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Lower Import Duties Rattle Pakistan's Mobile Handset Makers
Pakistan Federal Board of Revenue has recently announced that “Sales Tax and Income Tax at import stage has been drastically reduced in case of smartphones of Rs15,000 or below". This action was apparently taken after Digital Pakistan Initiative led by Tania Aidrus asked for it. It has come under fire from the country's nascent mobile phone and smartphone manufacturing industry which is producing low-cost mobile phones. Pakistan's mobile handset market is the 8th largest in the world. Current annual demand is for about 40 million units of which 13 million are assembled in Pakistan while the rest are imported, according to a report by Dunya News. The import bill for Fiscal Year 2020 is expected to be about $1.2 billion. Boosting it will save billions of dollars of precious foreign exchange. It will create tens of thousands of jobs and spawn new auxiliary manufacturing industries for chargers, headphones, USB cables, cases, etc. In future, Pakistan could become a significant exporter of mobile handsets.
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Mobile Phone Demand:
There are currently 164 million mobile phone users in Pakistan, the 8th largest in the world. The current annual demand for mobile phones in the country is estimated at about 40 million units, according to Pakistan Telecommunication Authority (PTA). The fastest growing demand is for 4G smartphones.
According to Pakistan Bureau of Statistics, mobile-phone imports (HS Code: 8517.1219) reached $498 million in 5 months period from July to November 2019, 64% jump over the prior year. Fiscal 2019-20 imports are expected to reach $1.2 billion.
Earlier, the growth rate for 4G handsets jumped from 16% in 2018 to 29% in 2019. Imports of mobile handsets soared 69% from $ 364 million in 2018 to $ 615.7 million in 2019. Pakistan is world's seventh largest handset importer and the 8th largest mobile phone market.
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Domestic Manufacturing:
Pakistan Telecommunication Authority (PTA) has granted permission to 26 local companies for manufacturing out of which 15 are currently in production. Among those currently producing mobile handsets in Pakistan are: E-Tachi, GFive, Haier, Infinix and Tecno. They are producing 13 million mobile phones.
Domestic manufacturers claim that they can meet 80% of demand for mobile handsets over the next 2 to 3 years if they are sufficiently protected by higher tariffs on imports.
Domestic mobile phone manufacturing industry will save billions of dollars of precious foreign exchange. It will create tens of thousands of jobs and spawn new auxiliary manufacturing industries for parts, chargers, headphones, USB cables, cases, etc. In future, Pakistan could become a significant exporter of mobile handsets.
Summary:
Pakistan's mobile handset market is the 8th largest in the world. Current annual demand is for 40 million units. Domestic plants produce 13 million units while the rest are imported. The import bill for Fiscal Year 2020 is expected to be about $1.2 billion. The country's nascent mobile handset manufacturing industry fears a serious early setback if the FBR decision to lower duties on imports of foreign made mobile phones is not reversed. It is being blamed on Tania Aidrus, Prime Minister Imran Khan's advisor on Digital Pakistan Initiative, who would like to increase availability of mobile handsets. Domestic mobile phone manufacturing industry will save billions of dollars of precious foreign exchange. It will create tens of thousands of jobs and spawn new auxiliary manufacturing industries for chargers, headphones, USB cables, cases, etc. In future, Pakistan could become a significant exporter of mobile handsets.
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Comment by Riaz Haq on August 11, 2021 at 7:20am
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In what seems like an odd move for all involved, Pakistan's telecommunication regulator – the Pakistan Telecommunication Authority (PTA) – has announced approval for Lucky Motor Corporation (LMC) to manufacture Samsung mobile devices.
https://www.theregister.com/2021/08/11/in_pakistan_a_car_company/
The local automobile manufacturer is a joint venture between Lucky Group and South Korea's Kia Motors, and manufactures and distributes Kia cars built in a purpose-built plant in Karachi's Bin Qasim Industrial Park.
"The authorization to manufacture Samsung Mobile devices in Pakistan is a landmark achievement and will further revolutionize the vibrant mobile manufacturing ecosystem in the country by ensuring presence of major local and foreign players in the market," declared the regulator.
The PTA has issued similar Mobile Device Manufacturing (MDM) authorizations to 25 foreign and local companies to produce the tech in Pakistan. The devices will be both sold in the country as well as exported.
