Samsung, Huawei and Nokia have shown an interest to start manufacturing mobile phones in Pakistan due to lower wages compared to China, therefore, it is being reported that the government is all set to formulate a policy with the international mobile companies.
The information was disclosed at a meeting of Pakistan Mobile Manufacturers and representatives of Federal Board of Revenue (FBR), Ministry of Information Technology and Telecom, Pakistan Telecomm-unication Authority (PTA) and EDB that was held on January 31, 2019.
Sources report that Noman Khalid, Director, PTA informed the participants at the meeting that due to International Mobile Equipment Identity (IMEI) registration the local manufacturing of mobile devices has increased.
He also recommended that the Ministry of Industries and Production (MoI&P) in coordination with relevant stakeholders should work on formulating a policy to encourage local manufacturing of mobile devices. According to him, a Semi Knock Down (SKD) assembly should be initially encouraged with the help of tariff- based incentives. “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 and that incentives should be given to 3G/4G technology mobile devices.” according to him.
Mansoor Khan, Joint Director Ministry of IT and Telecom speaking on the occasion stated that the benefits were offered to 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.
The labor pay in China is becoming very expensive, and currently costs approximately 5,000 Yuan (PKR 105,000) for unskilled and 20,000 Yuan (PKR 420,000) for technical work force whereas labor and skilled workforce is available in Pakistan at very low remuneration.
Furthermore, at the meeting they also stated that the mobile devices consist of almost 60 sub-parts manufactured by vendor industry/secondary suppliers with the mobile manufacturing plant costing around Rs 2 billion.
The following recommendations were also proposed to enhance mobile manufacturing in the country, such as: tax holiday on Income and Sales tax should be given for 8-10 years; Special Economic Zones (SEZs) may be developed to promote mobile manufacturing industry; and the duties and taxes on mobile devices; Complete Build-up Unit (CBUs) should be increased to make local manufacturing of mobile devices competitive; and incentives should be given for manufacturing of 2G/3G/4G devices.
Furthermore, the representative of FBR on the occasion said that the government has announced amendments to encourage CKD-based manufacturing and on the import of mobile devices in SKD and CBU form.
Meanwhile, Asim Ayaz, DGM-incharge policy, stated that EDB has always taken steps to encourage local manufacturing such as the Auto Development Policy (ADP) 2016-21 under which 13 new investors have been awarded Greenfield status and 2 closed units have been revived.
Moreover, he also revealed that the EDB policy team is also working on Mobile Policy. He hopes that Pakistan will see similar success as is being witnessed in the automobile sector. He further stated that EDB has made efforts to ensure surveillance and curb misuse of import policy schemes to discourage finished products and encourage local industry.
At the meeting, DGM (Policy) also requested the participants to forward joint proposals. The meeting concluded with a joint discussion 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 CDK assembly operations. The meeting also concluded that EDB will finalize the initial policy draft by February 20, 2019 and the initial draft will be discussed with all public and private sector stakeholders before final submission to MoI&P.
