Samsung Pakistan MD and CEO had a detailed meeting with the Federal Minister for Industries & Production Hammad Azhar, who informed via tweet that South Korean manufacturer of smartphones is looking forward to set up assembling plant in Pakistan. This development came after PTA’s (Pakistan Telecommunication Authority) implementation of the Device Identification, Registration and Blocking System (DIRBS), and Mobile Policy which was launched recently.
Smartphone production in Pak is multiplying following DIRBS implementation and Mobile Policy launched recently.
Met with the Samsung Pakistan MD and CEO. They appreciated both policies and are now actively considering setting up a smartphone assembly plan in Pakistan. pic.twitter.com/8bGBnCWvir
— Hammad Azhar (@Hammad_Azhar) August 21, 2020
According to the minister in Pakistan, the production of smartphones is increasing massively because of the execution of new, more advanced policies. Both the officials of Samsung praised the policies made by the Pakistani government and are actively looking forward to set up an assembly plant in Pakistan.
Economic Coordination Committee (ECC) in May this year, approved the first-ever device manufacturing policy of smartphones in Pakistan, in accordance with a summary moved by the Ministry of Industries and Production. The Ministry of Industries and Production was tasked to further fine-tune various features and incentives of the policy to promote localization of research and development, leading to the export of mobile phones.
This strategy was on a basic level started in January 2019 by assigning Engineering Development Board (EDB) as a secretariat. The strategy is made as a team with the techno-monetary arm of the Ministry of Industries and Production (MoIP), through the broad conference with pertinent open and private area partners.
According to Muhammad Hammad Azhar, Minister for Industries and Production, currently, the Pakistani industry carries a potential of over 40 million handsets, which has become a practical possibility, especially after the successful launch of Device Identification, Registration and Blocking System (DIRBS). Setting up research and development centers and an ecosystem for software applications was also visualized under the policy. Moreover, at the time of approval, the policy was expected to have a positive impact on the allied industry, including packaging and plasting.
Although the implemented policy aims to incentivize local assemblers who will provide jobs to local engineers, skilled, and semi-skilled educated youth, it fails to look at the larger picture.
When it comes to smartphone manufacturing or assembly, Pakistan does not precisely have a vibrant market. Most of the countries that have smartphone manufacturing plants don’t target their own markets, instead, they focus on exporting. However, at the moment, Pakistan does not have the right market size and the required skillset to export phones and to achieve an economy of scale with local assembly.
Since Pakistan is the 7th largest importer of smartphones, smartphone OEMs will benefit significantly from setting up assembly units in Pakistan, especially when it comes to taxes. However, the real question is whether this is beneficial for locals and the Pakistani government?
Pakistani consumers are getting Smartphones at the same price, and the government is getting lower taxes. Hence, the whole point of the policy is moot if it does not help in increasing the country’s exports. Moving to manufacture and assembly of technical items for export is not as simple as it may seem.
At this point, the government needs to study how other countries like India were able to achieve economies of scale with local manufacturing and assembly and can those strategies be implemented in Pakistan or not.