Wednesday, February 15, 2012

Live Large For Less in Delhi, Dhaka, Karachi & Mumbai

A worldwide cost of living survey of 131 major cities has found that big South Asian cities of Dhaka, Delhi, Karachi and Mumbai are among the ten least expensive in the world. In other words, foreign visitors, expatriate businessmen and overseas investors can live better for less in South Asia, particularly in Karachi which is the cheapest on the list, just one rank below Mumbai, India.




The survey conducted by Economist Intelligence Unit (EIU) compared more than 400 individual prices across 160 products, including food, clothing, transport, rents and private schools.

India and Pakistan’s cheap labor and land costs are making the area “attractive to those bargain-hungry visitors or investors willing to brave some of the security risks that accompany such low prices,” the survey said, as reported by the Wall Street Journal.

The Swiss city of Zurich remained the world’s most expensive, Tokyo was the runner up, with Singapore now listed as the world’s 9th most expensive city. Singapore was listed as the 6th most expensive last year, but remarkably was ranked 97th in 2001.

Here's how EIU describes the world cost of living survey methodology:

"More than 50,000 individual prices are collected in each survey, conducted each March and September and published in June and December. EIU researchers survey a range of stores: supermarkets, midpriced stores and higher priced specialty outlets. Prices reflect costs for more than 160 items in each city. These are not recommended retail prices or manufacturers’ costs; they are what the paying customer is charged. Prices gathered are then converted into a central currency (US dollars) using a prevailing exchange rate and weighted in order to achieve comparative indices. The cost-of-living index uses an identical set of weights that is internationally based and not geared toward the spending pattern of any specific nationality. Items are individually weighted across a range of categories and a comparative index is product using the relative difference by weighted item."

The cheapest cities on the EIU list are dominated by Asian and Middle Eastern cities. The latter of these is due, in part, to the use of price controls and the pegging of currencies to the US dollar. The former seems to have a more structural basis, with cheap labor and land costs making India and Pakistan incredibly attractive to those bargain hungry visitors or investors.

Currently, there are over 300 foreign multinational companies, including American and European companies, with operations in Pakistan. And more are coming every year in spite of ongoing security concerns and current economic slowdown. Almost all big international brand name American and European companies operate in Pakistan.



Here's an excerpt from a US government website on America's commercial presence in Karachi, Pakistan:

"U.S. firms have a strong presence in Pakistan. More than 70 wholly-owned U.S. subsidiaries are registered with the American Business Council (ABC) and American Business Forum (ABF) in Pakistan. There are also hundreds of local firms representing U.S. firms in the market. Leading U.S. businesses in Pakistan include Citibank, Pepsi-Cola, Coca-Cola, Procter & Gamble, NCR, Teradata, Pfizer, Abbot, Eli Lilly, Wyeth, DuPont, Oracle, Microsoft, Cisco, Intel, Chevron, 3M, IBM, Apple, Monsanto, McDonald’s, KFC, Pizza Hut, Dominoes Pizza, and Caterpillar.

Despite security challenges and common emerging market concerns about intellectual property rights (IPR) protection, contract enforcement, and governance issues, the Pakistan market offers many attractive trade and investment opportunities in a broad range of sectors: among others, energy (power generation); transportation (aerospace and railways); information and communications technology; architecture, construction, and engineering; health; environmental technology; agricultural technology; safety and security; franchising; and services."


Jon Copestake, the editor of the EIU cost survey report, explained that these cheap cities “have been cheap for a long time.” “Even though local inflation is high, it’s coming from a very low base, so it’s only a slight rise in the cost-of-living index,” he said.

Related Links:

Haq's Musings

Karachi 4th Cheapest for Expats

WEF Study Finds India's Air Most Toxic in the World

Karachi's High Development Index

Karachi Tops Mumbai in Stock Performance
Eleven Days in Karachi
Citymayors website

Karachi Demographic Trends Worry MQM

Pakistan Most Urbanized in South Asia

Karachi: The Urban Frontier

Do Asia's Urban Slums Offer Hope?

Orangi is Not Dharavi

Climate Change Could Flood Karachi Coastline

Karachi Fourth Cheapest For Expats

Karachi City Government

Karachi Dreams Big

12 comments:

Anonymous said...

Real estate in bombay and delhi is way too more expensive than karachi or lahore. This is because the rich of these places are way too richer than any place in Pakistan. Also some Indians might feel proud of it I am not as a normal middle class family cannot afford it.

Riaz Haq said...

Anon: "Real estate in bombay and delhi is way too more expensive than karachi"

The EIU suvey includes cost of real estate and shows Mumbai and Delhi are only slightly more expensive than Karachi.

