Pakistan spends Rs 63bn on import of mobile phones in FY14

KARACHI: Pakistan spent Rs 62.96 billion on the import of mobile phone handsets during the outgoing fiscal year 2013-14 (FY14) while it is expected to swell up more in current fiscal due to arrival of next generation technologies.
Precious foreign exchange was continuously being spent on import of luxurious items for last many years, which broadens trade deficit of Pakistan.
According to the latest figures of Pakistan Bureau Statistics (PBS), the same trade consumed Rs 59.31 billion of Pakistani nation in FY13 while it was enlarged by 6 percent at the end of FY14.
To save valuable foreign reserves, apparently government is intending to encourage local mobile phone manufacturing by announcing incentives for manufacturers in upcoming telecom policy.
However, Pakistan’s number one smartphone brand, Q Mobile’s Chief and Chairman Zeeshan Pervaiz Akhtar was not much optimistic regarding smartphones’ manufacturing in Pakistan and considered it impossible but he backed the government for taking any positive initiative to support mobile phone manufacturing in Pakistan as this would create huge employment opportunities in the country.
Similarly, given the government’s intentions to announce incentives for cellular phone manufacturers in upcoming Telecom Policy, the local industry experts also said manufacturing of smart phones in Pakistan would not be a fruitful venture.
Recently a Chinese firm showed interest to establish a smart phones’ manufacturing plant in Pakistan to cater to 3G/4G needs, thus it is quite expected the government envisaging to have more international players will announce incentives in the upcoming Telecom Policy which is due next month.
Akhtar said mobile phone manufacturing was not possible in Pakistan in the near future as even India could not produce single mobile phone yet. He suggested mobile phone assembling was a viable option to bring international players in Pakistan as Q Mobile was already to start running its assembling plant in Pakistan in next three to four months with expected production capacity of 10,000 units daily.
Government should rationalise the tax regime for mobile phone imports as high tax rates halt legal imports while it encourages grey imports.
Q Mobile contributes Rs 5 billion to Rs 6 billion every year in national exchequer in terms of duties for importing mobile phones, while in 2014 this figure is expected to touch the Rs 8 billion.
If the government intends to earn revenue by taxing this sector’s imports they should curb illegal import by taking immediate steps to support legal importers like Q Mobile.
Manufacturing of smart phones is not an easy task as it needs huge investment and latest technology thus Pakistani smart phones will remain fail to meet international quality standards as making of a 3G compatible smart phones is quite difficult venture.
Similarly, a senior telecom analyst Sohaib Sheikh said manufacturing mobile phones in Pakistan was less fruitful as one could import a smartphone at a price of featured phone now days.
It would be even difficult to export them considering the global competition, he added.
Also a smart phone can be imported today at a cost of feature phones, so competing with even an importer will be impossible, he reasoned.
Government can regulate mobile phone import by giving licenses to mobile importers, which will also reduce the grey import, Sheikh concluded.
PBS’s latest figures the import of telecom sector declined by 10 percent to Rs 137.93 billion in FY14 as compared to Rs 144.31 billion in FY13.
PBS revealed import of telecom group’s other mobile accessories and apparatus contracted by 11.37 percent in FY14 to Rs 74.965 billion as against Rs 84.99 billion in the last fiscal year.

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