Mobile handset assembly set to expand

KARACHI: Manufacturers of mobile handsets in Pakistan are advancing steadily towards their goal of local assembly under the Mobile Device Manufacturing Policy approved by the cabinet in June 2020.

On Wednesday, Industries Minister Hammad Azhar met with representatives of Vivo following which he announced via his account on the social media platform Twitter that the company “has decided to establish a smart phone manufacturing facility” in Pakistan and land for the project has been “purchased”. Representatives from Vivo declined to comment on the meeting.

The policy was approved by the Federal Cabinet in June 2020, but some industry players say there are lingering concerns.

Speaking to on background, they said the localisation requirement in the policy is not possible to implement in Pakistan since screens, motherboards and batteries are not going to be possible to manufacture here.

The policy also assured “removal of Fixed Sales Tax on CKD/SKD manufacturing of mobile devices” as well as exemption from 4 per cent withholding tax on domestic sales of locally assembled devices, but industry players say implementation of these steps has still not been completed.

“Without these exemptions local assembly is not feasible” one industry insider tells on condition of anonymity since talks with the government are still in progress. A press release issued by the ministry in June after cabinet approval of the policy said “a total of 16 local companies are manufacturing mobile devices in the country out of which most of the companies are manufacturing feature phones ie 2G. The companies are now shifting to manufacturing smart phones as technology is shifting towards 4G/5G.”

Telecom executives that the dearth of 4G capable handsets is the biggest hindrance to the growth of digital Pakistan. Local assembly of these handsets is critical to spur a digital revolution in the country.

Imports of mobile handsets have climbed sharply over the years, reaching $1.37 billion in FY20. Between July and September of FY21 they have crossed $492 million already and look set to beat last year’s record despite a slowing economy.