ISLAMABAD: In the last year, Pakistan Customs collected Rs54 billion through User Recognition, Registration, and Blocking System (DIRBs) on imports of mobile devices, which is 145 percent higher than the previous year.
The data released by the Federal Revenue Board (FBR) shows that the rise in cell phone import revenue is due to the fact that no non-duty paid/smuggled phone can now be used in Pakistan without due tax payment and registration with the Pakistan Telecommunications Authority.
The DIRBs were implemented by Pakistan Customs in cooperation with the PTA to eradicate the use of smuggled devices in the region. According to a customs official, this successful intervention has attracted huge investment in the country.
The official said that 17 companies are now producing cell phones in the region, adding that TCL is also planning to invest with Airlink in Pakistan’s mobile manufacturing industry, while another Alcatel company is also exploring the opportunity.
The issue of the availability of smuggled goods has been resolved to a large extent by the better use of information technology and regulation through targeted operations against smugglers, which has given room for local industry, the official added.
The government has also removed the duty-free mobile handset facility under the baggage rules from abroad as of July 1, 2019. According to the FBR, the decision was taken after receiving several reports about the abuse of the scheme.
Under the scheme, three percent of the government allowance will be given to local producers for cell phone exports and locally produced sets will be exempted from the 4pc withholding tax on domestic sales.
There is already a significant presence in the local market in the related and support sectors such as packaging, plastics, and IT software etc.
At the same time, the geographical proximity to China, which is a global manufacturing hub for handsets and is currently seeking to invest outside the country due to rising labor costs as well as trade tensions with the United States, poses a huge opportunity for the country.
Official data showed that during the FY20 under luggage, travellers carried as many as 1,389,707 cell phones into the country and registered them with DIRBs. As a result, Pakistan’s customs collected more than Rs5.8bn for imports of mobile phones under baggage from expatriates and travellers in the last year.
There is at the same time, a simple strategy for importing cell phones commercially. During the time FY20, as many as 19.80 million handsets were imported under commercial imports at a total value of Rs209.316bn with the FBR earning Rs39.414bn of revenue on it.
In May, the government approved the policy of manufacturing cell phones to help nurture a globally competitive indigenous handset industry. Due to the rise in market size as well as sophistication in terms of migration towards 4G, there is a strong local demand.
In the Customs Act1969, changes were introduced to grant draconian punishment, including forfeiture of land, godowns used for the storage of smuggled goods, fines and imprisonment for up to 10 years.
Till the expiry of the scheme, the government will retain the tariff difference between fully constructed unit imports and fully knocked down output. In return, as per the road map included in the policy, the domestic industry would have to ensure the localisation of parts and components.
