Economy of Karachi - AbsoluteAstronomy.com

Karachi
Karachi
Karachi is the largest city, main seaport and the main financial centre of Pakistan, as well as the capital of the province of Sindh. The city has an estimated population of 13 to 15 million, while the total metropolitan area has a population of over 18 million...

is referred as the financial capital of Pakistan

Pakistan

Pakistan , officially the Islamic Republic of Pakistan is a sovereign state in South Asia. It has a coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by Afghanistan and Iran in the west, India in the east and China in the far northeast. In the north, Tajikistan...

; it accounts for a lion's share of Pakistan's revenue generation. It generates approximately 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. Karachi produces about 30 percent of value added in large scale manufacturing and 20% of the GDP of Pakistan. In February 2007, the World Bank

World Bank

The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

identified Karachi as the most business-friendly city in Pakistan. In 2010, research by the global human resources company Mercer

Mercer (consulting firm)

Mercer is a human resource and related financial services consulting firm, headquartered in New York City. The firm operates internationally in more than 40 countries, with more than 19,000 employees, and is the world's largest human resource consulting firm....

found Karachi to be the cheapest city in the
world.

GDP

Karachi is the financial capital of Pakistan. It accounts for the lion's share of Pakistan's GDP and generates about 65% percent of the national revenue providing a Gross Metropolitan Product of PKR. 1.607 trillion or $265 Billion at PPP and a GMP per capita of $21,917 rivaling Western European and American cities. Most of Pakistan's public and private banks have their head offices in Karachi. Besides banking and finance, Karachi also hosts the offices of foreign multinational corporations as well as corporations based in Pakistan. It is home to the largest stock exchange of Pakistan: the Karachi Stock Exchange. This financial boom helped Pakistan to achieve its ambitious goal of exceeding a seven per cent growth in GDP for the fiscal year 2004-05.
(the GDP of Sindh as a percentage of Pakistan’s total GDP has traditionally hovered around 29%/30%). . A PricewaterhouseCoopers

PricewaterhouseCoopers

PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....

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

Lahore

Lahore is the capital of the Pakistani province of Punjab and the second largest city in the country. With a rich and fabulous history dating back to over a thousand years ago, Lahore is no doubt Pakistan's cultural capital. One of the most densely populated cities in the world, Lahore remains a...

and Faisalabad

Faisalabad

Faisalabad , formerly known as Lyallpur, is the third largest metropolis in Pakistan, the second largest in the province of Punjab after Lahore, and a major industrial center in the heart of Pakistan. Before the foundation of the city in 1880, the area was very thinly populated. The population has...

, which had a reported GDP (PPP) in 2008 of $40 billion and $14 billion, respectively. 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 a lion's share of Pakistan's revenue generation. According to the Pakistan Federal Board of Revenue's 2006-2007 year book tax and customs units in Karachi was responsible for 46.75% of direct taxes, 33.65% of federal excise tax, and 23.38% of domestic sales tax. Karachi also accounts for 75.14% of customs duty and 79% of sales tax on imports. 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. (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 and Quetta cover the entire province of Sindh and Baluchistan). Karachi's indigenous contribution to national revenue is 25%.

Business districts

I. I. Chundrigar Road

Ibrahim Ismail Chundrigar Road

Ibrahim Ismail Chundrigar Road aka I. I. Chundrigar Road could be considered the financial headquarters of Pakistan and the center of Karachi's banking and financial institutions. Situated in the heart of Karachi, Sindh, it was known as McLeod Road during the Colonial rule but was later renamed...

(formerly McLeod Road) remains the historical commercial hub of Karachi and is its main CBD

Central business district

A central business district is the commercial and often geographic heart of a city. In North America this part of a city is commonly referred to as "downtown" or "city center"...

. However over the years, notable business and trade activity has appeared in other connurbations of the city, including the Shahrah-e-Faisal thoroughfare, MT Khan road, Mai Kolachi road and the Clifton and Defence areas of the city.

IT trends

The recent trend of ICT (information and communications technology

Information technology

Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...

), electronic media

Electronic media

Electronic media are media that use electronics or electromechanical energy for the end-user to access the content. This is in contrast to static media , which today are most often created electronically, but don't require electronics to be accessed by the end-user in the printed form...

and call centre

Call centre

A call centre or call center is a centralised office used for the purpose of receiving and transmitting a large volume of requests by telephone. A call centre is operated by a company to administer incoming product support or information inquiries from consumers. Outgoing calls for telemarketing,...

s 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.

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 CNBC Pakistan

CNBC Pakistan

CNBC Pakistan is Pakistan's 24-hour bilingual Urdu and English language business and news channel which reports financial and business information, presenting in-depth and up-to-the-minute coverage of regional and international affairs from a Pakistani economic perspective...

