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Rising import bill of mobile phone cost national economy

Rising import bill of mobile phone cost national economy

By Yasir Ameen, Weekly Pulse, August 19, 2013

The mobile phone handset is a communication tool which has become essential commodity in the present time that every individual whether he/she has limited income resources or unlimited wealth own at least one gadget as per personal need, style craze and class standard.

More than two decades have passed away since Pakistan has been importing gadgets of different brands from various countries to meet the requirement of local masses. The country has been included as one of the top five volumetric markets in the world having subscribers base of 125 million and the number of customers are on the rise with huge number of growing-up generation.

Not only mobile phone companies of foreign brands—Nokia, Samsung, LG, Motorola, Sony Ericson, Blackberry— grabbed their share in the local market but scores of Chinese brands have been flooded in the local markets with copycat style of branded handsets and amazingly low cost range.

The business of few of the foreign branded companies has shrunk and they quit Pakistan market in the past three years eventually on the pressure of intensive pressure on the arrival of Chinese brands. Meanwhile, Huawei and HTC made their entries in the last couple of years and getting quite good popularity among new customers.

Besides, a number of local companies have been emerged in the past three years and created their footing amid high competitive market of handsets. These Pakistani companies have introduced latest technology and extra features in the smartphones, medium ranged and low-cost handset making their brands’ popularity among customers but squeezing the businesses of foreign brands in multiple aspects, including price benefits, hi-tech features, warranty and after sales service.

Among them, Qmobile is on the top. Companies like Gfive, Megagate Voice and Club have also made their presence in the local markets. All these brands are local and Pakistan but neither they assemble handsets nor manufacture but provide Chinese technology as a Pakistan company hence importing from China.

Dealers and traders said the sales of mobile phone units have increased to 2 million monthly and the imports worth of handsets reached $50 million dollar per month. Scores of mobile shops are flourishing their business to cater local demands, which has been on the rise ultimately impacting on sales and imports of gadgets at country level.

According to Pakistan Bureau of Statistics, the mobile phone import bill has touched Rs 60 billion in the outgoing financial year 2012-13. The sales and imports will be rising unabatedly in the coming years on the increasing demand of customers whom are though not new users of mobile phones but buy new handsets in case of snatching or stealing; to replace old/defaulted handset with new handsets, to use new emerging technology/ high featured mobile sets and habitually to change their gadgets twice in year, and the number of these customers is significant and growing.

In the next two or three years, the import bill of mobile handsets will surge to one billion dollar per year. But neither the government nor the handsets makers are interested to set up a manufacturing unit in Pakistan.

Analysts and media person asked question several times from representative of foreign brands particularly Nokia and Samsung that whether they are interested to establish their factories in Pakistan. But they flatly said NO on the response of most favorite question (which they term) of journalists and bloggers and further said that our investment are good in Pakistan particularly in customer care units and different CSR projects but it is global strategy of respective companies to import their handsets through sales partners in different countries including Pakistan and manufacture gadgets in limited countries, where the operations are highly feasible to them.

But did the government show any intention and do any effort for giving policies for manufacturing units to handsets makers. It did not carry out any practice efforts but did a lip-service and it has engaged various stakeholders for past many years for the purpose of establishing a handset manufacturing unit and concluded its efforts mere discussions and dialogue.

Shahid Hassan Siddiqui, a renowned economist, said Pakistani government should have stopped the imports of mobile phone handsets many years before and it should have asked companies to set up their plants at merely $300 to $500 million to continue their businesses in the future.

But there has been no attention given in this regard and country’s macro-economic situation gets in trouble because of costly import of mobile phone handsets every month. Pakistan is a big market for any manufacturers of handsets which not only provide them talented and cheap labor but also gives them exports corridor to different countries in Central Asia, he added.

Zeeshan Quershi of Qmobile said that setting up manufacturing unit has been old debate and it could be materialized if the government does it efforts seriously with incentive policies for companies because investment in Pakistan is difficult and operating manufacturing units is rather an arduous task at times when stable local production got hit severely mainly because of energy crisis.

He cited the example of home appliances industry which was used to assembling units but now it has been converted into manufacturing units and exporting its products to various countries because the government had given them incentivized policies and protection to local industry.

Manufacturing units will not be established in near future but assembling units could be set up, in this way, country could not only cater the local market through local production but substitute import bill and earn foreign exchange through exports of “Made in Pakistan” gadgets in different countries.

The government policies for handset manufacturing include protection to local manufacturers and assemblers first. Accordingly, it has to impose heavy duties on all imported brands. The grey channels and smuggling of portable devices(handsets) must stop via proper vigilance at custom level.

Meanwhile the tax holiday should be given to mobile phone assemblers initially under the head of corporate tax. The duties on imports of spare parts should be exempted at least for five years.

About Taimoor

Taimoor is the Digital Content Lead at www.RightJobs.pk . He has been working at prominent media outlets for several years. He blogs at several websites about current affairs, religion, careers and other walks of life.

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