INDUSTRIAL DEVELOPMENTS IN KARACHI

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)
July 11 - 17, 20
11

Karachi is known as the commercial hub of Pakistan because of its important role in the national economy. It has more than 20 per cent share in the national gross domestic product, accounts for 40 per cent of employment in large scale manufacturing, and generates a quarter of the federal and 40 per cent of Sindh revenues. The city is a gateway of foreign trade for the country as nearly 90 per cent foreign trade occurs on its air, sea, and road trade routes. Not less than 30 per cent of national industrial production takes place in the city. Headquartering important organizations, the city is in fact the control tower for 90 per cent of financial businesses, multinational companies, and banks.

While Karachi has several scattered small and medium manufacturing concentrations in different areas, major economic activities are generated in its mainly six industrial zones. The manufacturing companies engage in manufacturing of agricultural implements & machineries, art silk fabrics & garments, automobile spare parts, carpets, chemicals & dyes, textile goods, etc.

Over the years, the city has seen developments of industrial areas. However, unplanned developments created pressures on the city infrastructure, albeit it also produced splurge of employment opportunities that are attracting population from nationwide.

PORT QASIM INDUSTRIAL AREA

Port Qasim is the second largest seaport of the country after Karachi Port. It has an expansive industrial area of over 12,000 acres in its vicinity divided into Eastern, South Western, and North Western industrial zones. According to Bin Qasim Association of Trade and Industry, there are 95 industrial units operational in the zones while the constructions of 85 units are underway. Local and foreign investors have invested approximately three billion dollars in the zones. The government planned to establish textile city in the Eastern Zone. The project is over delayed despite the fact that the government allotted 700 acres for the textile city in 2005 that would accommodate companies dedicated to the textile industry. Total 1250 acres were earmarked for the city. A government body was tasked to market and sell the lands and establish basic infrastructure including wastewater treatment and captive power generation plants. Yamaha has planned to set up automobile plant in the area. This will be a big project with an investment of $1.5 million by the Japanese automobile giant. Yet another ambitious project worth $100 million foreign investments of dry laundry detergent plant of Procter & Gamble Pakistan was inaugurated at Port Qasim in December last. The plant spreading over 25 acres is expected to generate 3,500 direct and indirect jobs over the next 10 years. The country would save million of dollars foreign exchange in import of detergent raw materials as the company is sourcing 40 per cent of raw and packing materials within the country strengthening local supplier base. Al Tuwairqi Steel Mills is the country's largest private sector integrated steel manufacturing unit also located over 220 acres at a zone. The Saudi group planned to make an aggregate investment of near one billion dollar in three phases in the steel manufacturing.

IMMENSE INVESTMENT OPPORTUNITIES

Karachi has immense investment opportunities in various economic sectors. Transports, solid waste management, renewable energy including solar, wind and wave energy, tourism (developments of pristine palm beaches, hotels, resorts, etc.), water treatments, food processing are some of the potential investment avenues. Upgrades of urban and industrial infrastructure have been generally neglected. Devolution plan augured well for the urban infrastructure and city district government reshaped the appearance of the city by building network of roads, bypasses, flyovers, and underpasses and by revamping water and sewerage system. However, industrial infrastructure could not be developed as per the requirements.

Resource constraints have always been an issue. Traditionally, public sector sources are utilised for infrastructure developments. Funds from the capital markets, commercial financing, or private sector investments can play a role in developments of industrial infrastructure. It is said in parlance that Karachi's soil begets gold. Quite true in a sense that had alone proper solid waste management system been set up in the city, many economic benefits would have been gained so far. Over 7,500 tons of solid waste generated daily is not a small quantity and can lessen the energy crisis to the least. The administration is able to collect only 60 per cent of waste. A quarter of that is dumped in the landfills. Underdeveloped dumping sites are used for only waste disposal despite the international common practice of exploiting landfills as a viable energy solution.

Experts say Karachi cannot become a mega city in real sense with one-off development approach. Integrated and sequenced works are the befitting infrastructure solutions. For that to happen, Asian development bank has advised institutional reforms long ago in its report titled mega city development project.

WAY FORWARD

As the population of the city is exponentially rising and haphazard urban expansion is posing serious risks to the infrastructure, there is an urgent need of funds for especially water projects. Pakistan is the highly urbanized country of South Asia. Nearly 37 per cent of the population is living in the cities. Problems of pollution, waste management, and congestion are outgrowths of unplanned urbanization. An average population density in Karachi is 222 persons per square kilometre, which is highest compared to that in many other comparable cities in the world. Not only infrastructure is under great pressure, but city dwellers are also living unknowingly on a population ticking-bomb. Demands have outstripped the existing supplies of both water and energy. Media reports said the World Bank are willing to finance S-3 and K-IV water and sewerage projects, which are essential to avert impending severe water shortages in the metropolis and meet the water requirements of the industrial projects.