Samsung and Lucky inked the deal back in July. The production facility will be located at LMC's existing Karachi auto plant and is scheduled for completion by the end of 2021.
PTA tweeted, celebrating the job opportunity potential stemming from the new plant:
Samsung's decision to partner with an automobile manufacturer may seem unusual but, according to Pakistani brokerage and research firm Topline Securities, Samsung has form setting up factories in the region to serve domestic and export markets. In Bangladesh, for example, Samsung uses a local factory established in 2018 to produce 95 per cent of the 2.5 million mobile devices sold in-country.
Pakistani English-language daily The Express Tribune offers another reason the Lucky Group could be interested: the paper reported this week that an increase in prices for steel and other raw materials, plus shipping cost hikes, have caused a rise in vehicle prices even as COVID-repressed demand for cars was gradually rebounding.
The deal means Lucky Group has diversified into more affordable products, while Samsung has boosted local capacity, given local buyers a good reason to consider its wares, and diversified its manufacturing base.
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Tweet from Almas Hyder, Chairman of Engineering Development Board (EDB):
Today 5500 units smart phones have been exporter from INOVI telecom to Middle East market. A good start for Pakistan.
https://twitter.com/AlmasHyder/status/1425828347238510593?s=20
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#Pakistan begins #export of #smartphones . After authorisation from Pakistan #Telecom Authority (PTA), Inovi Telecom has exported 5,500 units of 4G smartphones carrying "manufactured in Pakistan" tag to the United Arab Emirates (#UAE). #electronics
https://tribune.com.pk/story/2315622/pakistan-begins-export-of-smar...
"PTA congratulates the company for this landmark achievement. This is the result of concerted efforts for the development of the mobile device manufacturing ecosystem in the country," the authority said in a statement issued on Saturday.
It said that the successful implementation of the Device Identification Registration and Blocking System (DIRBS) and enabling government policies including the mobile manufacturing policy have created a favourable environment for mobile device manufacturing in Pakistan.
"As a part of this policy, Inovi Telecom Pvt. Ltd was issued mobile manufacturing authorisation by PTA on 9th April 2021," it added.
Within four months, according to PTA, the company has managed to export "manufactured in Pakistan" phones.
In recent times, the telecom sector has emerged as a prominent contributor to Pakistan’s economy as its share in the national exchequer soared 129% in 2020 compared to 2019, despite economic pressure arising from Covid-19.
In July, Lucky Motor Corporation entered into an agreement with Samsung Gulf Electronics to produce Samsung mobile phones in Pakistan at its automobile plant at Port Qasim.
In comments to The Express Tribune, Tecno Pack Telecom CEO Aamir Allawala termed the joint venture excellent development for the country
Samsung was a mobile phone giant and its decision to assemble phones in Pakistan was an indication of the success of the Mobile Device Manufacturing Policy (MDMP) launched by the government in June 2020, said Allawala.
The vision of the policy was clear i.e. by 2022, 80% of all mobile phones sold in Pakistan should be locally manufactured, he said.
The brands already being manufactured in Pakistan included Tecno, Infinix, Itel, Vivo, Oppo and Realme while Nokia was in the process of setting up a plant and kick-starting operations in September 2021, Allahwala further said.
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Samsung's building a TV assembly plant in #Pakistan to churn out 50,000 units yearly. Samsung Electronics is also establishing a new #smartphone #manufacturing line in the country.- SamMobile
https://www.sammobile.com/news/samsung-building-tv-plant-pakistan-c...
Samsung Electronics is building a new TV manufacturing plant in Pakistan. The project will be finalized in collaboration with R&R Industries, and the factory is scheduled to become functional in the final quarter of the year. The news was confirmed via Twitter by the Advisor to the Prime Minister of Pakistan, Abdul Razak Dawood.
According to the news, the building of Samsung’s new TV manufacturing plant was made possible in part by the Made-in-Pakistan policy, which provides incentives to bolster the domestic manufacturing industry.
Through its new TV factory in Pakistan, Samsung will be able to produce roughly 50,000 units every year, though it’s not clear what TV models will be made there, exactly.
Samsung will also build phones in Pakistan
Aside from the new TV manufacturing plant built in collaboration with R&R Industries, Samsung Electronics is also establishing a new mobile phone manufacturing line in the country.
