ECONOMY

History

Prior to the late 1800s Karachi was a small fishing village. Early in the 1900s, Karachi emerged as a major trading centre which relied on the Indus as a primary means of transportation for local produce including cotton cloth, carpets, leather goods, silk, wool, indigo, dairy products, fish and minerals. The importance of Karachi grew in the British era when export of raw materials such as cotton and wool increased due to demand in England. Karachi has a number of locational advantages, such as its seaports and land routes, which attracted industrial and commercial investments, leading to multitudinous employment opportunities.

Overview

Karachi is considered to be the financial capital of Pakistan due to its large contribution to the economy of the entire country.

Karachi's high GDP is based on its industrial base, financial sector, and large service sectors. Some major industries are cement, textiles, chemicals and banks.

Karachi also makes the largest contribution to the national revenue of any other city by far.

Income and Employment

Karachi’s Per Capita income is the highest in the country

In 2012, employment in Karachi exceeded that in Lahore, which is Pakistan’s second largest city, by 81 percent. (1) There are an estimated 50,000 migrant workers coming to the city every month from different parts of Pakistan. (2)

Manufacturing and Trading are nearly tied as the largest employment sectors, followed by public administration at a much lower percentage.

There is a huge discrepancy between the numbers of women versus men in the workforce. The employment to population ratio in Karachi East for men is 73.9:100 while for women it is 7.1:100. (2)

The informal economy consists of economic activity that is neither taxed nor regulated by a government. (3) The share of employment in the informal economy is 56% of total employment.

Karachi has over 15,000 industries in the formal sector while there are more than 50,000 in the informal sector (2)

Trade

Karachi is the hub of foriegn trade, being the access point for nearly the country’s entire volume of imports and exports. The city contains the country’s two major seaports and a large airport.

Karachi Port Trust reported almost twice as many imports as exports in 2011-2012

Stock Exchange

Karachi is home to the Karachi Stock Exchange (KSE), which is the largest stock exchange in Pakistan. In 2008 the KSE was named ‘best performer among emerging markets’ and in 2012 KSE 100 Index was the lead among 72 markets worldwide when adjusted for price swings. (2)

1: Kaw, Jon Kher, Peter D. Ellis, Mark Roberts, and The World Bank Group. “From Megacities to Historic Towns: Leveraging on Spatial Analysis to Inform Urban Planning.” Annual World Bank Conference on Land and Poverty Conference 2017

2: “City District Karachi Development Report.” Pakistan Development Perspective. iMMAP, AlHasan System, http://www.skim.pk/?=blog/pakistan-development-perspective-city-district-karachi-development-report (page suspended)

4: Asian Development Bank, "Karachi Mega-Cities Preparation Project", Aug 2005

5: http://www.ilo.org/public/english/employment/download/mdg_en.pdf

Karachi’s Industrial Estates

There are currently over 6000 big and small registered industrial units operating in Karachi. These industrial units are located in Sindh Industrial Trading Estate (SITE), Landhi, Korangi, Malir and the Port Qasim Authority area (PQA). There are more than 65 categories of industrial plants in the established industrial estates including textile industries, tanneries , pharmaceuticals, plastic and rubberindustries, steel foundries, metallurgical industries, electroplating and metal coating industries, glass, ceramics and tiles industries,cement industry, soap and detergents, fish processing industries,chemical industries, power plants, fertilizers and pesticides edibleoils, automobile cable and conductor manufacturing etc.

Historical Growth of Industrial Estates in Karachi

In the British period, a few small industries were established at Nishter Road (Lawrence Road) in Karachi. Dalmia Cement Factory was established in 1924 in what constituted as the suburban areas of Karachi at that time. Industrial growth gained momentum after the creation of Pakistan. Adjacent to Karachi Port at the West Warf area, an industrial area was established in 1947, known as Karachi Port Trust Industrial Area. The location of port and proximity to the city center was considered important incentives to attract investors in this area where infrastructure like roads, railways, electricity etc. were available. Offices of traders, shipping companies and Government offices were located near to the industrial area. The area was also accessible to the industrial workers. As a result, the industrial area was soon occupied by large and medium size industries. In 1948, Sindh Industrial and Trading Estate (SITE) was established which is now the largest industrial estate of Karachi (Karachi Development Authority-KDA-, 1964). In 1958, under Greater Karachi Resettlement Schemes (GKRS),the government planned to develop industrial areas at Landhi and Korangi to provide employment to the newly developed satellite towns. The Government policy of denationalization and privatization in the 1970s and 1980s, completion of Malir River Embankment Project in 1987 and improvement in infrastructure accelerated industrial development in the Korangi and Landhi Industrial Areas (KDA, 1974). The small industrial areas of Mansoora (Federal B Area) and North Karachi were developed in 1960s and 1970s as part of residential schemes located along the Lyari River. In 1980s, Government established three new industrial areas, Karachi Export Processing Zone, Bin Qasim Industrial Area and Super Highway Industrial Estate at the periphery of the city (KDA, 1990). Textile is the most dominant of all industrial categories. Other important industries are food processing, tannery andleather goods, chemical and pharmaceutical, auto industries, shipyard, oil refineries, metal industries and printing.

