Mobile phone demand set to surge despite GST hurdles

Demand for devices projected to grow to 33 million units in 2024 despite 18% GST

PHOTO: file

KARACHI:

Despite a temporary slowdown in the assembly of 'Made in Pakistan' mobile phones due to the imposition of an 18% general sales tax (GST), demand for these devices is projected to surge to 33 million units in the country in 2024, up from 22.9 million units in 2023.

Citing data from the Pakistan Telecommunication Authority (PTA), Topline Research analyst Sunny Kumar projected a 44% growth in phone demand for the ongoing calendar year 2024. "According to our channel checks, based on the current monthly run rate and the recent imposition of 18% sales tax on all mobile phones in the FY25 budget, total mobile phone demand may reach 33 million units in 2024," Kumar anticipated in a commentary.

The 'Made in Pakistan' phones currently meet around 95% of domestic demand, while imports of branded ready-to-use phones have dropped to about 5% due to government policies. According to the latest data from the PTA, local mobile companies assembled 1.61 million units in July 2024, a decline of 20% compared to the same month last year and a 62% drop from June 2024.

This decline in July sales is attributed to pre-buying in June 2024, following the announcement of the 18% GST on all mobile phones in the FY25 budget. However, over the last two months (June-July 2024), average sales stood at 2.9 million units, still higher than the five-month (January-May 2024) average of 2.6 million units.

Cumulatively, in the first seven months of 2024, total locally assembled sales reached 18.95 million units, marking a 2.3-fold increase compared to the same period last year. "This significant improvement is mainly due to the import restrictions imposed last year," Kumar noted.

However, when compared to the first seven months of 2022, the growth is 27% on a year-on-year basis. "This growth is mainly driven by gradual economic recovery, an increasing share of locally assembled mobile phones amid higher taxes on imported phones, and a growing population, among other factors," he explained.

Within the 18.95 million locally assembled mobile phones sold in the first seven months of 2024, 64% (12.1 million units) were smartphones, while the remaining 36% (6.85 million units) were 2G phones. The top 10 locally assembled brands during this period included Infinix (2.76 million units), followed by Itel (2.12 million units), VGO Tel (2.01 million units), Tecno (1.96 million units), Vivo (1.71 million units), Xiaomi (1.70 million units), Realme (1.15 million units), Nokia (0.83 million units), G'Five (0.71 million units), and OPPO (0.63 million units).

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