Karachi - Economy

Economy

Karachi is the financial and commercial capital of Pakistan. In line with its status as a major port and the country's largest metropolis, it accounts for a lion's share of Pakistan's revenue. According to the Federal Board of Revenue's 2006-2007 year book, tax and customs units in Karachi were responsible for 46.75% of direct taxes, 33.65% of federal excise tax, and 23.38% of domestic sales tax. Karachi accounts for 75.14% of customs duty and 79% of sales tax on imports. Therefore, Karachi collects 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. (Note: 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 & Quetta cover the entire province of Sindh and Balochistan). Karachi's indigenous contribution to national revenue is around 25%.

Karachi's contribution to Pakistan's manufacturing sector amounts to approximately 30 percent. A substantial part of Sindh’s gross domestic product (GDP) is attributed to Karachi (the GDP of Sindh as a percentage of Pakistan’s total GDP has traditionally hovered around 28%-30%; for more information, see economy of Sindh). Karachi’s GDP is around 20% of the total GDP of Pakistan. 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 $78 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 $14 billion, respectively. Karachi's high GDP is based on its industrial base, with a high dependency on the financial sector. Textiles, cement, steel, heavy machinery, chemicals, food, banking and insurance are the major segments contributing to Karachi's GDP. In February 2007, the World Bank identified Karachi as the most business-friendly city in Pakistan.

Karachi is the nerve center of Pakistan's economy. The economic stagnation caused by political anarchy, ethnic strife and resultant military operation during late 1980s and 1990s led to an exit of industry from Karachi. Most of Pakistan's public and private banks are headquartered on Karachi's I. I. Chundrigar Road; according to a 2001 report, nearly 60% of the cashflow of the Pakistani economy takes place on I. I. Chundrigar Road. Most major foreign multinational corporations operating in Pakistan have their headquarters in Karachi. The Karachi Stock Exchange is the largest stock exchange in Pakistan, and is considered by many economists to be one of the prime reasons for Pakistan's 8% GDP growth across 2005. A recent report by Credit Suisse on Pakistan's stock market is a testimonial to its strong fundamentals, estimating Pakistan’s relative return on equities at 26.7 percent, compared to Asia’s 11 percent.

Karachi has seen an expansion of information and communications technology and electronic media and has become the software outsourcing hub of Pakistan. 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 10% in order to gain foreign investments in the IT sector. Many of Pakistan’s independent television and radio stations are based in Karachi, including world-popular Business Plus, AAJ News, Geo TV, KTN, Sindh TV, CNBC Pakistan, TV ONE, ARY Digital, Indus Television Network, Samaa TV and Dawn News, as well as several local stations.

Karachi has large industrial zones such as Karachi Export Processing Zone, SITE, Korangi, Northern Bypass Industrial Zone, Bin Qasim and North Karachi, located on the fringes of the main city. Its primary areas of industry are textiles, pharmaceuticals, steel, and automobiles. In addition, Karachi has a cottage industry and there is a Free Zone with an annual growth rate of nearly 6.5%. The Karachi Expo Centre hosts regional and international exhibitions. There are development projects proposed, approved and under construction in Karachi. Among projects of note, Emaar Properties is proposing to invest $43bn (£22.8bn) in Karachi to develop Bundal Island, which is a 12,000 acres (49 km2) island just off the coast of Karachi. The Karachi Port Trust is planning a Rs. 20 billion, 1,947 feet (593 m) high Port Tower Complex on the Clifton shoreline. It will comprise a hotel, a shopping center, an exhibition center and a revolving restaurant with a viewing gallery offering a panoramic view of the coastline and the city.

As one of the most rapidly growing cities in the world, Karachi faces challenges that are central to many developing metropolises, including traffic congestion, pollution, poverty and street crime. These problems continue to earn Karachi low rankings in livability comparisons: The Economist ranked Karachi fourth least liveable city amongst the 132 cities surveyed and BusinessWeek ranked it 175 out of 215 in livability in 2007, down from 170 in 2006. An average of six people per day are killed in Karachi and Police chief Ahmed Farooqi has said that the violence is beyond the control of law enforcement.

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Famous quotes containing the word economy:

    The basis of political economy is non-interference. The only safe rule is found in the self-adjusting meter of demand and supply. Do not legislate. Meddle, and you snap the sinews with your sumptuary laws.
    Ralph Waldo Emerson (1803–1882)

    I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we prudently save means that their life will be so much the more abundant. Economy is idealism in its most practical terms.
    Calvin Coolidge (1872–1933)