Creating Opportunities for Local Mobile Phone Manufacturing Ecosystem

The mobile phone is now an essential part of our lives being the quickest source of communication in today’s world. Most of the world’s population is connected through this small gadget, indicating an increased usage of mobile phones. This extreme usage has enabled mobile phone manufacturing companies to generate substantial incomes and profits from this industry. The rise in cell phone penetration every month is another indicator of how rigorously this industry is growing and becoming a significant contributor to the national exchequer. Creating Opportunities for Local Mobile Phone Manufacturing Ecosystem.

The rise in cell phone penetration every month is another indicator of how rigorously this industry is growing and becoming a significant contributor to the national exchequer.

In Pakistan, where the population is around 220 million, with 169 million cellular subscribers, the inception of 3G and 4G has accelerated the use equally and subsequently, the demand of smartphones in both rural and urban areas of Pakistan. In recent years, Pakistan has been importing; on average, about 11 million mobile phones every year. The growth in the number and increasing mobile phone import also points towards the fact that our country does have the potential for local manufacturing and how the mobile phone industry can benefit from local production.

Pakistan is the seventh-largest importer of mobile phones with annual sales of 34 million sets in 2019 and the annual market size of more than 40 million. The local manufacturing of mobile phones remained suppressed due to Local mobile manufacturing can develop into a major industry capable of generating an export surplus to sell its brand of “Make in Pakistan” in the international markets.

With increasing demand and competitive advantage of labor cost, local mobile manufacturing can develop into a major industry capable of generating an export surplus to sell its brand of “Make in Pakistan” in the international markets.

Keeping in view the prospects of local manufacturing finally we got Pakistan’s first local mobile manufacturing policy. Basic Objectives behind Mobile Manufacturing Policy. Local mobile manufacturing policy is envisioned, keeping in view the National mobile phone imports through grey channels. To fight this, PTA introduced Mobile Device Identification, Registration, and Blocking System (DIRBS), which curbed illegal imports of mobile phones and contributed to security enhancement. Still, the boom in local mobile manufacturing has remained slow.

The primary reason behind it was the absence of policy, which resulted in an unpredicted business environment, no correlation between local assembly and imports in Completely Knocked Down (CKD) Kits, and insufficient tariff differential between local assembly and import of Completely Built Units (CBUs). Pakistan is the seventh-largest importer of mobile phones with annual sales of 34 million sets in 2019 and the annual market size of more than 40 million technology acquisition and localization of mobile devices through local investment as it will have a direct impact on Pakistan’s economy. Local mobile manufacturing will also promote joint ventures while welcoming foreign direct investment to the country. Pakistani consumers will be able to enjoy high-end features at reduced prices, which were not possible with the globally imported smartphone brands. Local mobile manufacturing has the potential of creating 200,000 direct and indirect jobs, hence directly contributing to the country’s economy. Local mobile manufacturing has the potential of creating 200,000 direct and indirect jobs, hence directly contributing to the country’s economy

Through local mobile manufacturing, the government would be able to fulfill its goal of digital Pakistan intuitively, as it will also increase digitization through supporting 4G/5G technologies. Another objective behind local mobile manufacturing policy is the development of an efficient manufacturing eco-system that will increase the exports of the competitively manufactured handset to promote the “made in Pakistan” tag globally.

Main Points of the Local Mobile Phone Manufacturing Policy

  • Regulatory Duty Tax for CKD/ SKD manufacturing by Pakistan Telecommunication Agency for approved manufactures under IOCO approved quota, will be exempted.
  • Fixed income tax on CKD/SKD manufacturing of mobile phones up to $350 will be exempted.
  • Fixed income tax on $ 351-500 category and $ 500 on CKD/SKD manufacturing will be increased by Rs 2000 and Rs 6300, respectively.
  • The local industry will make sure that the localization of parts and components goes on as per roadmap.
  • Removal of fixed sales tax on CKD/ SKD manufacturing of mobile devices.
  • PTA activation may be restricted to locally manufactured handsets imported formally as CKD/SKD kit (8517.1211) under IOCO quota and not under HS Code 8517.7000, i.e., parts.
  •  In up to $30 category, words except “smartphones” to be inserted for CBU imports under 8517.1219 to avoid misdeclaration.
  • R&D allowance of 3% to be given to local manufacturers for exports of mobile phones.
  • Local industry to ensure localization of parts and components as per roadmap.
  • EDB will act as Secretariat of Mobile Phone Manufacturing Policy and ensure the development of allied parts, components, tools, and devices.

Currently, there are sixteen local mobile manufacturing companies in the country out of which most of the companies are manufacturing feature phones. There are sixteen local mobile manufacturing companies in the country out of which most of the companies are manufacturing feature phones
Keeping in view the interest of people towards smartphones and the latest 4G/5G technologies, the companies are now shifting to manufacturing smartphones incorporating the latest technologies. With mobile manufacturing policy, local manufacturing will get a go-ahead, and we will see its impacts in the coming years.

National Impacts of local mobile manufacturing

The establishment of domestic production will create job opportunities for skilled but unemployed Pakistanis, which will boost R&D culture in Pakistan. Local manufacturing will ensure overall economic development and will further provide a road to the local assembly. Other brands will also be motivated to play their part. The changing dynamics of the Pakistan mobile market due to 3G, 4G, and 5G have shown the Pakistani mobile manufacturing market’s potential. Hence, the landscapes of local assembling and manufacturing could be very eminent in Pakistan. Countries across the world have seen the tremendous transformative impact of their economic indicators due to local manufacturing Countries across the world have seen the tremendous transformative impact of their economic indicators due to local manufacturing. Examples include China, India, Argentina, Vietnam, Portugal, etc. Pakistan has the potential to achieve the same wonders only if it manages to plan the strategies for this initiative wisely.

Pakistan has climbed the first ladder in the shape of local mobile phone manufacturing policy. Local mobile manufacturing will bring in other industries along with it, including circuit designers, component manufacturers, accessories, packaging, and software industry to cater to mobile software requirements, and so on
Once deployed, mobile phone plants can lead to extraordinary miracles for the economy. Local mobile manufacturing will bring in other industries along with it, including circuit designers, component manufacturers, accessories, packaging, and software industry to cater to mobile software requirements, and so on.

The government must set milestones so that local assemblies can be leveraged as the more significant accelerator of economic growth. It can be done by devising aggressive long term goals to increase mobile phone penetration further and improve Pakistan’s standing among the connected countries in the world and transform it from least connected to the most connected country.

Also Read: Government Finalizes Local Mobile Phone Manufacturing Policy

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