, Dawn News

Dawn News

Dawn News was Pakistan's 24-hour Urdu news channel. Based in Karachi, the station is a subsidiary of Pakistan Herald Publications Limited , Pakistan's largest English-language media group. The test transmission of the station occurred on May 25, 2007, and the channel went live on July 23, 2007...

, TV One

TV ONE (Pakistan)

TVOne Global is an general entertainment channel from Pakistan that airs dramas, soaps and lifestyle programs.TVOne Global and sister station News One are part of Air Waves Media, owned by Interflow Communications, one of Pakistan’s leading advertising agencies...

, Indus Media Group

Indus Media Group

Indus Media Group is Pakistani company broadcasting a mix of free-to-air news and entertainment channels via satellite.IMG owns and operates the INDUS brand of television channels in various global markets.-Company:...

, ARY Digital

ARY Digital

ARY Digital, a subsidiary of the ARY Group, is a popular Pakistani television network available in Pakistan, the Middle East, North America and Europe. The ARY Group of companies is a Dubai-based holding company founded by a Pakistani businessman, Abdul Razzak Yaqoob . The network caters to the...

, AAJ TV

AAJ TV

AAJ TV is a 24 hour Pakistani news television channel. Aaj in English means "Today".-Channel and its Programmes:AAJ News was initially started on March 23, 2005 by the Business Recorder Group...

, KTN NEWS

KTN News

KTN News Sindhi: is an online Sindhi News TV channel from Pakistan. It delivers various programmes. The channel is focused on news, sports, politics and international information. Kawish Television Network, KTN is the first private Sindhi TV channel of Pakistan. It is the most watched private...

, KTN

Kawish Television Network

Kawish Television Network is the first private Sindhi TV channel of Pakistan. It is the most watched private Sindhi language channel based general entertainment television channel worldwide. The channel is part of the Kawish Television Network's bouquet of channels.-Early days:KTN was established...

, KASHISH TV and Geo TV

Geo TV

Geo TV or Geo Television is a Pakistani television network, founded by Mr. Mir Shakil ur Rehman in May 2002 and owned by Independent Media Corporation. The channel began test transmission on 14 August 2002, with regular transmission beginning 1 October 2002...

. 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 addtitional 10 channels and for this purpose is setting up a 50 acres (202,343 m²) studio in the city.

Karachi Stock Exchange

The Karachi Stock Exchange or KSE is a stock exchange located in Karachi, Sindh, Pakistan. It is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas listings. Currently located in Stock Exchange Building on Stock Exchange Road, in the heart of Karachi's Business...

is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas listings. In 2002 it was declared the “Best Performing Stock Market of the World for the year 2002”.

KSE is well into its fourth year of being one of the Best Performing Markets of the world as declared by the international magazine Business Week. Similarly, the US newspaper USA Today termed Karachi Stock Exchange as one of the best performing bourses in the world.

Industrial revolution

There are many cottage industries

Putting-Out system

The putting-out system was a means of subcontracting work. It was also known as the workshop system. In putting-out, work was contracted by a central agent to subcontractors who completed the work in their own facilities, usually their own homes....

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. http://www.ideaspakistan.gov.pk/

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

Automobile

An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

manufacturing companies. Toyota is in the process of increasing production capacity to over 120,000 units per annum. Suzuki

Suzuki

is a Japanese multinational corporation headquartered in Hamamatsu, Japan that specializes in manufacturing compact automobiles and 4x4 vehicles, a full range of motorcycles, all-terrain vehicles , outboard marine engines, wheelchairs and a variety of other small internal combustion engines...

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

Adam Motor Company

Adam Motor Company, Ltd. was an automobile manufacturer based in Karachi, Pakistan. They were notable for producing the Revo, which was Pakistan's first indigenously designed car...

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.

Banking sector

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

Central bank

A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...

, the State Bank of Pakistan

State Bank of Pakistan

The State Bank of Pakistan is the central bank of Pakistan. While its constitution, as originally laid down in the State Bank of Pakistan Order 1948, remained basically unchanged until January 1, 1974, when the bank was nationalized, the scope of its functions was considerably enlarged...

.

