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A view of Karachi downtown

Karachi is the financial and commercial capital of Pakistan; 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[1]. Karachi produces about 30 percent of value added in large scale manufacturing[2] and 20%[3][4] of the GDP of Pakistan. In February 2007, the World Bank identified Karachi as the most business-friendly city in Pakistan.[5]

Contents

GDP

A substantial chunk of Sindh’s GDP is attributed to Karachi[6][7] (the GDP of Sindh as a percentage of Pakistan’s total GDP has traditionally hovered around 29%/30%[6][7][8][9]). Karachi’s GDP is around 20% of the total GDP of Pakistan[3][4]. A PricewaterhouseCoopers study released in 2007, that surveyed the GDP (2005) of the top cities in the world, calculated Karachi’s GDP(PPP) to be $55 billion[10] (projected to be $127 billion in 2020 at a growth rate of 5.9%[11]). It confirmed Karachi’s status as Pakistan’s largest economy, well ahead of the next two biggest cities Lahore and Faisalabad having a reported GDP(PPP) of $29 billion and $10 billion, respectively[10]. Karachi's high GDP is based on its mega industrial base, with a high dependency also on Financial sector. Textile, Cement, Steel, Heavy machinery, chemicals, food, Banking, Insurance are the major segments 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[1]. Karachi also accounts for 75.14% of customs duty and 79% of sales tax on imports[1]. Therefore, Karachi generates 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[1] (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 Baluchistan[1]). Karachi's indigenous contribution to national revenue is 25%[3].

Business districts

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

I I Chundrigar Road (formerly McLeod Road) was once the main business district of Karachi, but in recent years many businesses have moved to other areas such as Sharah-e-Faisal, MT Khan road, Mai Kolachi, Clifton and Defence. The traffic congestion in I.I. Chundrigar Road has made it difficult to travel to the center of the city in a timely manner.

Sharah-e-Faisal has seen a spate of building with high rises, show rooms and institutions. Its proximity to Karachi Airport has been a significant factor.

IT trends

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 per cent in order to gain foreign investments in the IT sector.

Media

A part of Karachi's financial district

The city has also firmly established itself as the electronic media capital of the country as most Pakistan's Media Television Channels are headquartered here including CNBC Pakistan, Dawn News, TV One, Indus Media Group, ARY Digital, 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 a further 10 channels and for this purpose is setting up a 50-acre (200,000 m2) studio in the city.

Karachi Stock Exchange

Karachi Stock Exchange is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas listings. It has been declared as the “Best Performing Stock Market of the World for the year 2002”.

KSE has been well into the 4th 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.

Also see Karachi Cotton Exchange, National Commodity Exchange Limited

Industrial revolution

Karachi also has a huge industrial base. There are large industrial estates on most of the fringes of the main city. The main industries are Textiles, Pharmaceuticals, Steel, and Automobiles. Apart from these, there are many cottage industries in the city as well. Karachi is also known as software outsourcing hub of Pakistan. It also has a rapidly flourishing 'Free Zone' with an annual growth rate of nearly 6.5 per cent. An expo center has also been set up in Karachi and is now available to host many regional and International exhibitions.

Dozens of new manufacturing units are also being built near the Pakistan Steel Mill. Farm businesses line the SuperHighway route. SITE Manghopir is the biggest industrial area of Pakistan with more than 4000 factories. New Industrial zones have come in the past like 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, Adam Motor Company, Daihatsu, HinoPak Buses and Trucks manufacturing plants are also located in Karachi.

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 has created Pakistan Fashion Week a showcse for Pakistans emerging modern fashion industry some of whose desigers have established reputations abroad.

Banking sector

View of the I.I.Chundrigar Rd skyline, heart of the financial district of Karachi

The banking and insurance sector in Karachi has reaped the benefits of industrialization. One may see new branches of local and international banks all over Karachi. From bank to credit cards, paper money is becoming the order of the day in this city. Car loans from numerous banks have allowed the younger generation to go for the hot cars.

Transportation

Despite the growth and development of transport infrastructure elsewhere in the country Karachi remains the country's transport hub. Currently the city's two ports, Port of Karachi which is 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 & 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, Airblue and Shaheen Air International.

Fisheries

Karachi is the biggest fisheries hub in Pakistan. Fishery plays an important role in the Karachi's economy. It provides 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.

Resulting problems

  • Environmental problems

Karachi is the center of all business activities. Thousands of vehicles roll on the roads of Karachi. The City Administration is trying to introduce CNG buses and rickshaws in the city in the coming years.

  • Industrial pollution
  • Social problems
  • Traffic woes
  • Immigration
  • Emergence of slums

References

  1. ^ a b c d e "Federal Board of Revenue Year Book 2006-2007". http://www.cbr.gov.pk/YearBook/2006-2007/FBRyearbook2006-2007.pdf. Retrieved 2009-04-12.  
  2. ^ Pakistan and Gulf Economist. "Karachi: Step-motherly treatment". http://www.pakistaneconomist.com/database2/cover/c99-15.asp. Retrieved 2007-10-15.  
  3. ^ a b c Asian Development Bank. "Karachi Mega-Cities Preparation Project". http://www.adb.org/Documents/Produced-Under-TA/38405/38405-PAK-DPTA.pdf. Retrieved 2009-01-01.  
  4. ^ a b The Trade & Environment Database. "The Karachi Coastline Case". http://www1.american.edu/TED/karachi.htm. Retrieved 2009-01-01.  
  5. ^ Dawn Group of Newspapers. "World Bank report: Karachi termed most business-friendly". http://www.dawn.com/2007/02/14/ebr1.htm. Retrieved 2007-10-15.  
  6. ^ a b Social Policy and Development Center. "Provincial Accounts of Pakistan: Methodology and Estimates". http://www.spdc-pak.com/pubs/pubdisp.asp?id=nps5. Retrieved 2009-01-01.  
  7. ^ a b Dawn Group of Newspapers. "Sindh, Balochistan’s share in GDP drops". http://www.dawn.com/2006/02/21/ebr3.htm. Retrieved 2009-01-01.  
  8. ^ Dawn Group of Newspapers. "Sindh’s GDP estimated at Rs240 billion". http://www.dawn.com/2007/06/16/ebr3.htm. Retrieved 2009-01-01.  
  9. ^ Dawn Group of Newspapers. "Sindh share in GDP falls by 1pc". http://www.dawn.com/2004/12/02/ebr1.htm. Retrieved 2009-01-01.  
  10. ^ a b City Mayors. "The 150 richest cities in the world by GDP in 2005". http://www.citymayors.com/statistics/richest-cities-2005.html. Retrieved 2009-01-01.  
  11. ^ City Mayors. "The 150 richest cities in the world by GDP in 2020". http://www.citymayors.com/statistics/richest-cities-2020.html. Retrieved 2009-01-01.  

See also

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