The government is considering an incentives package for mobile manufacturing Plants to reduce the mobile import bill which is currently around $2 billion annually.
Government Will Consider An Incentive Package For Mobile Manufacturing Plants To Reduce Mobile Import Bills
Official sources revealed that the government is likely to announce some incentives in the upcoming budget for 2019-20 in shape of rebates and tax concessions for manufacturing plants.
Further, the government will provide land to mobile manufacturing plants in Haripur along with other utilities to facilitate investors.
Establishment of mobile manufacturing plants as well as reducing mobile imports have been made part of the Trade-Related Investment Policy Framework.
The Ministry of Information Technology and Telecommunication (MoITT) has expressed inability to bring mobile manufacturing companies in the country unless the government announces incentives packages for them, official sources revealed.
The government has issued 18 licenses to mobile assemblers and most of them are stationed in Azad Jammu and Kashmir due to tax holiday facility, however, there is not a single mobile manufacturing unit in the country and resultantly it contributes to the import bill.
GSM Association (commonly referred to as ‘the GSMA’ or Global System for Mobile Communications) in its latest report “Reforming mobile sector taxation in Pakistan: Unlocking economic and social benefits through tax reform in the mobile sector”, states significant investment is required to drive the expansion of the mobile market, and to improve the affordability of services for consumers. In particular, a focus on expanding network coverage, and investments in the quality of data services, could accelerate the growth of the sector in Pakistan.
The report states further improvements in affordability of mobile services and devices would contribute to mobile market expansion and development of the digital economy in Pakistan For the bottom 20 percent and 40 percent income groups of the Pakistani population, the total cost of mobile ownership (for both low and medium consumption baskets) is above the “1 for 2” United Nations (UN) affordability target (1 GB of data costing less than 2 percent of monthly income).
Moreover, an upfront cost of a handset represents an affordability challenge for those lower-income Pakistanis who do not have access to finance, which would enable them to pay the cost of a mobile phone in installments.
In addition, the “Device Identification Registration and Blocking System” (DIRBS) recently launched by the Pakistan Telecommunication Authority (PTA) could increase the average price of a mobile phone on the Pakistani market, as legal handsets are generally more expensive than counterfeit and illegal devices, unless it is mitigated by government measures, aimed at improving the affordability of handsets, maintained in the report.
According to the Pakistan Bureau of Statistics (PBS) mobile phones import witnessed a decline of 7.60 percent in the first nine months (July-March) of 2018-19 as it remained $557.187 million compared to $603.046 million during the same period last year.
Mobile phone imports in March 2019, which stood at $79.049 million, registered 2.64 percent growth as compared to $77.013 million imports in March 2018.
Last month’s figure was 45.52 percent higher when compared to $54.320 million in February 2019. Overall telecom imports saw a decline of 8.86 percent during July-March (2018-19) when compared to the same period of last year.
Total imports were recorded at $1031.786 million during this period when compared to $1132.038 million in July-March (2017-18), while registering 5.97 percent growth in March 2019. This figure stood at $127.768 million in March 2019 as compared to $120.565 million during February 2019.
Other telecom apparatus imports witnessed a phenomenal decline of over 10.28 percent in July-March (2018-19) as it stood at $474.599 million against $528.992 million during the same period of last year. When compared to February 2019, other telecom apparatus imports registered 26.46 percent negative growth in March as it was $48.719 million compared to $66.245 million in February 2019.