Economy in Karachi

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 also accounts for 75.14% of customs duty and 79% of sales tax on imports. Therefore, Karachi generates a significant 53.38% of the total collections of the Federal Board of Revenue (since renamed as the Central 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 25%.

Karachi produces about 30 percent of value added in large scale manufacturing. A substantial chunk of Sindh’s GDP is attributed to Karachi (the GDP of Sindh as a percentage of Pakistan’s total GDP has traditionally hovered around 28%/30%). Karachi’s GDP is around 20% of the total GDP of Pakistan. 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 (projected to be $127 billion in 2020 at a growth rate of 5.8%). 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 $28 billion and $10 billion, respectively. Karachi's high GDP is based on its mega industrial base, with a high dependency also on the financial sector. Textile, Cement, Steel, Heavy machinery, chemicals, food, Banking, 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 due to political anarchy, ethnic strife and resultant military operation during late 80s and 90s led to efflux of industry from Karachi. Most of Pakistan's public and private banks are headquartered on Karachi's I.I. Chundrigar Road, while 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. During the 1960s, Karachi was seen as an economic role model around the world, and there was much praise for the way its economy was progressing. Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea, copied the city's second "Five-Year Plan" and World Financial Centre in Seoul is designed and modeled after Karachi.

Recently, Karachi has seen an expansion of information and communications technology and electronic media and has become the software outsourcing hub of Pakistan. Call centers 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 channels 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 and Dawn News as well as several local stations.

Karachi has several large industrial zones such as SITE, Korangi, Northern Bypass Industrial Zone, Bin Qasim and North Karachi located on the fringes of the main city.The primary areas are textiles, pharmaceuticals, steel, and automobiles. In addition, Karachi has a vibrant cottage industry and there is a rapidly flourishing Free Zone with an annual growth rate of nearly 6.5%. The Karachi Expo Centre hosts many regional and international exhibitions. There are many 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 acre (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.