Pakistan: The Next Electronics Manufacturing Hub?

by Riaz Haq

Aug 2, 2022

Soaring demand for consumer electronics and low labor costs are attracting major global smartphone manufacturers like Samsung to Pakistan. In 2021, local manufacturers produced 25 million handsets, up a whopping 88% increase from 13 million produced in 2020. A key factor credited for this rapid production ramp-up is the new Mobile Device Manufacturing Policy announced and implemented by former Prime Minister Imran Khan's government in 2020. It imposes high tariffs on the import of mobile phone sets and offers tax rebates for local manufacturing. The policy set a 49% localization target by June 2023, including 10% localization of components on the motherboard and 10% localization of batteries.  Pakistan is forecast to be the world's 7th largest consumer market by 2030. The key to attracting more manufacturing in Pakistan lies in continuation of pro-investment policies and a measure of political stability. 

Pakistan Going From Imports to Exports of Mobile Handsets. Source: PIDE

The local manufacturing plants have assembled 14.08 million mobile phone handsets in the first six months (January-June) of 2022, while imports declined to 1.14 million handsets, according to the Pakistan Telecommunication Authority (PTA). Implementation of Device Identification Registration and Blocking System (DIRBS) and conducive government policies including the Mobile Device Manufacturing Policy 2020 have created a favorable environment for mobile device manufacturing in Pakistan.

Pakistan Mobile Phone Market. Source: PIDE

In addition to Samsung, a number of Chinese mobile handset manufacturers are investing in Pakistan to ramp up local production. Itel has manufactured 3.91 million mobile devices followed by VGO Tel's 2.97 million, Infinix 2.65 million, Vivo 2.45 million, Techno 1.87 million, QQMEE 0.86 million and Oppo 0.67 million. After the export of the first lot of 4G smartphones to the UAE in 2022, Pakistan has now set $1 billion target for mobile phone exports for the current fiscal year. 

Pakistan Telecom Indicators. Source: PTA

Pakistan wants to emulate Vietnam which has emerged as one of the leading countries in the assembly and export of smartphones and other consumer electronics devices in the past decade. Apple has recently moved part of its iPad manufacturing to Vietnam from China, where Covid lockdowns have disrupted supply chains.  TRT World has recently quoted Quentin D’Silva, the head of Lucky's smartphone division in Pakistan, as saying, “It’s only in the last five to seven years that the smartphone business has mushroomed in developing countries like ours". 

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  • Riaz Haq

    Amir Husain
    @amirhusain_tx
    MANUFACTURING IN PAKISTAN: THE CELL PHONE EXAMPLE

    The question is not whether Pakistan CAN do these things. Pakistan demonstrably can. The question is whether the ecosystem matures fast enough to integrate these capabilities into commercial manufacturing.

    So when someone asks "what percentage of local value addition makes something truly 'produced' locally?" ask them to name a number. Then show them which "manufacturing nations" fail their test. The truth is, the question itself is designed to ensure Pakistan can never win. It's intellectual gerrymandering. Set the standard at whatever Pakistan hasn't achieved yet, discount labor arbitrage, discount or ignore benefits gained, then move it again when they get there. Meanwhile, people that actually understand the business do appreciate what Pakistan has accomplished. It includes at least the following:

    1. A near-total transformation of a major consumer goods sector from imports to domestic production in under a decade
    2. Tens of thousands of skilled jobs created
    3. Billions in foreign exchange saved
    4. An industrial ecosystem taking root and growing
    5. Human capital developing at scale
    6. Electronics export potential emerging

    Every successful manufacturing nation started exactly where Pakistan is now. The critics can keep moving goalposts. The factories keep running. The workers keep getting paid. The capability keeps building.


    https://x.com/amirhusain_tx/status/2016694941993590808?s=

    Jan 29

  • Riaz Haq

    Apple is set to begin manufacturing and refurbishing iPhones in Pakistan, aiming to establish a regional export hub for mobile devices, according to reports in February 2026. The plan, supported by the Pakistan government under a new Mobile and Electronics Manufacturing Framework, includes incentives like an 8% performance bonus and discounted land for local assembly and repair.
    The Economic Times
    The Economic Times
    +4
    Key details:
    Manufacturing & Refurbishing: The agreement involves both assembling new iPhones and establishing a facility to repair/refurbish 2-3 year-old models for international re-export.
    Economic Impact: The initiative is expected to generate approximately
    $
    100
    $
    1
    0
    0
    million in re-export revenue in its first year.
    Incentives: The Pakistan government has proposed enhancing performance-based incentives for manufacturers to 8% to attract Apple and other tech giants, encouraging a shift toward localization.
    Location: Reports suggest Air Link Communication plans to open the first official Apple retail store by late 2025.
    Hindustan Times
    Hindustan Times
    +4
    This move marks a significant shift in regional supply chain strategies and aims to boost Pakistan's local manufacturing capabilities.

    Feb 19

  • Riaz Haq

    • China is a major ally and investor in Pakistan, with several Chinese private sector firms undertaking joint ventures in the South Asian country
    • China’s Aerospace Development Industry Investment Group Co. says it plans investments in advanced technology industries and mining and minerals

    ISLAMABAD: A Chinese aerospace firm has expressed interest in investing up to $10 billion in various sectors in Pakistan, the information ministry in Islamabad said on Thursday.

    China is a major ally and investor in Pakistan and has pledged over $65 billion in investment in road, infrastructure and development projects under the China-Pakistan Economic Corridor (CPEC), besides several Chinese private sector manufacturers undertaking joint ventures in the South Asian country.

    Pakistan offers significant investment potential owing to its strategic geographic location connecting South Asia, Central Asia, and the Middle East, a large consumer market of over 240 million people, and a young and dynamic workforce. The country also provides attractive incentives for investors.

    On Thursday, officials of the Aerospace Development Industry Investment Group Co. of China met with Pakistan’s Board of Investment Minister Qaiser Ahmed Sheikh to discuss investment opportunities and potential avenues in the country, according to the Pakistani information ministry.

    “They informed that Aerospace Development Industry Investment Group is an international investment group with an AAA corporate credit rating, engaged in strategic industrial investments in areas including advanced technologies, aerospace development, artificial intelligence, electric vehicles, drone technologies, and energy projects,” the ministry said.

    “The delegation expressed keen interest in investing between USD 5 billion to USD 10 billion in Pakistan across multiple sectors including mining and minerals, advanced technology industries, and industrial development. They also emphasized their interest in collaborating with Pakistan on skill development initiatives.”

    Sheikh appreciated the interest shown by the Chinese company, saying that Pakistan is taking concrete steps to improve investment climate in the country.

    “The Board of Investment is actively working on regulatory reforms to facilitate investors, promote ease of doing business and streamline business procedures,” he was quoted as saying.

    The minister referred to the Pakistan–China Business-to-Business Conference held in September last year, where more than 300 companies from Pakistan and China participated and signed 167 Memoranda of Understanding (MoUs) aimed at strengthening bilateral investment and trade cooperation.

    “Pakistan and China already have a Free Trade Agreement, and Pakistan is now focusing on increasing its value-added exports to further enhance economic cooperation,” he said.

    Sheikh also briefed the delegation on the incentives available for investors in Pakistan’s Special Economic Zones (SEZs), including exemption from income tax and sales tax on the import of machinery, to promote industrial investment.

    yesterday