The Viability of Local SIM Manufacturing in Pakistan

Telecom industry has flourished impressively over the past few years making itself one of the most profitable industries in the country. More than half of the population around the world is connected through the small gadgets; indicating a heavy usage of mobile phone. This excessive usage has empowered mobile phone
manufacturing companies to generate substantial incomes from this sector. The rise in mobile phone penetration every month is an indicator of how effectively this industry is growing and becoming an ultimate contributor to the national exchequer.

The rise in mobile phone penetration every month is an indicator of how effectively this industry is growing and becoming an ultimate contributor to the national exchequer

According to the Annual Report of 2018-2019 by Pakistan Telecommunication Authority (PTA), the telecom sector subsidized over 96 billion to the national capital in terms of levies, taxes and duties. The total investments worth US$ 636 million while sector revenue crossed Rs. 552 billion. The sector maintained USD 236 million FDI during the year.

The growing number of subscribers emphasize the need to seriously consider SIM card manufacturing in the country

The telecom industry has witnessed significant growth in the subscribers’ base each year passing. Currently, there are 169 million cellular subscribers in the country. The growing number of subscribers emphasize the need to seriously consider SIM card manufacturing in the country. The idea of making a SIM card locally is not new. The company who was interested in manufacturing the SIMs in the country was KWICK High Tech & Solutions. Back in 2013, the Government made its agreement with the company to provide turnkey solutions to telecom, banking and government sector by using the state of the art hardware and software tools. However, due to the ineffectiveness on the previous Government’s part and various other reasons, the manufacturing could not start.

Back in 2013, the Government made its agreement with KWICK High Tech & Solutions to provide turnkey solutions to telecom, banking and government sector. However, due to the ineffectiveness on the previous Government’s part the manufacturing could not start.

Now things have changed a lot during the past few years. In the past, mobile phones and SIM cards were used for illegal purposes. After the 2014 terrorist attacks, the Pakistani Government severely tightened SIM card registration rules in the country. All SIM cards now have to register biometrically. SIM cards are now activated and sold after the National Database, and Registration Authority verifies the purchaser’s biometrics online. For device’s registration, PTA has also introduced the Device Identification Registration and Blocking System (DIRBS). DIRBS project is also seen as a significant step towards helping Pakistan digitalization.

Last year, the Ministry of Information Technology (MoIT) had finalized the design of SIMs and smart cards to make the telecom industry more efficient

The economic survey report has declared a very healthy increase in tax collection of Rs. 28 Billion in the first six months of the Fiscal year.

It is also expected that the tax revenue will cross Rs. 50 Billion for the full year as compared to Rs. 22 Billion taxes collected last year. The Government then introduced a smartphone manufacturing policy. The policy itself put a positive effect on revenue. If the SIM cards are also being manufactured locally, it will surely uplift profit growth.

The SIM manufacturing plants have to be build up from scratch in Pakistan. From constructions to setting up the manufacturing plants and from manufacturing to distribution of SIM cards, a lot of human resources will be required, which means more jobs for the people

The Government of Pakistan is quite optimistic in bringing the SIM card manufacturing facility in the country.

Last year, the Ministry of Information Technology (MoIT) had finalized the design of SIMs and smart cards to make the telecom industry more efficient. The Government has now formed a committee for the manufacturing of SIMs and smart cards. The Government is currently seeking approval from the Economic Coordination Committee (ECC) to start working on the approved plan.

There are a number of benefits if SIM manufacturing starts in Pakistan. First of all, there will be more job opportunities for our people. In Pakistan, the SIM manufacturing plants have to be build up from scratch. From constructions to setting up the manufacturing plants and from manufacturing to distribution of SIM cards, a lot of human resources will be required, which means more jobs for the people. Not only this, but it will help to promote other businesses as well. Once deployed, sim card manufacturing plants can bring in different industries along with them, such as circuit designing, component manufacturing, accessories, packaging, and software industry to cater R&D, mobile software requirements which in return will not only bring more job opportunities for the young engineers in the country but will also help to boost up other industries.

An essential benefit of local SIM manufacturing would be for the mobile operators as they wouldn’t have to import SIMs, adding a substantial improvement in their revenues

Currently, we are importing SIMs and smart cards from China and other countries. When any product is imported, tax fee is imposed on it which is added to the total sum of item cost, insurance cost and shipment cost. So, another essential benefit of local SIM manufacturing would be for the mobile operators as they wouldn’t have to import SIMs, adding a substantial improvement in their revenues by reducing the shipment cost and other import taxes.

In September last year, researchers at a security firm named AdaptiveMobile Security had issued a report about a new vulnerability nicknamed Simjacker that uses a phone’s SIM card to spy. Pakistan faces continuous security threats due to Indian manufactured software. One solution for that was to provide encryption codes to the manufacturing companies. But if these encryption keys are leaked or hacked, SIM cards can be cloned, which could put the nation’s security at risk. So, when the SIM card is manufactured locally, there will likely be fewer chances of security compromise. The telecom operators do not need to share the encrypted keys to others hence making the SIM cards more secure.

AdaptiveMobile Security has issued a report about a new vulnerability nicknamed Simjacker that uses a phone’s SIM card to spy

The local SIM manufacturing will help to lift the foreign direct investment (FDI) as well. Pakistan has already seen significant growth in FDI. According to the data released by the State Bank, Pakistan has seen an 88% increase in FDI from $1.36b in 2019 to $2.56b in 2020 and the significant contribution was from the CPEC project. According to MoIT, as the Government announced this step, many investors showed interest in investment and setting up plants for SIM manufacturing.

If the SIM manufacturing plants successfully start working in the country, it will attract foreign investments and improve the overall economic standing of the country.

The whole world has seen a tremendous transformative impact on its economic indicators due to local manufacturing. Pakistan also has the potential to achieve the same wonders only if it manages to plan the strategies for this initiative wisely. The Government must set mileposts and announce incentives so that local assemblies can be leveraged as the more significant accelerator of economic growth by developing long term goals to upsurge mobile phone penetration. It will also improve Pakistan’s standing among the connected countries in the world and transform it from least connected to the most connected country.