This was announced by Lucky Motor Corporation a couple of months ago, the latter of which will repurpose its automotive plant at Port Qasim to assemble Samsung mobile devices. By 2022, 80% of all mobile phones sold in Pakistan could be manufactured locally, though not exclusively at the Port Qasim assembly plant.
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OPPO #Pakistan targets 5mln #mobilephone exports. The #Chinese company has plans to upgrade its assembly plant to a #manufacturing plant in Pakistan with a target to make 5 million mobile phones per annum. #smartphone
https://www.thenews.com.pk/print/896336-oppo-pakistan-targets-5mln-...
OPPO Pakistan has plans to upgrade its assembly plant to a manufacturing plant in Pakistan with a target to make 5 million mobile phones per annum.
OPPO Pakistan CEO George Long made the announcement during his meeting with Federal Minister for Industries and Production Makhdum Khusro Bakhtyar at his office on Wednesday.
Highlighting that the company also aimed to establish a research and development centre for transfer of technology and skill development of IT professionals in Pakistan, Long said OPPO was optimistic about exporting locally manufactured sets from the country.
Welcoming the announcement, the minister said that the government of Pakistan’s investment-friendly policies have improved the business ecosystem in Pakistan.
He said that local manufacturing of mobile would not only keep prices under control for local customers, but would also enable expansion of the mobile phone industry to become a bigger player in the economy. Bakhtyar said that this growth would result in the creation of numerous employment opportunities within the industry as well as associated industries in the country.
Earlier this month, the Pakistan Telecommunication Authority (PTA) had floated the draft ‘Mobile Device Manufacturing Regulations and Authorisation’ for the promotion of domestic manufacturing of mobile phones.
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Chinese smartphone giant Xiaomi to set up local manufacturing plant in Pakistan
Dawood says initial production of Xiaomi will be around 3 million handsets per annum
https://tribune.com.pk/story/2327553/smartphone-giant-to-set-up-loc...
KARACHI:
One of the world’s largest mobile manufacturers will set up a handset manufacturing plant in Pakistan, announced Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood.
On his official Twitter handle on Tuesday, he cherished that the Make in Pakistan was bearing fruits as Xiaomi had partnered up with Airlink Communications to manufacture smartphones in Pakistan.
The production facility would be established at Quaid-e-Azam Industrial Estate, Lahore, he said adding that 2.5 to 3 million handsets will be produced per year.
“The production facility will become functional in January 2022 and it will create 3,000 direct and indirect jobs,” he remarked.
In comments to The Express Tribune, Tecno Pack Electronics Chief Executive Officer (CEO) Aamir Allawala said that Pakistan was among the top 10 handset markets in the world.
He cherished that Mobile Device Manufacturing Policy 2020 had begun bearing fruits.
Allawala highlighted that investment of global mobile brands in local manufacturing was nearly nil until June 2020 despite a huge domestic market.
Until that period, the duties and taxes on completely built units (CBU) mobile phones were kept low – at the same level as their parts and components, he added.
In July 2020, the government created a reasonable differential in duties and taxes between CBU and completely knocked down (CKD)/ semi-knocked down (SKD) mobile phones under the mobile device manufacturing policy, he said.
This encouraged almost all foreign brands to start local assembly of mobile phones with a plan of indigenisation of its parts, he added.
“Currently, Tecno, Infinix, Itel, Oppo, Vivo, Realme and Nokia are producing smartphones in Pakistan,” Allawala said, adding that Samsung would begin production from December 2021 and Xiaomi from early 2022.
“By January 2022, 90% of all mobile phones sold in Pakistan will be made in the country,” he said.
The next step will be localisation of parts and boost in smartphone exports and all companies are making efforts in this regard, he added.
Talking to The Express Tribune, information and communications technology (ICT) expert Parvez Iftikhar termed Dawood’s announcement great development provided that manufacturer sticks to smartphones only.
It would not only provide jobs and other benefits to the economy but also help in increasing 4G penetration in the country, which is a pre-requisite for 5G, he added.
“It is time to not just celebrate but also to build upon it and increase our bandwidth in terms of exports, local infrastructure, policy making as well as setting a vision,” according to SI Global CEO Noman Ahmed Said.
