95% of Mobile Phones in Pakistan Now Assembled Locally, Saving Forex

Pakistan has seen a dramatic shift in its mobile phone market, with local manufacturing now meeting 95% of the country's demand. This transition has significantly reduced the share of imported phones to a mere 5%, leading to substantial savings in foreign exchange. According to data from the Pakistan Telecommunication Authority (PTA), local production of mobile phones has surged by 55% year-on-year as of May 2024.

In 2016, Pakistan assembled only 1% of its mobile phones locally, with the rest being imported. However, the landscape has transformed drastically. Between January and May 2024, Pakistan imported only 0.75 million phones, while local manufacturers produced 13.08 million units. This shift is saving Pakistan an estimated 15-20% in foreign exchange, as local assemblers still import most parts from abroad but avoid the higher costs of finished products.

Sunny Kumar, Deputy Director at Topline Research, highlighted that this remarkable growth is a result of both import restrictions imposed last year and a gradual economic recovery. He noted that local companies manufactured 2.23 million units in May 2024 alone, bringing the total for the first five months of the year to 13.1 million units, a 168% increase from the same period last year.

The Karachi Electronic Dealers Association's former chairman, Idrees Memon, pointed out that almost all global brands, excluding Apple, are now assembled in Pakistan. This move has saved the country about 70% in foreign exchange and significantly reduced taxes for local assemblers. Memon also mentioned that the new 18% sales tax on mobile phones, effective from July 1, 2024, might hamper exports, which have recently begun to flourish, particularly to Middle Eastern countries.

The local assembly sector includes 18-20 companies with substantial setups, providing employment to hundreds of thousands of Pakistanis. The demand for smartphones has surged post-pandemic, with more people adopting digital solutions for everyday needs. Consequently, the value of phone imports in US dollars tripled in the last fiscal year compared to the previous one.

The Pakistan Bureau of Statistics (PBS) reported that mobile phone imports (both CKD and CBU) increased by 214% to $1.62 billion in the first ten months of FY24, compared to $516.5 million in the same period last year. Despite this, local production has remained robust, fulfilling a significant portion of the demand.

The local manufacturing policy introduced in 2020 has been pivotal in this transformation, encouraging international mobile brands to establish assembly plants in Pakistan. This policy shift, combined with the affordability of locally assembled phones, has created a price gap of 15-20% compared to imported models of the same quality.

Among the 13.08 million locally assembled units in the first five months of 2024, 62% were smartphones, while the remaining 38% were 2G phones. This trend underscores Pakistan's growing capability and confidence in meeting domestic demand through local production, marking a significant milestone in the country's industrial progress.

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