Salient Features of the Industrial Sector in Karachi

The Karachi Port Trust Industrial Area is a small industrial area occupying about 2 sq. km. Two large size industries, Karachi Shipyard and Engineering and Naval Dockyard are located there. Oil depots and oil processing plant, ghee edible oil, pharmaceutical, chemical and motor vehicle assembling factories are located in this area.

SITE is located about 5km north-west of the city center. It is spread over about 18 sq. km. area. It is the largest industrial area of the city (SITE, 1995). Textiles, chemical, re-rolling mills, pharmaceutical, food, beverage auto vehicle assembling plants are the main industries (Table1). Korangi Industrial Area was established in 1960. It is located about 14 km south-east of the city center along the Malir River. Its total area is about 34 sq. km. Major industries are tannery and leather products, textile, chemical, food, engineering etc. Twolarge oil refineries are also located in this industrial area (Korangi Industrial Area, 2000).

Karachi Industrial Zones Profile
Industrial Zones Land Area (sq.km) Type of Industries
Karachi Port Trust Industrial Area 1.92 Shipyard, Automobile, Oil Depots
Sindh Industrial Trading Estate 17.81 Textile, Oil andGhee, Chemical Beverage, Paint,Tannery, Leather Food, EngineeringPharmaceutical
Korangi Industrial Area 34
Federal B (Mansoora) Industrial Area 2.20
North Karachi Industrial Area 1.20 TextilePharmaceutical, Flour Mills Paint, Chemical, Gemstone
Karachi Export Processing Zone 2.00
Landhi Industrial Area 2.88
Super Highway Industrial Area (I) 1.20 Textile, Oil and Ghee,Chemical, Flour Mills, Automobile, Cement, Re-rolling steel, Food,Paint, Engineering
Bin Qasim Industrial Area 3.00
Manghopir Industrial Area 1.1
Super Highway Industrial Area (II) 4.00
Source: Industrial Land use and Land Value Pattern in Karachi City, Sindh University Research Journal, Science Series, S. Akhtar and M.R.Dahnani

Federal B Industrial Area (Mansoora) was established in 1960 by Karachi Development Authority (KDA) as a part of Federal B Area (Mansoora) Housing Scheme. Two blocks (21 and 22) were allocated for industries. It is located about 15 kmfrom the city center. At the time of establishment it was located at the periphery but now it is within populated area. It is a small industrial area occupyingabout 2 sq. km. area. Textile, pharmaceutical, foodand chemical are the main type of industries locatedthere. The industrial area is dominated by cottage industries (Federal B Industrial Area, 2000).

Landhi Industrial Area, New Karachi Industrial Area and Karachi Export Processing Zone are located at the outskirts of the city. Landhi Industrial Area was established in1958. It is located at a distance of 21 km from the citycenter. Its total area including extension of Landhi Industrial Area is about 5 sq. km. There are 300 industrial units of different categories mainly textile, food, chemical, pharmaceutical, engineering. North Karachi Industrial Area is located at adistance of about 21 km from the city center. It was established in 1973. It occupies an area of about 2 sq. km. It is a small industrial area with small sizeindustries. The sizes of industrial plots range from 120 to 2000 sq. meters. It is part of North Karachi housing scheme in which sectors 6 and 12 are allocated for industries. In the beginning a poultry farm and poultry feed manufacturing plant were established. Industrial activity was started in this area in 1987 replacing poultry farms. About 600 small and medium size industries are in operation belonging to textile, pharmaceutical etc. The area is known for cottage industries. Karachi Export Processing Zone was established in 1984 to encourage foreign investment. It occupies an area of 2 sq. km located about 26 km from the city center. It is situated in close proximity to the Port Bin Qasim and National Highway. Textile, chemical,engineering and gemstones are the main types ofindustries.

Super Highway Industrial Area, Bin Qasim Industrial Area are located at the outskirts of the city. KDA planned Super Highway Industrial Estate in 1983 withthe name of North Karachi Industrial and Trading Estate in Scheme 33. It is located near Super Highwayon the right bank of the Lyari River at a distance ofabout 25 km from the city center. Its total area is about 1.2 sq. km. At present, 120 industries of medium size have been established. Food, chemical,textile and pharmaceutical are the main types ofindustries (Super Highway Industrial Area, 1999). The phase 2 of the Super Highway Industrial Area was established in 1992. It occupies an area ofabout 4 sq. km. Bin Qasim Industrial Estate is a part of port Bin Qasim located at the edge of the city near National Highway at a distance of 30 km from the city center. The industrial estate was established in 1980. Industrial activity started in 1990. Motor assembling, chemical, oil depot and pharmaceuticalsare the important industries. Manghopir Industrial Area is a small industrial area located at the outskirts of thecity. It was developed in late 1960s at the fringe of thecity. Cement industry, steel industry and marble cuttingand polishing industries are located there.