Author: Ali Qasim

Lahore (NUT-DESK)

Despite the efforts made by the government to promote locally produced mobile phones in Pakistan and curtail their imports, the inward shipments of handsets recorded a significant jump in November 2021. According to the Pakistan Bureau of Statistics (PBS), Pakistan imported mobile phones worth $212 million in November 2021, reflecting an increase of 28% on a year-on-year basis and 41.6% on a month-on-month basis.

Data revealed that the cumulative mobile phone imports during the first five months (July-November) of the current fiscal year 2021-22 reached $857 million against $724 million in the same period of last year, an increase of 18.3%.

Speaking to Media, Tecno Pack Electronics CEO Aamir Allawala pointed out that currently almost 70% of inward shipments of cellular phones had moved from completely built up (CBU) units to completely knocked down (CKD) and semi-knocked down (SKD) units.

Another 20% would move to SKD/CKD by January 2022, as renowned global smartphone companies were expected to kick-start production in Pakistan early next year, he said.

Guessing the reason behind the sharp increase in mobile phone imports, ICT expert Parvez Iftikhar said that Pakistanis could be buying and importing a higher number of smartphones these days because local manufacturers were mainly producing 2G phones.

An official of the Ministry of Commerce said that the spike in mobile phone imports came on the back of increase in orders for luxury phones, ie flagship models of renowned brands.

“Such phones are usually priced over $1,000 and Pakistan is manufacturing or assembling phones of mid or low price ranges,” he said. From January to October 2021, the production of mobile phones in Pakistan stood at a substantial 18.87 million units. During this period, imports of cellular phones came in at 9.45 million.

“The ‘Make in Pakistan’ policy is yielding excellent results and we look forward to sustainable growth in the long run,” Adviser to Prime Minister on Commerce Abdul Razak Dawood stated in a tweet last month.

SI Global CEO Noman Ahmed told that the surge in imports was witnessed due to several reasons, but the increase in mobile phone users was the most prominent factor. He elaborated that the import of SKD units increased approximately 87% in November while shipments of CBU units spiked 81%.

Another reason was that the local manufacturers were gearing up to reach 100% capacity and they might still be importing most of the equipment required to assemble mobile phones, he said.

The implementation of Device Identification, Registration and Blocking System (DIRBS) by the Pakistan Telecommunication Authority (PTA) is a massive paradigm shift aimed at curbing fraud and encouraging legal imports, said the SI Global CEO.

According to him, the measure is having a profound impact on the telecommunication ecosystem in Pakistan. Several initiatives have been taken by the Ministry of Information Technology and the Board of Investment to support the local industry.

“There is a wide gap in taxes applicable to locally manufactured and imported phones. Besides, announcement of 5% subsidy is also expected in the near future,” he added.

“The Special Technology Zones, being set up in Pakistan, will give an edge to the local mobile manufacturers.”

Due to these incentives, global smartphone giants are entering Pakistan and the country is expected to see locally assembled smartphones by the end of this month, he hoped.He detailed that cellular phone companies from China and rest of the world were establishing their facilities in Faisalabad.

“When these manufacturers will produce at full capacity in near future, they will gain a competitive edge,” he projected. “They will also open doors to new opportunities for Pakistan by exporting their merchandise.”

In addition, a modest number of jobs will be created and foreign direct investment (FDI) will surge.Furthermore, he noted that Mobile Device Manufacturing Authorisation had been granted to 19 companies.

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Lahore (NUT-Business)

The Cellular Mobile Operators have opposed the government’s move for jacking up the Withholding Tax (WHT) by 50 percent, increasing it from 10 to 15 percent on customers in the upcoming mini budget for 2021-22. The federal cabinet is most likely to take up the Tax Laws Fourth Amendment Bill for approval in today’s meeting (Tuesday) under the chairmanship of Prime Minister Imran khan.

The sources said that the government had brought down the WHT rate from 12.5 percent to 10 percent on the eve of the last budget for 2021-22 and it made a commitment that it would be further brought down to 8 percent in the next budget for 2022-23.

“Now the government is making reversal from its commitment, then how investment can be lured in such circumstances when there is no certainty in policies,” said the sources working in telecom sector and added that it would be disastrous if the internet services or SMS would be brought under the tax net.

The cabinet had opposed such moves in the last budget and it was hoped that it would be resisted again because if the WHT was jacked up by 50 percent, then no one from the market would trust any official word from the incumbent government.

“How the CMOs could put in place medium to long term investment plans when there is complete uncertainty in policy-making process,” they raised the question and added that under the IMF program, this booming sector would be made a scapegoat for the short-term objectives.

The government is looking to increase the WHT from 10pc to 15pc in the upcoming mini-budget — a reversal of the WHT reduction announced in the federal budget 2021-22, just a reflection of the overall governance model pursued by the incumbent regime.

They also argued that out of over 220 million, approximately 2.9 million file taxes, which is one percent of the total population.

Even though a majority of the country’s population had non-taxable income, they are paying the WHT, which they can never claim back. So this kind of withholding tax becomes part of national kitty although it was claimed by the official circles that it was adjustable and refunds could be taken back after filing due Income Tax return.

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