40,000 jobs in mobile industry under threat

Industry faces risk of collapse owing to dearth of imported raw material

KARACHI:

Pakistan’s mobile phone industry, which has fared well so far, is facing a looming threat of collapse, endangering 40,000 jobs.

According to industry players, current situation is very different from early last year as mobile phone assemblers are unable to open the required number of letters of credit (LCs) to meet raw material needs.

Domestic assemblers had been given a quota of $80 million for import of completely knocked down (CKD) parts for assembling mobile phones. In this situation, the closed assembly lines could render around 40,000 people working in the industry unemployed.

In 2022, Pakistan’s assembly plants produced 19.7 million mobile phones and smart devices worth Rs9.7 billion, said Federal Minister for IT and Telecommunication Syed Aminul Haque in a statement.

“Domestic demand for mobile phones is estimated at 36 million per year, or an average of 3 million per month including 1.4 million smartphones,” Tecno Pack CEO Aamir Allawala said.

The data was compiled during April-May 2022 when the market had faced no disruption, which was caused later by the unavailability of foreign exchange, he pointed out.

The CEO mentioned that they had 2,750 employees in January 2022 but “now only 1,000 are left as we can carry on with the situation for only a few more days”.

“How far we can continue to employ these people without doing business,” he posed a question.

He was of the view that Pakistan’s trade deficit could be bridged with the help of foreign direct investment (FDI). “We can form joint ventures with Chinese companies and investors, who are eager to invest in the country.”

For that, the country must have to address the deep political uncertainty and encourage foreign investors by creating a favourable environment.

“Policy revisions with the change in political set-up discourage foreign investors, who prefer to wait and see until the dust settles,” Allawala observed.

A country with the population size that of Pakistan, which has over 220 million people, can attract investors anywhere in the world.

“We have overcome two big challenges, ie, law and order and energy shortage in the last decade, and we can do it again,” he remarked.

Pakistan could attract more FDI by easing political temperature and ensuring consolidated policies, he stressed. “We should also offer a separate legal system to foreign investors to secure their legal rights.”

Apart from that, he suggested, like other countries in the world, there should be a separate taxation system to deal with foreign investors.

Published in The Express Tribune, January 5^th, 2023.

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