Delhi and Mumbai may appear to be expensive to you and other locals because of high local inflation but the EIU report editor explains that “even though local inflation is high, it’s coming from a very low base, so it’s only a slight rise in the cost-of-living index” when compared with other major cities around the world.

Anonymous said...

My friend was in India recently. At a Kolkata book fair he was surprised to see Imran Khan there. IK was there to promote some book he had written. IK also spoke in a meeting. One of things he told to Indians "pls invest in Pak real estate as it is very cheap".

Riaz Haq said...

Anon: "IK also spoke in a meeting. One of things he told to Indians "pls invest in Pak real estate as it is very cheap"."

I didn't know that Imran Khan also plays a real estate agent inviting Indians to buy in Pakistan. Maybe that's his side business.

satwa gunam said...

Real estate of India is being funded by the illegal money of the politicians and bureaucracy and goondas. Price in any city of India has not come down but for Bangalore due to oversupply than demand. It is further aggravated by the tension in the software industry. For middle class house in India is a very far dream. It is being used by the powerful politicians to make the large population as slaves for their lifetime for a house.

Anonymous said...

Actually IK wanted indians to invest in Pakistan and this came off that.
You see he has already appointed himself as next PM of Pakistan and one the things he has in agenda is to suck up to India (note that he has already told that he will promote good relationship with India).

Anonymous said...

IK is a known sucker for India. About 5 yrs back in a TV interview he has clearly told that India is miles ahead of Pakistan when during his playing days it was the other way around. He was of course talking in favor of democracy and hated Mushy.

Also Riaz can you change the verification process on the blog which forces the user to type words. Of late the words are angled so badly that they are undecipherable. Is that in your control ?

Iqbal Singh said...

It would be hard to live large in Karachi because it is also in the top ten list for "most dangerous" due to terrorism perhaps.

Last issue of the Econmist highlights the myriad of issues facing Pakistan today. That doesn't mean India doesnt however. You tend to blog with a heavy bias against India which is fine but it is a bit distorted.

Riaz Haq said...

Singh: "Karachi because it is also in the top ten list for "most dangerous" due to terrorism perhaps."

There are certain neighborhoods of Karachi which are dangerous, just as there are dangerous areas in Chicago, New York, and Los Angeles. But overall, Karachi is no more dangerous than other major cities of the world with large population...especially in developing countries.

Riaz Haq said...

Here's an APP report on proposed revival of Karachi Circular Railway:

The ECC which met here under the chairmanship of Minister for Finance and Economic Affairs Dr. Abdul Hafeez Shaikh was informed that Japan International Cooperation Agency (JICA) has already agreed to provide 93.5pc ($2.4 billion) of the estimated cost through soft loan at a markup of 0.2pc payable in 40 years including 10 years grace period. The remaining 6.5pc ($169.6 million) will be borne by the Ministry of Railway (60pc equity), Government of Sindh (25pc equity) and the City District Government Karachi (15pc equity); the stakeholders of KUTC as per their share.



The track of the KCR will be 86 km long with 27 stations to be built around the city.



This important project will be a milestone in improving the quality of life of the citizens.



The ECC also approved the summary with special appreciation for the Ministry of Railways, the Government of Sindh and Karachi City Government for their efforts to get approved the most economic and viable project of Circular Railway for Karachi.





The ECC also discussed various agenda items of national importance. The following decisions were taken in the meeting;



At the outset of the meeting the ECC members offered special prayers for departed soul of Senior Minister of the KPK Government Mr. Bashir Bilour who lost his life in a terrorist attack in Peshawar recently.



The ECC prayed to Almighty God for resting the departed soul in eternal peace and for granting courage to the bereaved family to bear this precious loss.



Ministry of Railways moved a summary seeking the approval of the ECC for waiver of on-lending charges to Karachi Urban Transport Corporation for the Project "Revival of Karachi Circular Railways as Modern Commuter System".



Japan International Cooperation Agency (JICA) has already agreed to provide 93.5pc (US$2.4 billion) of the estimated cost through soft loan at a markup of 0.2pc payable in 40 years including 10 years grace period.



The remaining 6.5pc (US$169.6 million) will be borne by the Ministry of Railway (60pc equity), Government of Sindh (25pc equity) and the City District Government Karachi (15pc equity); the stakeholders of KUTC as per their share.



The track of the KCR will be 86 km long and 27 stations will be built around the city.



This important project will be a milestone in improving the quality of life of the citizens.



The ECC approved the summary with special appreciation for the Ministry of Railways, the Government of Sindh and Karachi City Government for their efforts to get approved the most economic and viable project of Circular Railway for Karachi.



