A report released by Fintech solutions noted that Pakistan is becoming more self-reliant in local production handsets due to the entry of global smartphone manufacturers one after another. Recently, vivo opened its manufacturing unit in Pakistan. Lucky motors also got the license of manufacturing Samsung devices in their newly opened plan with Xiaomi and Realme in the queue to open their local manufacturing sites in the upcoming months.
The report also listed that Pakistan should now become less dependent on imports and t it reduces total ownership costs (TCOs) for premium devices, it will be able to unlock the full value of the country’s fast-growing mobile broadband market.
The vivo’s plant is capable of manufacturing 1 million smartphones per year. It will also fulfill PM’s digital Pakistan vision where the ‘Made in Pakistan’ policy was stressed upon.
Global Smartphone Manufacturers Entry will Make Pakistan more self-reliant
While listing the pro’s of local mobile manufacturing and its impact on the Pakistani mobile phone market, Fitch highlighted:
“However, with 11 million new mobile subscriptions recorded in 2019 and our robust 4G/5G subscriptions forecasts suggesting rapid device replacement rates over the next decade, vivo’s contribution will have only a modest effect on Pakistan’s overall handset trade deficit of USD1.02bn (2019 data),”
While the government is promoting local manufacturing, another factor that contributed to Vivo’s decision to manufacture locally instead of import is the government hiking import duties and certification fees for complex electronics goods.
“With the country’s mobile operators set to rapidly roll out mobile broadband services during the coming decade, being able to keep smartphone average sales prices (ASPs) within the reach of consumers will be paramount,”
The emergence of local mobile phone manufacturing will revolutionize the vibrant mobile ecosystem by ensuring the presence of local and foreign players in the market.
The report also noted that if upcoming manufacturing plants are able to manufacture 5-6 million handsets on yearly basis, the future demand will be mostly served through local sources.
“We expect annual handset sales volumes to rise from 69.56mn in 2021 to 75.44mn by 2025, with smartphones expected to take an ever-larger share of overall sales as prices fall. A faster fall in handset ASPs, driven by the new local manufacturing initiative, would likely change the scale of these forecasts as more consumers would be able to purchase mid-range and premium devices,”
Currently, Pakistan relies on the imports of its handsets which causes a substantial dent in the trade deficit. While much is done in the local manufacturing industry, economic policymakers should work on finding a balance between the widening deficit and encouraging growth measures.