He emphasised the need to work towards meeting and matching international standards and inculcate that skill at the collegiate level for youth engagement.
The net smartphone sales were around 1.3 million this year, which indicated the booming market share that we were currently heading towards, granting more employment opportunities as well, he added.
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#Samsung starts producing mobile phones in Pakistan. #Pakistan imported #smartphones worth $644.673m in first 4 months (July-October) of 2021, up from $557.961m during the same period of last year, registering a growth of 15.54%. - DAWN.COM
https://www.dawn.com/news/1661220
KARACHI: One of the world’s largest manufacturers of mobile phones, Samsung, has finally started production in Pakistan, lifting hopes of the authorities and the industry that this would cut down the import bill of the country in the months to come.
The development came to light on Tuesday at a meeting of the company’s top managers with the Senators who visited the production site in line with the plan to receive a briefing on the growing new sector and challenges ahead for the cellphones manufacturing industry in Pakistan.
“We were informed that Samsung has formally started its production,” Faisal Subzwari, chairman of the Senate’s Standing Committee on Industries and Production, told Dawn.
He headed a delegation of members of the Senate panel which visited Samsung’s production unit and an auto manufacturing plant, and held a meeting with the management of Export Processing Zone.
The company aims to manufacture around 3m handsets every year
“It’s really good to know that the company has started production within a short span of four months,” Mr Subzwari said. “We visited the production facility which was designed on modern lines and obviously the local manpower, support of local industry and conducive environment provided by the government led to such achievement. But still I believe that we need to move forward from just growing in the assembling area to localisation of the industry.”
The country has witnessed robust growth in local production of cellular phones. During the first 10 months of this year, the Pakistan Telecommunication Authority (PTA) data says, the production of mobile phones by local manufacturing plants has almost doubled to 18.87 million against the import of mobile phones which stood at 45m.
However, despite the increase in local production of mobile phones, the import remained on a higher side. The PTA data says that mobile phones worth $644.673m were imported during the first four months (July-October) of 2021 compared to $557.961m during the same period of last year, registering a growth of 15.54 per cent.
The industry believes that it may take time to achieve the desired results but with the fresh start in an absolutely new industrial avenue, things have finally started moving in the right direction.
“With production of around 250,000 to 300,000, we aim to produce around 3m cellphones every year,” Mohammad Ali Tabba, chief of the Lucky Group which partners with Samsung to produce cellphones in Pakistan, told Dawn. “The whole production line is manual with no robotic assistance. So you can imagine how much workforce is required offering employment in this absolutely new area of engineering in Pakistan.”
He agreed that the country needed to move towards localisation from its current status of assembling industry and believed it was more the role of the industrial sector than the government to go for modification and compatibility.
“It’s not only the local production of cellphones but also a host of opportunities which it brings. From employment to investment and from export opportunities to local capacity building, it carries immense potential,” said Mr Tabba.
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Samsung TV plant begins production in Karachi
https://www.dawn.com/news/1662359
ISLAMABAD: South Korean technology giant Samsung Electronics has operationalised its first TV line-up plant in collaboration with a local firm in Karachi, Commerce Adviser Razak Dawood announced on Monday.
Taking to Twitter, Mr Dawood shared photos of the facility and tweeted: “We congratulate Samsung Electronics on operationalising its first TV Line-up plant in Pakistan at Karachi in collaboration with R&R Industries. Initially, the unit will produce 50,000 TV sets and increase the capacity to 100,000 units within 2 years.”
South Korean technology giant Samsung Electronics has operationalised its first TV line-up plant in collaboration with a local firm in Karachi, Commerce Adviser Razak Dawood announced on Monday.
Taking to Twitter, Mr Dawood shared photos of the facility and tweeted: “We congratulate Samsung Electronics on operationalising its first TV Line-up plant in Pakistan at Karachi in collaboration with R&R Industries. Initially, the unit will produce 50,000 TV sets and increase the capacity to 100,000 units within 2 years.”
Mr Dawood said the collaboration was in line with Make-in-Pakistan policy of the Ministry of Commerce. “I urge all our firms to partner up with leading international companies to set up units in Pakistan,” the adviser further tweeted.
R&R Industries Pvt Ltd had signed an agreement with Samsung to set up a plant in Karachi’s Korangi Industrial Area. The construction and fabrication of the factory has already been completed.
