GST removal on locally-assembled units: Samsung, OPPO may start manufacturing cellphones

ISLAMABAD: M/s Samsung and M/s OPPO are likely to start local assembly in Pakistan soon after removal of sales tax on locally assembled mobiles from above $ 200 category.

Mobile Device Manufacturing Policy 2020 was approved by the ECC in May 2020. The decision was subsequently ratified by the Cabinet on June 2, 2020.

The mobile device manufacturing policy provides sufficient advantage to the local manufacturing of mobile phones especially below $ 200 category in comparison with imports in completely built condition. M/s VIVO, M/s Airlink Communications, M/s Inovi Telecom are amongst the new investors in local assembly of mobile phones that have already started their trial production in February 2021.

The combined capacity of these three companies is more than 1 million mobile handsets per month whereas M/s Transsion Tecno, a Karachi based company assembling three famous brands including Itel, Infinix and Tecno , has increased local assembly from 150,000 units to 650,000 units per month owing to increase in demand soon after the policy was launched. In addition to the new entrants in mobile assembly, few experienced companies like G-Five and Q Mobile was already operating in the market, while M/s Samsung and OPPO are poised to enter local assembly in Pakistan market and are probably waiting for the implementation of approved recommendation of policy to remove sales tax on locally assembled mobiles from above $ 200 category. By introduction of new players and capacity enhancement by existing companies, Pakistan will soon be able to meet major portion of local demand, which was around 3.6 million per month in CY 2020.

The local manufacturing companies are moving rapidly from 2-G non android market to the 4-G smart phones as the local manufacturing has ensured availability of mobile handsets at competitive prices to customers.

Engineering Development Board (EDB), a technical arm of Ministry of Industries and Production (MoIP) was made the secretariat of Mobile Policy.

The policy has provisioned a 3 % export rebate for the local companies to enter into export market. From the initial success of the policy and increased demand in local and international market, the local assemblers are optimistic about export of locally assembled mobile phones.

The mobile phone manufacturing industry is expected to become larger than the automotive industry of Pakistan in terms of turnover in a few years and employment is expected to grow manifold. To further boost the electronics sector, work has already started on preparing appropriate framework for local assembly of tablets, allied equipment and mobile accessories in near future in line with its vision to improve the entire eco system, and make this the fastest growing sector in terms of employment and exports in the near future.

Copyright Business Recorder, 2021