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

Arif Habib Limited
Atlas Bank
Atlas Bank
The Atlas Group established Atlas Investment Bank in 1990 as a joint venture between Atlas Group and the Bank of Tokyo-Mitsubishi, Japan. With an associated company, Atlas Lease Limited formed in 1989 as a joint venture between the Atlas Group, the Bank of Tokyo-Mitsubishi, Japan and the National...
Bank AL Habib
Bank AL Habib
For the original bank with a similar name, see: HBL PakistanThe Bank AL Habib Limited, run by the Dawood Habib family group of companies, is one of the growing banks in Pakistan. It was selected as one of the top 200 Best Under A Billion companies by Forbes Asia in their annual review of 2005...
Bank Alfalah
Bank Alfalah
Bank Alfalah Limited is a private bank in Pakistan owned by the Abu Dhabi Group. Bank Alfalah was incorporated on June 21, 1992 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1, 1992...
Barclays Pakistan
Faysal Bank, Karachi
Habib Bank
Habib Metropolitan Bank
HSBC Ltd, Karachi
JS Bank
JS Bank
JS Bank Limited is a subsidiary of JS Group. JS Group is progressive financial service groups in Pakistan. JS Group has dynamically expanded its business in different sectors and has introduced JS Bank Limited with various standards of banking.JS Bank Limited operates in the Commercial banking...
KASB Bank
KASB Bank
KASB Bank is a Pakistani bank with the head office in Karachi. It is working under the KASB Group of Companies. The bank was established to provide financial and business community to the people of Asia.- External links :* 's official site...
MCB Bank Limited (formerly Muslim Commercial Bank
Muslim Commercial Bank
MCB Bank Limited was incorporated by the Adamjee Group on July 9, 1947, under the Indian Companies Act, VII of 1913 as a limited company. The bank was established with a view to provide banking facilities to the business community of the South Asia. The bank was nationalized in 1974 during the...

)
Mybank Limited
NIB Bank
SAMBA Bank Limited
Silkbank Limited
Soneri Bank
Soneri Bank
Soneri Bank is one of the Pakistan large commercial banks having branches in large cities of Pakistan. Its head office is in Karachi on Chundrigar road.- Online Banking :...
RBS Pakistan
The Bank of Tokyo-Mitsubishi UFJ Limited
United Bank Limited

Transportation

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

Port of Karachi

The Port of Karachi is Pakistan's largest and busiest seaport, handling about 60% of the nation's cargo . It is located between the Karachi towns of Kiamari and Saddar, close to the main business district and several industrial areas. The geographic position of the port places it in close...

(Pakistan's largest) and Port Qasim

Port Qasim

The Port Muhammad Bin Qasim , also known as Port Qasim, is a seaport in Karachi, Pakistan, on the coastline of the Arabian Sea. It is Pakistan's second busiest port, handling about 35% of the nation's cargo...

, are central to nearly all shipping in Pakistan. The airport of Karachi, Jinnah International Airport

Jinnah International Airport

Jinnah International Airport is Pakistan's largest international and domestic airport. It is located in Karachi, Pakistan, and its passenger terminal is also commonly known as the جناح ٹرمینل Jinnah Terminal...

(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

Pakistan International Airlines

Pakistan International Airlines Corporation commonly known as PIA, is the flag carrier airline of Pakistan. The airline has its head office on the grounds of Jinnah International Airport in Karachi. and operates scheduled services to 24 domestic destinations and 38 international destinations in 27...

, Aero Asia International

Aero Asia International

Aero Asia International was a private airline based in Karachi, Pakistan. It operated domestic and international services.Since May 2007, the airline was suspended from the Civil Aviation Authority of Pakistan due to the previous management's issues relating to the operating compliance on some CAA...

, Airblue

Airblue

Airblue Limited is a private airline with its head office on the 12th floor of the Islamabad Stock Exchange Towers in Islamabad, Pakistan. It is Pakistan's second largest airline with over 20% share of the domestic market...

and Shaheen Air International.

Fisheries

Karachi is the biggest fishery

Fishery

Generally, a fishery is an entity engaged in raising or harvesting fish which is determined by some authority to be a fishery. According to the FAO, a fishery is typically defined in terms of the "people involved, species or type of fish, area of water or seabed, method of fishing, class of boats,...

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

Karachi Fish Harbour

Karachi Fish Harbour is located in Karachi, Sindh, Pakistan. Karachi Fish Harbour handles about 90% of the fish and seafood catch in Pakistan and 95% of fish and seafood exports from Pakistan.- See also :* Karachi Fisheries Harbour Authority...

and Korangi Fish Harbour

Korangi Fish Harbour

Korangi Fish Harbour is located in Karachi, Sindh, Pakistan.It is a new facility built to take pressure off the Karachi Fish Harbour, to service a boom in fisheries production, and for large trawlers and processing vessels...

are two major fish harbours in Karachi.

Resulting problems

Environmental problems
- As the center of Pakistan's business activities, Karachi is filled with thousands of vehicles travelling the roads every day. The city administration is trying to introduce CNG buses and rickshaws in the coming years, in part to alleviate the resulting environmental problems.
Industrial pollution
Social problems
Traffic woes
Immigration
Emergence of slums
Terrorism