The local partner company believes the collaboration will create more than 700 jobs in Pakistan due to the vast nature of this project.
It is expected that the business revenue of the project will be approximately touch Rs5 billion per annum and an annual target of producing 50,000 TV units.
Samsung Electronics, founded in 1969, quickly became a major manufacturer in the Korean market. This soon expanded to Samsung becoming a leading global brand and has been one of the world’s leading manufacturer of televisions for the last 15 years.
It is also worth mentioning that Lucky Motor Corporation (LMC), a subsidiary of Lucky Cement Ltd announced, in July that it has entered into an agreement with Samsung Gulf Electronics Co., FZE (Samsung) for the production of Samsung-branded mobile devices in Pakistan. The production facility will be located at LMC’s existing plant which is expected to be completed by end December.
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#Pakistan plans to export #smartphones in 2022. Pak produced 22.12 million handsets during January-November 2021 and imported 9.95 million. The country's #Mobile Device #Manufacturing Policy 2020 set a 49% localization target by June 2023. #economy https://tribune.com.pk/story/2337404/pakistan-eyeing-to-boost-cell-...
Adviser to the Prime Minister on Commerce and Investment Abdul Razak Dawood on Wednesday said that after achieving “big success” in the manufacturing of mobile phones last year, Pakistan was now seeking expansion into exports.
Pakistan, a net importer of mobile phones prior to 2016, produced 22.12 million handsets during January-November 2021 and imported 9.95 million during the same period, data from the Pakistan Telecommunication Authority (PTA) shows.
In 2020, Pakistan’s import of mobile phones was 24.51 million compared to 13.05 million sets produced locally.
Various Chinese mobile phone manufacturers have played a key role in Pakistan’s production boom in 2021, according to the PTA.
Local manufacturing plants assembled 9.03 million smartphones while the number of 2G mobile phones was 13.09 million.
“I would say that our whole venture into manufacturing mobile phones has been a big success,” Dawood said in an interview with Arab News on Wednesday.
“It has been very successful because we now see that every month the number of mobile phones coming into the country is decreasing and the numbers that are being produced and sold locally is increasing.”
The PM’s aide said the record levels of local manufacturing were achieved under a new “conducive policy” introduced by the current government.
The Mobile Device Manufacturing Policy 2020 set a 49 per cent localization target by June 2023, including 10 per cent localization of parts of the motherboard and 10 per cent localization of batteries.
“We have developed a policy for local assembling of mobile phones … We are currently looking at becoming a world-class assembler of mobile phones,” Dawood said.
“We are right now concentrating on low-end mobile phone sets and we hope that soon we will be able to start getting into high-end phones with world-class companies.”
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#Pakistan businessman hints at #iPhone plant in the country. Local #manufacturing could reduce import tariffs to make its best iPhones more affordable and accessible in the country. #Apple saves around 22% on import duties by making its phones in #India https://www.imore.com/pakistan-business-leader-hints-iphone-plant-c...
Pakistan business leader Javed Afridi says he is in talks with Apple to bring an iPhone assembly plant to the country.
Afridi made the revelation on Twitter in response to a question from journalist Shiffa Yousafzai:
Afridi is best known as the owner of Pakistan's MG JW Automobile, and the CEO of Haier & Ruba. He is also the chairman and owner of Pakistani T20 cricket franchise Peshawar Zalmi. Haier is a leading Pakistani supplier of home appliances and tech including laptops and LED TVs.
The murmurings could be reminiscent of a similar deal Apple did in India in order to onshore iPhone assembly in the country there. Like India, iPhones and other Apple products sold in Pakistan are subject to high import tariffs if they aren't made locally, driving up the price.
If Apple was able to set up some form of manufacturing it could reduce the impact of these tariffs to make its best iPhones more affordable and accessible in the country. Apple saves around 22% on import duties by making its phones in India instead of importing them. It would also help Apple reduce its reliance on its supply chain in China, a weakness highlighted by the pandemic which saw heavy disruption to supply in the early part of 2020. Like India, Apple could also consider using phones made in Pakistan for export as well as the local market.
Apple announced its new iPhone SE earlier this week, featuring 5G and the A15 chip from the iPhone 13, a great budget option at just $429.
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