the original on 2014-02-12. Retrieved 2014-02-10.
  27. ^ "West Wharf, Karachi". wordpress.com. 12 April 2013. Archived from the original on 15 March 2016. Retrieved 27 April 2018.
  28. ^ a b "Archived copy". Archived from the original on 2014-02-12. Retrieved 2014-02-10.{{cite web}}: CS1 maint: archived copy as title (link)
  29. ^ (Corporate Website Archived 2008-05-11 at the Wayback Machine)
  30. ^ "Welcome to Barclays Pakistan". Archived from the original on 2010-02-22. Retrieved 2010-02-28.
  31. ^ "Faysal Bank". Archived from the original on 2010-03-04. Retrieved 2010-02-28.
  32. ^ "RBS the Royal Bank of Scotland - Pakistan". Archived from the original on 2010-03-09. Retrieved 2010-02-28.
  33. ^ "Supreme Court accepts PSP's petition questioning Karachi's census". www.geo.tv.
  34. ^ "CJP has voiced sentiments of Karachiites, says Mustafa Kamal". www.thenews.com.pk.
  35. ^ "Pakistan's sprawling Karachi 'broken' by monsoon floods". www.aljazeera.com.
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