Soaring demand for consumer electronics and low labor costs are attracting major global smartphone manufacturers like Samsung to Pakistan. In 2021, local manufacturers produced 25 million handsets, up a whopping 88% increase from 13 million produced in 2020. A key factor credited for this rapid production ramp-up is the new Mobile Device Manufacturing Policy announced and implemented by former Prime Minister Imran Khan's government in 2020. It imposes high tariffs on the import of mobile phone sets and offers tax rebates for local manufacturing. The policy set a 49% localization target by June 2023, including 10% localization of components on the motherboard and 10% localization of batteries. Pakistan is forecast to be the world's 7th largest consumer market by 2030. The key to attracting more manufacturing in Pakistan lies in continuation of pro-investment policies and a measure of political stability.
|Pakistan Going From Imports to Exports of Mobile Handsets. Source: PIDE|
The local manufacturing plants have assembled 14.08 million mobile phone handsets in the first six months (January-June) of 2022, while imports declined to 1.14 million handsets, according to the Pakistan Telecommunication Authority (PTA). Implementation of Device Identification Registration and Blocking System (DIRBS) and conducive government policies including the Mobile Device Manufacturing Policy 2020 have created a favorable environment for mobile device manufacturing in Pakistan.
|Pakistan Mobile Phone Market. Source: PIDE|
In addition to Samsung, a number of Chinese mobile handset manufacturers are investing in Pakistan to ramp up local production. Itel has manufactured 3.91 million mobile devices followed by VGO Tel's 2.97 million, Infinix 2.65 million, Vivo 2.45 million, Techno 1.87 million, QQMEE 0.86 million and Oppo 0.67 million. After the export of the first lot of 4G smartphones to the UAE in 2022, Pakistan has now set $1 billion target for mobile phone exports for the current fiscal year.
|Pakistan Telecom Indicators. Source: PTA|
Pakistan wants to emulate Vietnam which has emerged as one of the leading countries in the assembly and export of smartphones and other consumer electronics devices in the past decade. Apple has recently moved part of its iPad manufacturing to Vietnam from China, where Covid lockdowns have disrupted supply chains. TRT World has recently quoted Quentin D’Silva, the head of Lucky's smartphone division in Pakistan, as saying, “It’s only in the last five to seven years that the smartphone business has mushroomed in developing countries like ours".
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Not going to happen unless we have consistent, investor friendly policies. Manufacturing needs cheap energy. Pakistan energy rates are highest in region.
If Imran Khan comes back and our military allows him to work, Pakistan can realize its true potential. Otherwise if army wants to keep playing with its corrupt political toys, who have no vision for country execpt to steal more money, Pakistan has no future. Army needs to be kicked out of country's political decisions.
If our military leadership was this sincere, we sould have been Asian tiger long time ago. Its military which has been ruling the country directly or indirectly for last 75 years. Even after 75 years, we are still begging a billion or 2 dollars.
Moh: "If our military leadership was this sincere, we sould have been Asian tiger long time ago"
Pakistan's military-run enterprises need upgrade to revive economy
Corporate empire has potential to be globally competitive
By Uzair Younus
It is time to accept that rather than trying to cut this empire down to size, it may be more fruitful to develop Military Inc. 2.0: a corporate empire that is globally competitive.
Pakistan's military began playing a role in the economy soon after independence. The construction of the 805-km cross-border Karakoram Highway in the Himalayas was a major inflection point. The Frontier Works Organization was formed then with the mission to construct the highway on the Pakistani side.
Today, military-run organizations have their tentacles spread across the entire economy, with the military-owned Fauji Foundation being one of the largest conglomerates in the country. The government has exempted both the Army Welfare Trust and the Fauji Foundation from income taxes, giving them an edge over privately owned companies.
The military also operates housing developments across the country, with the Defence Housing Authority (DHA) a dominant force in the country's real estate sector. While the initial aim was to develop homes for serving and retired military personnel, DHA has since evolved into a multibillion-dollar entity with a presence in all major cities.
The military's economic footprint, however, is indicative of broader economic issues plaguing Pakistan. For decades, Pakistan's civilian and military elites have extracted wealth by engaging in highly protected, low-productivity sectors. As a result, Pakistani businesses are both globally uncompetitive and provide shoddy services to domestic consumers.
An example is the DHA project in Karachi, built on land reclaimed from the Arabian Sea. The predominant role enjoyed by the military meant that development of the DHA site occurred without proper access to proper stormwater drainage, resulting in multimillion-dollar homes, paid for in cash, routinely being flooded during monsoon rains.
Political volatility and instability have further compounded the problems, leading to an anemic rate of foreign direct investment, particularly in export-oriented sectors. The result: recurring balance of payments crises that require bailouts.
To emerge from this crisis, Pakistan's military must learn from its strategic ally China. While the Chinese regime also began with military-run organizations developing public infrastructure, over the decades, it has developed companies that have a more global outlook.
