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The government has decided to formulate mobile phones manufacturing policy as three international cellular companies - M/s Samsung, M/s Huawei and M/s Nokia - want to start manufacturing in Pakistan due to lower wages compared to China, well-informed sources in EDB told Business Recorder. This 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 held on January 31, 2019.

According to sources, Noman Khalid, Director, PTA, informed the participants that due to International Mobile Equipment Identity (IMEI) registration the local manufacturing of mobile devices has increased. He recommended that Ministry of Industries and Production (MoI&P) in coordination with relevant stakeholders should formulate a policy to encourage local manufacturing of mobile devices. Initially, Semi Knock Down (SKD) assembly should be encouraged with the help of tariff- based incentives. However, benefits offered to the SKD assembly should have cap limit i.e. 22 months. The case study of India can be followed as an example. He further added that incentives should be given to 3G/4G technology mobile devices.

Mansoor Khan, Joint Director Ministry of IT and Telecom 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. He proposed that tax slabs should be formulated according to manufacturing and classification of industry.

The representatives of mobile industry revealed that all mobile device manufactures and potential investors - M/s Samsung, M/s Huawei and M/s Nokia - want to start manufacturing in Pakistan. The labor pay in China is very high, i.e., 5,000 (PKR 105,000) Yuan for unskilled and 20,000 (PKR 420,000) Yuan for technical work force whereas labor and skilled workforce is available in Pakistan at very low remuneration. They further stated that the mobile devices consist of almost 60 sub-parts manufactured by vendor industry/secondary suppliers. The mobile manufacturing plant costs around Rs 2 billion.

The cost of land is additional and industry proposed the following to enhance local manufacturing of mobile devices: (i) tax holiday on Income and Sales tax should be given for 8-10 years; (ii) Special Economic Zones (SEZs) may be developed to promote mobile manufacturing industry; (iii) the duties and taxes on mobile devices

Complete Build-up Unit (CBUs) should be increased to make local manufacturing of mobile devices competitive; and (iv) incentives should be given for manufacturing of 2G/3G/4G devices.

The representative of FBR said that the government has announced amendments to encourage CKD-based manufacturing and on the import of mobile devices in SKD and CBU form. He further added that if stakeholders have any issues they may submit their proposal/requests for review to Ministry of Finance through EDB/ MoI&P.

Asim Ayaz, DGM-incharge policy, stated that EDB has always taken steps to encourage local manufacturing. One example in this regard is Auto Development Policy (ADP) 2016-21 under which 13 new investors have been awarded Greenfield status and 2 closed units have been revived.

He further revealed that EDB policy team is working on Mobile Policy and hoped that soon Pakistan will see similar success as is being witnessed in the automobile sector. He added that EDB made efforts to ensure surveillance and curb misuse of import policy schemes to discourage finished products and encourage local industry. In reply to query on Finance Bill (2nd Amendment), DGM (Policy) requested the participants to forward joint proposals.

After a detailed discussion, the meeting decided 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 later as CKD assembly operations. In this regard the industry will submit consolidated proposals to EDB.

It was also decided that the industry will submit proposals/requests to EDB on the reservation if any on the Finance amendment Bill 2019. The meeting further decided that EDB will finalize the initial policy draft by February 20, 2019 and initial draft will be discussed with all public and private sector stakeholders before final submission to MoI&P.

Copyright Business Recorder, 2019

the author

I did graduation from the Government Murray College Sialkot and MSc in Psychology from the University of Punjab. I am in journalism since 1990. I worked in Daily Nawa-i-Waqt as sub editor and staff reporter in Daily Pakistan and Daily Din prior to joining Daily Business Recorder. I have been associated with this newspaper since 2000 as staff reporter. Energy Sector, Commerce / Trade and Industries are key areas of my interest. I have also the credit of exposing number of scams like Rental Power Plants (RPPs), LNG, sugar import, etc.