Mobile technology is at the heart of digital transformation in the country. Mobile broadband networks now cover 80% of the population and 97% of internet connections, as public and private sector organizations use digital platforms to increase participation and improve citizen services. They depend on mobile connectivity.
Mobile technology also enables Internet of Things (IoT) applications in areas such as agriculture, clean energy and drinking water solutions, as the government plans to roll out 5G technology by summer.
As mobile technology plays an increasingly important role in economic growth by contributing directly to GDP and increasing productivity and efficiency in various sectors of the economy, the mobile ecosystem continues to create jobs in other sectors.
Pakistan is considered to be one of the fastest growing countries in the telecommunication market. The demand for mobile phones is increasing. To sustain continued growth in the future, the government has recognized the potential of digital transformation by creating a specific mobile policy to encourage local assembly and manufacturing of mobile devices.
Due to the pandemic and import restrictions, the number of domestic players has been reduced from the initial 46 to 30.
According to Ali Raza, Marketing Director, Techno Mobile Pakistan, the introduction of Device Identification, Registration and Blocking System (DIRBS) by Pakistan Telecommunication Authority (PTA) in 2019 has proved very effective in curbing the channel of illegal import of mobiles. The phone device is inside the country. "This has paved the way for the 2020 Mobile Manufacturing, Import Substitution, Manufacturing and Export Policy."
The policy aims to deploy 49 computers, including 10 computers to identify motherboard components and 10 to identify computer batteries. Keeping this policy in mind, the PTA issued the Mobile Device Manufacturing (MDM) Regulation in 2021, which allows local and global mobile companies to assemble and manufacture mobile devices in Pakistan.
PTA data shows that between July and November last year, local assemblers produced 19.2 million units and 1.4 million were imported for commercial purposes. In 2020, Pakistan imported 24.5 million mobile phones compared to 13 million units assembled locally, indicating that local assemblers have been able to replace commercial imports since the policy was introduced.
“The government's mobile phone manufacturing policy to attract leading mobile phone brands to set up their factories in Pakistan has proven to be the first step in creating a competitive domestic manufacturing market. Although localization remains low, the industry has benefited the economy in terms of import substitution, job creation, technology transfer and accessibility to consumers,” said Raja.
A sector report by the Credit Rating Agency of Pakistan noted that the market was largely driven by imports with an average annual growth of 3% between FY17 and FY21. “However, commercial imports of mobile devices fell by 58% in FY22, suddenly shifting from 25 million units to 10 million units. At the same time, domestic production increased from 13 million units to 25 million units during the same period. This is largely a result of support for government policies. »
“Since the introduction of mobile phone assembly and manufacturing policies, the industry has grown rapidly and increased production capacity and volume to meet the domestic demand for smartphones and features. For example, we produce 500,000 to 800,000 units per month. After the policy was announced, 46 companies set up their own assembly plants. Some were closed due to dollar liquidity concerns due to the pandemic and subsequent material import restrictions. The number of active players in this industry is now down to 30 compared to the initial 46 companies,” explains Raja.
“We are not only making entry-level phones and cheap smartphones, we are also entering the premium segment. Now we will assemble 5G compatible mobile phones locally. We are not just a mobile phone manufacturer, we are a technology company working for the welfare of Pakistan. We want to transform Pakistan and make it one of the biggest technology players in the world.
According to him, the principle of mobile manufacturing has several advantages. “This has helped the country attract foreign investment through major brands, transfer technology, create jobs for skilled workers and technicians and make mobile phones affordable to consumers through lower taxes on locally assembled sets. We are also looking for export opportunities.
Raja criticizes the fact that the industry has not taken significant steps towards localization of components like most car makers. "It is unfair to compare this nascent industry with the 40-year-old automobile industry. After the introduction of this policy, our journey was cut short by the pandemic and later due to import restrictions due to dollar shortage and balance of payments problems. So the two sectors cannot be compared," he said. .
"Now that import restrictions have been relaxed, we will move to the second phase of local manufacturing and export of accessories. The key to the success of this policy lies in supporting the mobile ecosystem. The most important part of this ecosystem is policy compliance.
He continued: “We don't have the ability to make chips for motherboards or heavy metal components like batteries and sensors. However, we may manufacture other less precise components and accessories locally. If the policy is consistent and the government supports it in the long run, we will build the entire ecosystem.
“We are looking at the possibility of localizing all the components that we can manufacture in Pakistan and then export. Currently, Techno, a Chinese brand, exports very little. The industry lobbies the government to provide incentives to develop the export ecosystem.
Techno Pakistan is a part of China Transition Holdings, which operates in 70 countries around the world. "We are a global company with a local focus. We are the leading brand in Africa and one of the top three mobile phone brands in the Indian subcontinent. We cater to all market segments from affordable mobile phones to premium mobile phones," said Raja.
He repeatedly argues for the relevance of policies to create an ecosystem conducive to indigenization and export. "Telenor's decision to exit Pakistan and sell its local operations for $400 million, the price at which it acquired the spectrum years ago, speaks volumes about the country's business landscape. It underscores that political instability, political inconsistency and poor business culture and conditions despite heavy investment does not allow companies to reach their maximum potential. Policy compliance is critical to achieving the goals set by the government. »
According to the PTA, domestic assemblers produced more than 7 million smartphones in the first five months of the current fiscal year, compared to 8.8 million in 2022. But he added that despite government policies aimed at curbing the gray market of mobile phones. Limits, the size of illegally imported or smuggled mobile phones is still quite large.
“Pakistan's growth potential for smartphone manufacturers is huge. We have 110 million unique mobile SIM card holders, 60 of whom use personal phones. Therefore, the scope for growth is huge. But we need an ecosystem that can not only meet domestic demand but also export,” he added.
Dawn was published in The Business & Finance Weekly on January 22, 2024
Post a Comment