Just recently it was over the media that all the big names in the mobile industry including Samsung, Huawei and Nokia, are planning to start manufacturing phones in Pakistan. To cater to this, Government is looking to formulate a new Local mobile manufacturing policy.
All the three tech giants have shown interest to set up local plants in Pakistan during a meeting held to the representatives of FBR, MOITT and PTA. Due to the currency devaluation and lower labour cost, different tech giants are looking to make Pakistan a manufacturing hub for their devices. No doubt, setting up manufacturing plants and factories need a lot of labour so it will provide employment opportunities to Pakistani youth.
Initially, these Smartphone giants used to manufacture devices in China but it seems it is no longer a favourable place due to growing labour cost. The high Tariffs placed by growing smartphone markets like India and Pakistan is yet another key factor to force these companies to set up local plants to provide their customers with cost-effective devices. So while we push them to go for this “Made in Pakistan” initiative, the government needs to work on its pull strategy to ensure that this does not become a hollow space.
Local Mobile Manufacturing-The Next Potential Industry of Pakistan
There are various benefits that local manufacturing can bring to our industry and country as a whole.
- Local manufacturing will result in a lesser reliance on foreign countries to fulfil local needs. It will also help in saving foreign exchange and an increase in Foreign Direct Investment.
- Availability of locally manufactured devices will ensure a decrease in grey channel mobile imports.
- Through local mobile manufacturing Pakistan will be able to change its status from consumer market to producer market. Its image in the international market will also improve that will help in attracting international companies to start doing business in Pakistan.
- Establishment of local manufacturing companies will create a number of job opportunities for the socio-economic development of the country.
- Once mobile manufacturing starts, it will take along other industries along with it such as component manufacturers, circuit designers, accessories, packaging, and software industry to cater mobile software requirements, R&D and so on.
Mobile manufacturing units in India are increasingly rapidly
India started its mobile manufacturing in late 2004 and today it has become the second largest telecom markets threatening its strong neighbouring countries like China. Today there are more than 300 mobile manufacturing companies in India. In 2016, two out of every three mobile phones sold in India were domestically produced. By 2020, almost 96 per cent of mobile phones sold in India will be locally manufactured. In the recent budget of 2018 Indian government hiked the customs duty on mobile phones to 20 per cent from 15 per cent- a move taken to help boost local manufacturing of mobile phones and the related components. Just a few months back, South Korea’s Samsung set up the world’s largest mobile factory in the northern Indian state of Uttar Pradesh.
Promoting Local Manufacturing in Pakistan-the Pull factor:
In order to promote local mobile manufacturing in Pakistan, the Government should provide a favourable environment to these tech giants. The government should cut down import duties and build a strong modern infrastructure of highways, rail lines, and airports. It should also jot down a proper framework to provide a secure business environment for investors through a stable policy and incentive system.
For attracting companies to start manufacturing mobile devices in Pakistan, the government should ensure subsidized electricity and power facilities. Moreover, It should also develop a clear and comprehensive policy regarding CKDs (completely knocked down) and SDKs (Semi-Knocked down).
Once mobile manufacturing business flourishes in Pakistan, it will not only allow us to cater the local needs but if things go right, we will also be able to offer our products to other smaller markets of the region as well. There is no shortage of opportunities and talent but due to non-availability of a supportive environment, we lag behind in this industry. We not only need friendly government policies to motivate business to invest in this industry but at the same time, we also need to build infrastructure and minimize the cost of finance especially of power and water that are key to electronic manufacturing.