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Tuesday, May 21, 2024

Policy profiting local mobile phone manufacturers is in the works

Rumor has it that the government is all set to announce Pakistan’s first Mobile Phone Policy next month, which will include several incentives to increase national manufacturing/assembly of mobile devices. Abdul Razak Dawood, Prime Minister’s Advisor on Commerce, Textile, Industries and Production and Investment, announced this news recently, during a meeting on draft Mobile Device Manufacturing Policy prepared by Engineering Development Board (EDB).

He revealed that the policy plans to ultimately enable local mobile phone manufacturing and assembly sector to make more profit than yearly imports of mobile phones and adjunctive products. Currently, the local imports are governed by mobiles in completely built condition to semi-knocked down (SKD) and completely knocked down (CKD) condition which are then sold after serial refurbishing.

This means that mobile device parts will be imported and then assembled in the country, instead of importing fully assembled – ready to sell phones.

Pakistan’s cell phone production units are easily in the top ten markets worldwide. Their sales value has been estimated at a whopping Rs 366 billion this year, which is substantially greater than the automobile industry – given their steady sales decline of vehicles in 2019. This reassures Pakistan’s standing in the electronic industry and shows hope for expansion.

According to Razak Dawood, this policy can attract new investments, generate employment and make Pakistan a global player for electronics manufacturing. Such can be achieved by promoting a ‘Made in Pakistan’ scheme to develop the local mobile and device manufacturing industry. This will basically follow the supply and demand pattern – that is, after severing the current international supply of devices.

Read more: PTA set to block all unregistered mobile phones by October 20th

Dawood believes that the proposed policy will attract domestic and foreign direct investment in the national engineering sector – and not just limited to mobile phone devices. For this reason, he invited and urged domestic and foreign companies to invest in manufacturing of electronic goods in Pakistan in exchange of high returns on their investment.

“Special Economic Zones are providing technical and financial support through various incentives by granting tax holidays and duty exemptions on parts which are used in manufacturing of mobile phone devices and other electronic goods”, he added.

Moreover, this draft mobile device manufacturing policy is also focusing on generating employment, substituting import products and technology transfer. The revenue collection through imports will be substituted by the import of CKD (complete knocked down) kits at subsidized duty structure and enhancement of duty on CBU (complete built-up) imports, thus making local assembly and manufacturing more feasible. This means that mobile device parts will be imported and then assembled in the country, instead of importing fully assembled – ready to sell phones. Hence, generating employment in the assembling industry.

Read more: FBR proposes to reduce taxes on imported phones by 50%

All in all, the initiative sounds promising as long as enough investments are incurred to begin work at par with international standards, the policy does not introduce losses due to substandard manufacturing and there is no resultant inflation in the prices of said devices.