In addition, China focused on improving quality by leveraging technology while also investing in global best practices. This ensured that the country built globally competitive businesses that enhanced China's technological reach, such as telecommunications group Huawei Technologies.
Pakistan's military would do well to mimic China's strategy to become globally connected, competitive and innovative.
Such a reconfiguration may solve Pakistan's macroeconomic challenges and recurring external crises, as the military is finding it difficult to muster resources required to compete with an India that is growing at a faster pace and rapidly modernizing its military. This is tilting the balance of power in the region toward India, creating national security risks for Pakistan.
Critics will argue that reorienting the military's corporate empire will only worsen the challenges facing Pakistan's floundering democracy. This concern is valid, but Pakistan's growing economic challenges mean that it is time to prioritize sustainable growth and socioeconomic development.
Changing the military's corporate approach is likely to create the space for broader economic reforms that are urgently needed to end Pakistan's protracted economic decline.
The world’s biggest bet on India
What Tata’s $90bn pivot to its home market says about the planet’s fifth-biggest economy
If you want to glimpse the frontier of Indian capitalism, take a trip to Tamil Nadu in the south of the country. New factories with solar panels on their roofs lie on a vast 550-acre (220-hectare) site. Inside, it is reported, Tata is making components for the latest iPhones on behalf of Apple—and in the process finally connecting India to the world’s most sophisticated supply chain, which used to be anchored to China.
The project is not a one-off. It is part of a new and staggering $90bn investment surge by India’s biggest business that is repositioning itself towards its home market and away from its 30-year strategy of fanning out globally. Tata’s ambition to create electronics factories and semiconductor fabs in India could transform its economy. “I firmly believe that this is going to be India’s decade,” says Natarajan Chandrasekaran, who runs the holding company, Tata Sons, which oversees the group. The change in strategy also reflects the dramatic psychological shift within the business world’s most ardent globalisers, as they adapt to new megatrends. These include the rebasing of strategic manufacturing away from China; the rise of a new energy system; and industrial policy, which in India is being championed by Prime Minister Narendra Modi.
Anyone who follows India, the world’s fastest-growing big economy, may be under the impression that it is run by Mukesh Ambani and Gautam Adani, two swaggering tycoons, whose conglomerates generate headlines and make them Asia’s richest men. Together the “two As” may spend over $100bn in the next five years. Yet Tata is in fact the country’s biggest business measured by market value ($269bn) and operating profits ($16bn last year), spanning everything from steel mills to software. And we estimate that its new plans are larger than any other individual firm’s, encompassing electric vehicles (evs), electronics, battery gigafactories, clean power and chips (see chart 1). If that doesn’t sound ambitious enough, it has also taken on the Everest of corporate turnarounds, buying Air India.
But even Tata, which considers itself aloof from politics, has paid symbolic homage to Mr Modi’s populist nationalism. In 2019 Mr Tata visited the headquarters of the rss, the Hindu-chauvinist association that backs Mr Modi. In the same year Mr Modi attended the launch of a book by Mr Chandrasekaran. The Tata charities are also working more closely with the state, for example on hospitals. And Tata is participating in India’s $26bn manufacturing-subsidy scheme (though it insists the handouts are too small to swing investment decisions).
Pakistan Exports 120,000 Locally Manufactured Mobile Phones
The export ceremony of locally manufactured mobile phones by Pakistan Telecommunication Authority (PTA) Authorization holder Inovi Telecom was held at PTA headquarters today.
The ceremony was held to mark Inovi’s achievement of the export of 120,000 locally made mobile phones of the SEGO brand to the United Arab Emirates for African markets.
Inovi Telecom is the first company to export locally manufactured mobile phones in large quantities. Inovi’s CEO appreciated PTA for its active support and for taking measures to help bolster the mobile industry. Moreover, both PTA Members extended their continued support for the development of a mobile device manufacturing ecosystem in Pakistan.
Inovi Telecom Pvt. Ltd was issued Mobile Device Manufacturing Authorization on 9th April 2021 in accordance with the PTA Mobile Device Manufacturing (MDM) Regulations, 2021.
iPhone Exports from India Double to Surpass $2.5 Billion
Foxconn Technology Group and Wistron Corp. have each shipped more than $1 billion of Apple’s marquee devices abroad in the first nine months of the fiscal year ending March 2023, people familiar with the matter said. Pegatron Corp., another major contract manufacturer for Apple, is on track to move about $500 million of the gadgets overseas by the end of January, the people said, asking not to be identified revealing private information.
Apple’s rapidly growing export numbers illustrate how it is ramping up operations outside of China, where chaos at Foxconn’s main plant in Zhengzhou exposed vulnerabilities in the Cupertino-headquartered company’s supply chain and forced it to trim output estimates. That compounded a broader problem with evaporating demand for electronics as consumers weigh the risks of a global recession.
Apple, the world’s most valuable company, began assembling its latest iPhone models in India only last year, a significant break from its practice of reserving much of that for giant Chinese factories run by its main Taiwanese assemblers including Foxconn.
