Image Source: Tech Juice

Industry participants claim that given that mobile phone assemblers are unable to open the necessary number of letters of credit (LCs) to satisfy their raw material demands, the current scenario is substantially different from that of early last year.

Completely knocked down (CKD) parts for the assembly of mobile phones were allowed to be imported under a quota of $80 million for domestic assemblers. In this case, the shutdown of the manufacturing lines might result in the layoff of up to 40,000 workers in the sector.

Layoffs, phone shortage in Pakistan as mobile manufacturing industry shuts down plants | Arab News PK
Source: ArabNews

The decline in production

Syed Aminul Haque, the federal minister for IT and telecommunication, said in a statement that 19.7 million mobile phones and smart gadgets worth Rs9.7 billion were created in Pakistan in 2022 using assembly lines. According to Tecno Pack CEO Aamir Allawala, domestic demand for mobile phones is predicted at 36 million annually or an average of 3 million each month, including 1.4 million smartphones.

He noted that the data was gathered in April and May of 2022, before the market experienced the later disruption brought on by the lack of foreign exchange. In January 2022, there were 2,750 workers working for the company, but “just 1,000 are left since we can only maintain the situation for a few more days,” the CEO said.

The impact on the job market

He questioned how long we could keep hiring these individuals without conducting business. He believed that foreign direct investment may help Pakistan close its trade imbalance (FDI). With Chinese businesses and investors that are willing to put money into the nation, we may create joint ventures.

For that, the nation must address the severe political unpredictability and attract international investment by fostering a climate that is conducive. Foreign investors are discouraged by policy changes brought on by a political shift and prefer to wait it out until everything is settled, according to Allawala. Pakistan, which has a population of over 220 million, is large enough to draw investors from all over the world. In the past ten years, we have overcome two significant obstacles—law and order and the energy shortage—and we can do it again.

Policies that should be used

Allawala emphasized that Pakistan could increase FDI if political tensions were reduced and policies were well-coordinated. To protect the legal rights of foreign investors, we should also provide them with a distinctly legal framework.

How Much Tax On Mobile Phones In Pakistan Airport New Mobile Price
Source: Mobtech

In addition, he urged that, like other nations in the globe, a separate taxing structure be in place to deal with international investors.

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