Karachi Among Cheapest Cities for Expats

Pakistan's financial capital Karachi shows up among the least expensive cities for expatriates in a survey conducted by consulting firm Mercer UK. Cost of living for employees is one of the factors considered by businesses looking to expand globally.

There are several large cities in Pakistan, but Karachi is the largest with a population exceeds 12 million, according to the United Nations. Whilst the political capital of Pakistan is Islamabad, Karachi is definitely the economic center. It is home to the largest port in Pakistan situated in a sheltered natural harbor, and it is this which originally provided the conditions for the city to grow. Whilst the port continues to play an important part in economy of Karachi, the economy has diversified. Karachi is the location for the headquarters for many of the largest Pakistani companies, as well as being the location for the Pakistani offices of many international firms. Manufacturing plays a big part in the local economy, and increasingly outsourcing of services from richer countries plays a part, particularly with call centers. Pakistan has been ranked at number 20 on the 2009 A.T. Kearney Global Services Location Index of the most attractive outsourcing destinations in the world. All of these factors combine to result in Karachi having what has been claimed to be the highest average wage of any city in south Asia. However, despite the regionally high wages, Karachi is still located in south Asia, and so many of the prices for goods and services reflect this. In addition, the excellent infrastructure links to the world further reduce the price of imported goods. These high wages, coupled with low prices of goods and services, result in Karachi being among the cheapest major cities in the world in which to live, not necessarily for the local residents, but certainly for the expatriates earning in hard currency.

Here are Mercer's picks for the least expensive cities of the world in 2009:

1. Johannesburg, South Africa
2. Monterrey, Mexico
3. Asuncion, Paraguay
4. Karachi, Pakistan
5. Wellington, New Zealand
6. Auckland, New Zealand
7. Mexico City, Mexico
8. Quito, Ecuador
9. Chennai, India
10.Tunis, Tunisia

The survey covers 143 cities across six continents but concentrates mostly on Europe, Asia, and the Middle East. The only countries in the Americas covered were Canada, Mexico, Brazil, and the U.S. Mercer looks at more than 200 factors, including the cost of housing, transport and food.

Tokyo, last year’s second most expensive city, climbed to the top spot, knocking Moscow down to number 3. Geneva and Hong Kong ranked 4th and 5th, with Asian and European cities dominating the top 10 slots.

The survey, conducted in March, uses New York as the base city for the index, with currency moves measured against the dollar. New York itself jumped to 8th from 22nd last year.

“As a direct impact of the economic downturn over the last year, we have observed significant fluctuations in most of the world’s currencies, which have had a profound impact on this year’s rankings,” Nathalie Constantin-Metral, a senior researcher at Mercer, said in a statement on the firm’s website.

“Now that cost containment and reduction is at the top of most company agendas, keeping track of the change in factors that dictate expatriate cost of living is essential,” she added.

Tel Aviv ranked as the most expensive city in the Middle East, while Caracas was top in South America, and Sydney was the priciest city for expatriates in the Pacific.

Following are the top 10 most expensive cities, according to the Mercer survey. Last year’s rankings in brackets:

1. Tokyo, Japan (2)
2. Osaka, Japan (11)
3. Moscow, Russia (1)
4. Geneva, Switzerland (8)
5. Hong Kong, China (6)
6. Zurich, Switzerland (9)
7. Copenhagen, Denmark (7)
8. New York City, USA (22)
9. Beijing, China (20)
10.Singapore, Singapore (13)

Related Links:

Eleven Days in Karachi

AT Kearney Global Services Location Index

Outsourcing to Pakistan

Power Shortages in Pakistan

Garbage Collection in Karachi

Pakistan's Electricity Crisis

Karachi: The Urban Frontier

Emaar Bullish on Pakistan

Karachi Dreams Big

Cost of Power Outages in India

Comments

Unknown said…
This is very cute blog.The picture Karachi in this very lovely.It is please to see the lots of information here in your blog.Shangrila Murree
Expat said…
Great information related to expat and really Karachi is very cheap for the expats.
Thanks
Karachi is the trade capital of Pakistan. It is the biggest Industrial City in the country. 70% of the national economy depends on Karachi. It has the advantage of sea port which is used for the import and export of goods. It ranks 20 out of 143 cities of the world for the most attractive outsourcing destination.
Riaz Haq said…
Here are some excerpts from a BBC report on violence in Karachi:

According to human rights organisations, 775 people died in political and sectarian shootings and bomb attacks in Karachi in 2010. ...
And although thousands are killed every year in the north-west, the impact of the violence in Karachi is arguably no less important. The city is Pakistan's commercial hub.
Business losses
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Karachi provides 70% of the total annual tax revenue collected by the government.
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The violence has been largely fuelled by antagonism between the local chapters of three political parties: the Pakistan People's Party (PPP), the mostly Pashtun Awami National Party (ANP) and the Muttahida Quami Movement (MQM).
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The MQM remains Karachi's dominant political party and represents the city's majority Urdu-speaking community - the descendants of Muslim migrants to India at the time of partition in 1947.

In December 2010, Sindh Home Minister Zulfiqar Mirza accused the MQM of being mainly responsible for the extortion and targeted killings prevalent across the city.

Within 48 hours, an enraged MQM withdrew its support for the PPP-led coalition in Islamabad.

The only reason the government could hold onto power was because opposition parties did not bring a no-confidence motion against the government.

The MQM has since been coaxed back into the coalition and now holds the political balance.

However, tensions remain with the ANP and the PPP.
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In Karachi, all three parties have been involved in stoking ethnic passions.
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Thousands were arrested; many were were later killed in what human rights organisations and the Pakistan media said were staged killings by security forces.

The MQM fought back - and was held responsible for a number of murders of police and security officials

The party said it was targeted by a conservative security establishment for its liberal politics and for fighting for the rights of the Urdu-speaking community.

Things changed under the government of President Pervez Musharraf and the party now enjoys excellent relations with the establishment.

"The MQM's 'new deal' with the establishment is that its control of Karachi will remain unchallenged by the security establishment," a political analyst, who wished to remain unnamed, told the BBC.

"In return, the MQM will support the establishment's policies in the centre."

MQM insiders acknowledge this deal, although they insist the party will never vote for "anything against the spirit of its ideology".

Obviously, this deal stands as long as the MQM controls Karachi.

But since 2006, the party has been increasingly feeling the pressure exerted by the growth of the Pashtun community in the city.
Activists of the Labour Party Pakistan in Karachi in march 2011 Karachi is home to a bewildering number of political parties and campaigning groups

Arriving here in their thousands, the Pashtun newcomers are in competition for land and jobs with the Urdu-speaking community.

MQM leaders say these new arrivals must not be treated as long-term inhabitants of the city - a call at odds with its identity as a party of migrants.

They say that there is a link between the growth of the Pashtun community and the "Talibanisation" of parts of the city - the Taliban is predominantly made up of Pashtun people.

The MQM say they will resist this at all costs, and this bellicosity has led to violence which has claimed dozens of lives.

Some of it has also involved separate turf battles between Karachi's Baloch community - the original inhabitants of the city - and the MQM.

"It's a complex political and ethnic problem which needs to be handled with extreme care," says a local human rights activist.
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