Samsung, Huawei, and Nokia wish to start manufacturing phones in Pakistan.

According to a local newspaper, the government has decided to formulate a new mobile phone manufacturing policy.

M/s Samsung, M/s Huawei and M/s Nokia want to start manufacturing in Pakistan due to lower labor wages compared to China, well-informed sources in EDB told the newspaper.

High Labor Costs in China

The labor pay in China is very high, i.e., CNY 5,000 (PKR 105,000) for unskilled and CNY 20,000 (PKR 420,000) for the technical workforce, whereas labor and skilled workforce are available in Pakistan at very low remuneration.

They further stated that the mobile devices consist of almost 60 sub-parts manufactured by vendor industry/secondary suppliers. The mobile manufacturing plant costs around Rs. 2 billion.

According to the report, this was disclosed at a meeting of Pakistan Mobile Manufacturers and representatives of Federal Board of Revenue (FBR), Ministry of Information Technology and Telecom, Pakistan Telecommunication Authority (PTA) and EDB held on January 31, 2019.

Noman Khalid, Director PTA, informed the participants that due to International Mobile Equipment Identity (IMEI) registration the local manufacturing of mobile devices has increased.

Importing Semi Knock Down Units

He recommended that the Ministry of Industries and Production (MoI&P), in coordination with relevant stakeholders, should formulate a policy to encourage local manufacturing of mobile devices. Initially, Semi Knock Down (SKD) assembly should be encouraged with the help of tariff-based incentives, the report stated.

However, benefits offered to the SKD assembly should have a cap limit i.e. 22 months. The case study of India can be followed as an example. He further added that incentives should be given to 3G/4G mobile devices.

Companies Currently Assembling Phones in Pakistan

According to Mansoor Khan, the benefits were offered to the industry in 2015 and currently, 23 companies are assembling Mobile Phones in Pakistan out of which 15 are in Azad Jammu and Kashmir mainly due to tax holiday offered to industry in AJK. He proposed that tax slabs should be formulated according to manufacturing and classification of the industry.

A representative of FBR said that the government has announced amendments to encourage CKD-based manufacturing and on the import of mobile devices in SKD and CBU form.

Working on a Policy

Asim Ayaz, DGM-incharge policy, revealed that EDB policy team is working on a Mobile Phone Policy and hoped that soon Pakistan will see similar success as the automobile sector.

After a detailed discussion, the meeting decided that EDB will liaise with local manufacturers for preparation of draft mobile device policy to encourage local manufacturing of mobile devices initially as SKD assembly and later as CKD assembly operations. In this regard, the industry will submit proposals to EDB.

Via Business Recorder