Can local mobile manufacturing boost Pakistan’s exports? An insight from Mobile Manufacturing Summit
The demand for technology products has reached new heights, especially for mobile phones. In Pakistan, there is an annual demand of about 36 million mobile units, which is staggering. To shed light on the huge potential of the mobile industry, the Engineering Development Board (EDB), in conjunction with the Pakistan Mobile Phone Manufacturers Association (PMPMA), organized a summit on mobile device manufacturing. It is pertinent to mention here that EDB is an attached department of the Ministry of Industry and Production.
Several well-known mobile phone manufacturers operating in Pakistan also participated in the event. There were a total of approxf 31 companies including Xiaomi, Realme, Infinix, Tecno, Itel, Alcatel, G-Five, Oppo, Vivo, Decode, Digit, etc.
Chief Guest and other key participants
Makhdoom Syed Murtaza Mahmud, Federal Minister of Industry and Production, was the main guest at the event. All relevant stakeholders participated in the event, including mobile device manufacturers, government officials from the Ministry of Industry and Production, the Pakistan Telecommunications Authority, the Ministry of Commerce, the National Tariff Commission, the Board of Investment, the Ministry of IT and Telecom, the Federal Board of Revenue, and academia to encourage local assembly of mobile devices by increasing investment and employment opportunities in this sector.
Key PMPMA officials who participated in the event include Chairman Mian Abdur Rehman, Senior Vice Chairman Muzaffar Piracha, Vice Chairman Aamir Allawala and Deputy Vice Chairman Zeeshan Mianoor.
During the event, souvenirs and shields were presented to various government officials, federal ministers, smartphone manufacturer executives and other industry officials.
Main purpose of the event:
The aim of organizing the event was to get input from all relevant stakeholders regarding the local production of mobile phones. In addition, the huge potential of local production to boost the country’s economy was also discussed by industry experts. These aspects will be part of our discussion and you will also have the chance to learn some new interesting facts.
Insights related to the local mobile industry of Pakistan:
The seed of mobile manufacturing in Pakistan was sown in 2015. There was no dramatic shift in the industry as we are a third world country and need more time to get going. After 2018, however, things moved quickly and mobile products took off in the country. The government then formulated the country’s policy together with other stakeholders first-ever mobile production policy. The policy attracted a number of renowned international mobile brands to Pakistan.
Currently, except Apple, all other major mobile brand phones are manufactured in Pakistan. A total of 31 companies (local & international) have set up their local assemblies in Pakistan. According to PMPMA’s estimate, more than 40,000 people have gained employment as a result of these developments. Recently, in another pursuitPakistan exported about 130,000 ‘Made in Pakistan’ mobile phones to UAE for the first time in history. Moreover, one of the industry officials told that during the event about 95% of phones used in Pakistan are manufactured under the umbrella of PMPMA, a moment of pride for the country.
Pakistani Local Mobile Industry – A huge potential for a thriving economy of the country
All major industry experts and government officials who participated in the event spoke about the potential of local mobile manufacturing in Pakistan. According to the officials, if the local mobile industry flourishes at a good pace and along with government support, it could add as much as $14 billion to the national treasury. To validate their assumption, they give the public a number of reasons.
- Examples from Vietnam and India:
First they gave examples of the local mobile industries in Vietnam and India. Vietnam is the largest assembler of Samsung smartphones, earning a whopping $57.5 billion in mobile exports. Similarly, India is also becoming a major manufacturer of smartphones and exports millions of mobile phones every year. The interesting thing is that both countries started just a few years ago, so Pakistan can take their lead and tap into the potential of this rich mobile industry.
- Developing as a Sunrise Industry:
In addition, a senior mobile industry official cited the example of the sunrise industry. He said that since we are a developing country, the concept of a sunrise industry can be applied to us. First we will have to let the assembly line flourish and become exporters. Then we can go into a reverse process and then start producing the raw material (components) and then move towards the design (patent) in the same way.
Another official informed the public about the new China +1 policy and we can benefit from it. For example, if China shifts its 10% mobile production to Pakistan, we could still make $15 billion a year from it.
Required steps to exploit the potential and localization of the mobile industry:
Consistency of government policies:
Government policies must be consistent for local mobile assembly facilities to be successful, as it creates a stable environment for investment and operations. Businesses may feel insecure and at risk due to inconsistent or shifting government regulations, which may discourage them from investing in the local assembly plant. Foreign investors are more willing to invest in a country if they can be confident that laws and regulations will not change often because of policy consistency.
A key technique to drive the growth of a local mobile assembly is tiered rates. Tariffs imposed on products at each stage of production rather than just the final stage are referred to as tiered rates. This can make it cheaper to produce things locally instead of importing them, which can be beneficial for setting up a local mobile assembly facility.
Applying rates at every stage of production can drive up the price of imported items. As a result, companies may be encouraged to set up local assembly plants as it is more economical.
Using cheap and large workforce:
Pakistan has a cheap and very large workforce which can prove to be really beneficial. It is pertinent to mention here that having a cheap and large workforce can be an important factor in setting up a local mobile assembly facility. A large and low-cost workforce can help keep labor costs down, making it more cost-effective to produce goods locally. This can make it more competitive to produce goods locally rather than importing them.
Infrastructure development is crucial to the success of setting up a local mobile assembly facility. Adequate infrastructure is necessary for the proper operation of the facility, as well as for the transportation of raw materials and finished goods.
Without proper infrastructure, it can be difficult and costly to transport raw materials and components to the assembly facility and to transport finished products to market. This can increase production costs and make it less competitive to produce goods locally.
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