Pakistan’s domestic market presents a huge opportunity for the manufacturing of smartphones capable of 3G/4G technology. PHOTO: FILE
ISLAMABAD:
A Chinese delegation expressed its commitment to set up a smartphone manufacturing plant in Pakistan before Finance Minister Ishaq Dar assured the investors of reduced income tax rates as a neatly-folded package of incentives.
The delegation said the plant would be set up on a fast-track basis as Pakistan begins to move forward in the telecom sector after acquiring next-generation 3G and 4G services.
In response, the government on Friday assured the Chinese mobile manufacturing companies that its upcoming production plants of smart-phones for next-generation services will qualify for reduced income tax rates announced in the new budget as part of incentives to lure foreign investors.
Chinese Mobile Companies Association Secretary General Lou Peide, who was the head of the delegation, informed that the group comprises prominent Chinese companies in the smartphone manufacturing sector. He said the delegation is in Pakistan to share Chinese experience and expertise as Pakistan’s domestic market presents a huge opportunity for the manufacturing of smartphones capable of 3G/4G technology.
Piede mentioned that with a population of nearly 200 million and a high growth rate of the mobile industry, there is a huge requirement for local manufacturing units in the country.
He informed that Chinese companies own almost 80% of the global market and produce smartphones that cost between $22 to $600, highlighting the impact of Chinese companies in the global mobile phone market.
The auction of next-generation contributed significantly to the national exchequer and Pakistan earned over $1 billion from the auction of these licences. Two licences of next-generation technology remain unsold.
Incentives
As against the present corporate income tax rate of 33 percent, the Foreign Direct Investment (FDI) in manufacturing, construction and housing will be subject to 20 percent corporate income tax.
Assisted by the Minister of State for Science and Technology and other officials, Dar briefed the Chinese investors on the latest economic indicators and performance of the economy during the last year. He also discussed the proposed budget which provides special incentives for foreign investment in Pakistan.
Dar said that FDI in the Information Technology sector will enjoy a special corporate tax rate for the next five years if they complete their projects in a three-year time period till June 30, 2017. The finance minister assured the group of investors that their concrete proposal prepared in consultation with the ministry of IT and the Board of Investment (BOI) will be considered seriously to develop local mobile manufacturing units in Pakistan.
He further assured the delegation of Chinese investors that the government will provide incentives for local manufacturing of smartphones and other IT related solutions during the next three years.
Dar concluded commenting that as Pakistan has an educated and skilled young labour force, the country can and should be used as an export base to the whole region.
Published in The Express Tribune, June 7th, 2014.
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COMMENTS (10)
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Every one knows now that Nigeria is the next potential market in ICT and smartphone gadgets in the globe, therefore i suggest that smartphone manufacturing industry should be established in Nigeria, my company can prepare you all information you need to do this and we are very sure of the marketing and profitability.
Thank you
@Chachoo:
problem is these areas lack the skilled labour force
@Erceylan:
Any source for this every other guy working in Chinese mobile phone factories has cancer? People like you just have to cry about everything.
These are assembly plants not manufacturing plants. Gosh.
@Erceylan: Please give the source of information or any medical reference. Just giving statement regarding cancer development is not right. I would also like to know what type of cancer you are talking about?
Its because smart phones are made using chemicals that cause cancer. Every 2nd Chinese labor working in those plants has got it. Their unions got aware of it and pushed the government to stop the companies from using such chemicals..... I guess their gov took notice and now they turn to give it to Pakistan, since our government doesn't care as long as they keep getting fed.
People will complain about PML-N no matter how much FDI they'll bring into the country and regardless of how much economic growth there will be. I'd like to add the energy crisis is a failure of the previous government and the corrupt beurocracy and will take time to fix.
V.imp question: Under which brand name will they be sold? 2ndly although all famous international brands are now being made in China but fact is that American and other international brands keep their quality intact but this is not true with China's own brands. 3rdly if these will be started manufactured in Pakistan then it means there will be huge increase in tax on international brands as per Pakistan tax policy that anything made in Pakistan is taxed heavy if imported to help local manufacturing. Which means international brands will become too expensive! They did the same with car manufacturing which turned out to be good perhaps!
The best place to setup this plant will be near engineering Universities. GIKI, UET and NUST comes to mind. Good road network, power grid near by are some other issues to be looked at. Very few places , in Pakistan, can provide the above mentioned options and Interior Sindh is definitely out of the question.
Kindly set up this plant in underdeveloped regions of Pakistan rather than again establishing it in Karachi or Lahore. South Punjab or Interior Sindh is the ideal location for that purpose.