Islamabad: The production of mobile phones by local manufacturing plants has surpassed the number of mobile phones’ imports in the country. During Jan-July 2021, the production of mobile phones by local manufacturing plants was 12.27 Million and imported mobile phones was recorded at 8.29 Million.
This trend reflects a positive uptake on PTA’s Mobile Device Manufacturing (MDM) Authorization regulatory regime whereby local manufacturing within the first year of regime introduction has resulted in production of 12.27 Million phones in a short span of 7 months including 4.87 million 4G smartphones.
The successful implementation of Device Identification Registration and Blocking System (DIRBS) along with conducive government policies including the mobile manufacturing policy has created a favourable environment for mobile device manufacturing in Pakistan. It has also contributed positively to the mobile ecosystem of Pakistan by eliminating counterfeit device market providing a level playing field for commercial entities and has created trust amongst consumers due to the formulation of standardized legal channels for all sorts of device imports.
It is important to highlight that the Government of Pakistan introduced a comprehensive mobile manufacturing policy to encourage and attract manufacturers to establish their units in Pakistan. PTA in light of the policy issued Mobile Device Manufacturing (MDM) Regulations on 28th January, 2021. Till now, 26 companies have been issued MDM authorization enabling them to manufacture mobile devices in Pakistan. The companies include renowned brands e.g. Samsung, Nokia, Oppo, TECNO, Infinix, Vgotel, Q-mobile etc.
Meanwhile, early benefits of Prime Minister Imran Khan’s Digital Pakistan initiative have started to trickle in – as evidenced by the recent export of 5,500 locally manufactured 4G smartphones to the UAE.
Pakistan has one of the largest markets for use of mobile devices with a yearly appetite of around 40 million devices per year. Therefore, manufacturing of devices locally is a key step towards fulfilling this demand and creating skilled jobs in the country. The move should bring prices down, resulting in more affordable devices for consumers.
According to statistics maintained by PTA, Pakistan’s subscriber base reached 159 million in CY 2019, making it the eight largest online population in the world. As per PTA data, mobile subscriptions crossed 164 million in CY 2020.
Owing to significant size of population and continuous growth in mobile connectivity, Pakistan is the world’s seventh largest handset importer in the world as per Trade Map Data. This makes Pakistan market an attractive destination for global brands. However, currently the market is largely dependent on imports as local manufacturing regime remains unattractive.
According to PTA, Pakistan’s total annual market size (2G/3G/4G) is estimated at 34 million handsets out of which 20 million are 2G and 14 million units are 3G and 4G collectively. Following are the changing trends in mobile market of Pakistan.
During the two-year period between January 2018 and December 2019, the share of 4G devices grew from 16 percent to 31 percent; 3G devices shrank from 19 percent to 13 percent; while 2G devices decreased from 64 percent to 56 percent. This clearly reveals the local market is shifting gradually towards latest technology.
Device Identification, Registration and Blocking System (DIRBS) project of PTA has been instrumental in controlling smuggling of mobile phone devices in addition to providing safeguards against security hazards. International Mobile Equipment Identity (IMEI) registration requirement under DIRBS has resulted in growth of both local manufacturing and imports through legal channels.
According to the import statistics shared by PTA and the benchmark analysis, after the introduction of DIRBS, the commercial imports have shown increase from 17.2 million units in 2018 to 28.2 million mobile devices in 2019. The significant increase of 64 percent reveals that imports through grey channels have been converted into legal imports.
Local assembly exhibited 147 percent growth during calendar year 2019.
Analysis of available data shows that the imports have increased by 11 million devices wile local manufacturing has grown by 7.64 million. This means local manufacturing could not benefit fully from introduction of DIRBS, and further potential still exists to convert the imports into local manufacturing thus ensuring jobs for educated youth including engineers, technicians, and skilled and semi-skilled workers.
PTA granted permission to 29 local companies for manufacturing out of which 19 are operational.
Pakistan’s mobile manufacturing policy offers zero custom duties/taxes for manufacturing of devices that fall in the slab of USD 0 to 350. It allows 3 percent R&D rebate on export of mobile devices, which encourages local manufacturer to export such smartphone devices bearing “Manufactured in Pakistan” to global markets.
Local manufacturers have shown satisfaction on approval of mobile phone policy and are of the considered opinion that investment in this sector will start pouring in.
Until recently, most of the local companies were manufacturing 2G feature phones. Many are now shifting to manufacturing smartphones as technology is shifting towards 4G/5G.
Recently, Pakistan Telecom Authority (PTA) Authorization holder Inovi Telecom started exporting smartphones. The first consignment of 5,500 units of 4G smartphones carrying “Manufactured in Pakistan” tag was shipped to the UAE.
Notably, Inovi Telecom Pvt. Ltd was issued mobile manufacturing authorization by PTA on 9 April 2021. Within 4 months, the company has managed to achieve exporting ‘Manufactured in Pakistan’ phones.
Before this, PTA has issued authorization to Lucky Motor Corporation to Manufacture Samsung Mobile Devices in Pakistan.
In accordance with Mobile Device Manufacturing (MDM) Regulations 2021, PTA has issued MDM authorization to Lucky Motor Corporation Limited for manufacturing of Samsung brand mobile devices. This 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.
This is possible only due to the conducive policies of the Government of Pakistan in its “Digital Pakistan” endeavour. PTA has so far issued MDM authorizations to 26 foreign and local companies for the production of mobile devices (2G/3G/4G) locally. Mobile devices manufactured by these companies shall not only be sold in the country but will also be exported to other competitive markets of the region and beyond. The device manufacturing plants shall be instrumental in creating new job opportunities as well as enabling affordability of mobile devices for Pakistani users.
Federal Minister for Industries and Production Muhammad Hammad Azhar says that mobile device manufacturing industry has a huge potential in Pakistan. It is one of the top five industries across the globe that plays an important role in spurring economic growth.
The mobile devices are also transforming the future of e-government which will further increase the demand of mobile devices in Pakistan. Government of Pakistan has decided to provide a comprehensive, well defined policy that aims essentially to promote local manufacturing of PTA approved mobile devices in Pakistan.
The policy aims to address the core issues faced by mobile device manufacturers and to provide an attractive tariff environment over the policy period, besides other non-tariff initiatives to promote “Make in Pakistan” strategy for mobile devices.