The ECC also approved a summary by Ministry of Railways for changes in the composition of Business Express.



Ministry of Railways submitted a summary for ECC approval back in July 2012.


http://www.brecorder.com/top-news/1-front-top-news/98665-ecc-approves-revival-of-karachi-circular-railways-.html

Riaz Haq said...

#Pizza Hut set to open 75 new outlets to double its restaurants in #Pakistan - The Express Tribune #FastFood
https://tribune.com.pk/story/1414386/pizza-hut-set-open-75-new-outlets-pakistan/


KARACHI: American fast food giant Pizza Hut has decided to double its presence in Pakistan, the company and its local partner announced on Friday, adding that they would open 75 new outlets at an approximate investment of $3.4 million.

During a ceremony at the US Consulate in Karachi, a new franchise agreement was signed between Yum! Brands – a Fortune 500 company that owns Pizza Hut – and its local partner MCR. The deal was aimed at expanding Pizza Hut’s presence in Pakistan and adding to its network of 75 outlets over the period of next five years.

Robot waiter serves food in Multan’s pizza outlet
While the official press release stated that the agreement commits to an expansion of “150 new Pizza Hut units in Pakistan”, Pizza Hut (Middle East) General Manager Randall Blackford confirmed that the company is targeting a total number of 150 outlets across the country.

“We are currently operating at almost 75 units in Pakistan and we are going to double this number in the next four to five years,” he told The Express Tribune.

“Pizza Hut has a long list of first milestones, which include the first food product to be sold over the internet and the first food product to be delivered to outer space. Therefore, it is natural that we want to reach the milestone of first restaurant chain to have 150 outlets in Pakistan,” he added.

Inaugurated in December 1993, Pizza Hut was the first international franchise to enter Pakistan and also the first one to expand its presence in all four provinces of the country. It currently operates under MCR, a Pakistani company that is part of the services sector for the past 25 years.

“Pakistan is a great market for us and we have made so much progress over the years that we want to double it again,” said Blackford, when asked about the motivation behind expansion. “Additionally, Pizza Hut is a massive revenue-generating brand especially in this part of the world, hence our eagerness to capitalise on the market.”

Meanwhile, MCR President Aqueel Hasan said that the agreement presents a massive opportunity for Pakistan, adding that the country was looking at approximately $3.4 million on average in investment alone from the deal. “The amount of investment varies between the size of the proposed outlets, but the figure is anywhere from $300,000 to $600,000 per unit,” he said. Moreover, the agreement has been slated to generate around 3,500 jobs, excluding the spill-over effects from the expansion.

Social media battle erupts over pineapple on pizza

“This is a huge investment not only in monetary terms, but also it terms of skilled labour force available in the economy,” said Blackford. “Each outlet has a couple of dozen people working, so hiring them and training them – that is a massive investment in time.”

Riaz Haq said...

Fast Food: 2nd largest industry in Pakistan by Prof. Dr. Noor Ahmed Memon, (Dean KASBIT, Khadim Ali Shah Bukhari Inst of Tech).

http://www.foodjournal.pk/2016/July-August-2016/PDF-July-August-2016/Exclusive-article-Dr-Noor-Fast-Food.pdf

Fast Food Industry in Pakistan is the 2nd largest in Pakistan. accounts for 27% of its value added production and 16% of the total employment in manufacturing sector with an estimated 180 million consumers, Pakistan holds the world’s eighth largest market when it comes to fast food and food related business. More than 1000 large scale food processing enterprises in Pakistan. 75% of rural based food manufacturers are in so called informal sector (difficulty in accessing raw material finance informal sector (difficulty in accessing raw material, finance skills, knowledge and management). Pakistan’s fast food sector is changing significantly with an inclined shift in life styles and traditional eating habits. According to the survey which was being made on the performance of the fast food business in Pakistan it was being revealed that an average consumer spends 42% of one’s income on food. Retail sales of processed foods is expand ing by 10% annually. Supermarkets are gaining in popularity as a shopping venue and now account for about 10% of all retail food sales. In addition, Pakistan now hosts numerous western style fast food chains reflecting a rising popularity with such eating style. On an average calculation the fast food business in Pakistan and the trend of eating habits of the locals in the country is increasing almost 21% annually which means the growth of the fast food business in Pakistan is more than 20% on annual basis which makes it as one of the fastest growing businesses not only in Pakistan but even in the entire world as well.

http://www.foodjournal.pk/2016/July-August-2016/PDF-July-August-2016/Exclusive-article-Dr-Noor-Fast-Food.pdf