While India makes up just a fraction of iPhone output, rising exports bode well for Prime Minister Narendra Modi’s plan to make the country an alternative to China as factory to the world.
China’s Covid Zero policies and an episode of violence at the Zhengzhou plant — nicknamed iPhone City as the world’s biggest production center for the device — laid bare the dangers of relying on the country. While Beijing has since dropped that approach to containing the virus, Apple and other global names are exploring alternative locations more than ever before.
India’s vast workforce, Modi’s support and a thriving local market make it a prime candidate to take on more electronics manufacturing. Foxconn, Apple’s largest supplier, began building facilities in the country more than five years ago in anticipation of a need to extend its geographic range.
One recent selling point is a raft of new government incentives, a cornerstone of Modi’s drive to make India an electronics manufacturing hub. Foxconn has won 3.6 billion rupees ($44 million) of benefits in the first year of the so-called production-linked incentives scheme, while Wistron’s claims are currently being processed, the people said.
Representatives for Apple, Foxconn and Wistron didn’t respond to emails seeking comment. A Pegatron spokesperson declined to comment.
Apple’s contract manufacturers currently make iPhones at plants in southern India. But production in the country is just beginning. About 3 million of the devices were made in India in 2021, compared with 230 million in China, according to Bloomberg Intelligence estimates.
Foxconn began making the iPhone 14 in India a few months ago — sooner than anticipated — after a surprisingly smooth production rollout that slashed the lag between Chinese and Indian output from months to mere weeks. Apple’s three Taiwanese partners currently assemble iPhones 11 to 14 in India.
But moving out of China, where Apple has built a deep supply chain for close to two decades, isn’t easy. A Bloomberg Intelligence analysis estimated it would take about eight years to move just 10% of Apple’s production capacity out of China, where roughly 98% of the company’s iPhones are being made.
India tracks production and exports of all smartphone makers who enjoy financial incentives as part of Modi’s push.
Beyond smartphones, the country is drawing up plans to boost financial incentives for tablet and laptop makers, hoping to woo Apple to make everything from earphones to MacBooks locally as well as attract other brands. The iPhone maker is also expected to open its first retail store in India in 2023, after meeting certain criteria imposed on foreign retailers.
Mobile policy attracts 36 companies to manufacture smartphones in the country
Like the auto industry in Pakistan, the mobile phone industry has also attracted at least 36 companies to manufacture/assemble smartphones under the policies introduced by the government in 2020.
According to officials, the ‘Make in Pakistan’ policy introduced by the previous Imran Khan government has resulted in the establishment of 31 companies which manufacture a great number of renowned international mobile phone brands in the country.
As per the data, local manufacturing plants have manufactured over 19.7 million phone handsets during the first 11 months of 2022 compared to just 1.37 million commercially imported phone handsets. Data provided by the Pakistan Telecommunication Authority (PTA) reveals that the local manufacturing plants assembled 1.56 million mobile phone handsets in November 2022
Despite the increase in local production, the country imported mobile phones worth $ 290.57 million during the first five months (July-November) of the current fiscal year 2022-23. However, this was a decrease of 66.08 percent when compared to the imports of the same period last year at $ 856.73 million.
To review further expansion and issues related to the newly flourishing industry, the Ministry of Industries & Production (MoI&P) will hold a mobile device manufacturing summit on Tuesday (today). As per the officials of the Engineering Development Board (EDB), the relevant department of the MoI&P is jointly organising the summit in collaboration with the Pakistan Mobile Phone Manufacturers Association.
The summit will be addressed by the Federal Minister for Board of Investment, Chaudhry Salik Hussain, and will also include an exhibition of technology and products by the members of association including Xiaomi, Realmi, Infinix, Tecno, Itel, Alcatel, G-Five, Oppo, Vivo, Premier Code etc. The exhibition will be open for targeted general public.
According to officials, the purpose of organising this summit-cum-exhibition is to get input from all the relevant stakeholders which includes mobile device manufacturers, government officials from MoI&P, PTA, Ministry of Commerce, National Tariff Commission, Board of Investment, Ministry of IT & Telecom, Federal Board of Revenue and academia to boost local assembly of mobile devices through enhancing investment and employment opportunities in this sector.
The summit will focus on the localisation of parts and components used in mobile manufacturing, localisation of allied equipment like laptops and tablets, targeting export of mobile phones and promoting ease of doing business in Pakistan. The mobile device manufacturing sector is expected to benefit from this summit as it will facilitate further collaborations with international counterparts which can enhance the competitiveness of the sector.
The mobile device manufacturing policy was formulated by EDB in 2020 with the aim to promote local manufacturing of mobile devices in Pakistan and to provide an attractive environment for investors under the “Make in Pakistan” policy of the government.
According to data by PTA, 55 percent of the mobile devices in the country are smart phones while the remaining 45 percent are on 2G Pakistan network.
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