Import of spare parts: SEPAK concerned over additional requirements

ISLAMABAD: M/s Samsung EC Pakistan (Pvt) Limited (SEPAK) has raised concerns on additional requirement for import of spare parts for the mobile devices which are financially hurting local industry.

These concerns have been conveyed by the SEPAK MD Roy Chang in a letter to Commerce Minister, Syed Naveed Qamar.

SEPAK provided marketing support and facilitation services to Samsung Gulf Electronics FZE (SGE) and to the ultimate parent of both the entities, Samsung Electronics Co. Ltd. (SEC), within the territory of Pakistan. SEC is currently one of the few technological companies which has appointed authorized assemblers (the “Assemblers”) in Pakistan for localizing its products and has undertaken a significant investment in developing a market for locally assembled products in Pakistan.

According to MD SEPAK, the assembly plants by the assemblers have been set up under the Mobile Device Manufacturing (MDM) Regulations, 2021 (MDM Regulations). The MDM Regulations, amongst other things, require the assemblers to set up after-sales services.

The letter says that towards discharge of the said obligations, the Assemblers and SGE have made arrangements where under several Authorized Service Centres (ASC(s)) are working in various parts of Pakistan, to provide after-sales services to customers of Samsung Products in Pakistan, as per the requirements of the MDM Regulations. As part of the after-sales services, the relevant distributor, Momentum Logistics (Private) Limited imports spare parts into Pakistan for onwards provision to the ASC’s, so that the ASCs can provide the full range of services to the Samsung customers.

The State Bank vide EPD Circular Letter No. 11 of 2022 requires that goods imported under an HS Code starting with the prefix 85 must obtain prior permission from the Foreign Exchange Operations Department, State Bank, before initiating any import transaction. The said HS code also includes spare parts required by the ASCs to provide after sale service as mandated by the MDM Regulations.

“We have received several complaints from the relevant distributor/ importer that they are not receiving the required approvals in time which is hampering their ability to provide customers with timely service. SGE has received reports from Pakistan that most of the ASCs are now utilizing their reserve stock to provide repair services,” said MD SEPAK in his letter, adding that once the reserve stocks deplete it will be impossible for the ASCs to continue to abide by the obligation under the MDM Regulations and to provide repair services in Pakistan.

The ASCs in Pakistan are estimated to be facilitating around four to five thousand customers each month. If the current situation continues and the import of spare parts is delayed on account of the delay in issuance of the required approvals under the Circular, many customers will need to be turned away by ASCs.

The company maintains that ASCs in such case will be unable to continue the operation required by the MDM Regulations. Furthermore, the ASCs may be forced to close down their business operations in Pakistan, as lack of spare parts will ultimately result in the operation of ASC’s being rendered non-feasible.

The company maintains that the applications for the required approvals to Samsung’s relevant distributor(s) be expedited and appropriate direction in that regard be issued to EPD/ FEOD and all entities involved in the approval process.

“Government should take immediate steps towards saving the local industry from financial ruin. This will result in ultimate benefit for the local industry and the people of Pakistan,” MD SEPAK added.

Copyright Business Recorder, 2022