Mobile phone imports in Pakistan have increased by 5.11 per cent during the first eleven months (July-May) of the current financial year (2015-16) compared to the same period of previous year. According to the Pakistan Bureau of Statistics (PBS), total imports of mobile phone stood at $687.249 million while they were $653.813 million in the same period last year.
Overall Telecom imports witnessed decline of 0.66 per cent during July-May 2015-16 compared to the corresponding period of last year. Total imports were recorded at $1.256 billion compared to $1.265 billion in the same period in the last year. Other Telecom apparatus import also witnessed significant decline of 6.84 per cent during this period as it stood at $569.459 million during July-May (2015-16) against $611.277 million during the same period of last year.
In the next two years, smartphones are expected to cross 55 per cent of mobile phone imports. Smartphone adoption in Pakistan is expected to grow due to expanding 3G and 4G networks (currently, 3G services are available in more than 200 cities and towns) and more affordable smartphones are available in the market. According to the Ministry of Information Technology and Telecommunication, Pakistan spends around $600 million each year on import of mobile phones.
As a policy priority, the Ministry of IT is engaged with international telephone manufacturing companies to establish local manufacturing/assembling units through Public-Private Partnership or otherwise. Chinese mobile manufacturers and their Pakistani importers have shown interest in setting up manufacturing/assembling units in Pakistan.
Finance Minister Ishaq Dar in his budget speech announced that in order to stop mis-declaration and to bring the tax structure in line with market prices, the rates of sales tax on mobile phones are being rationalised. The existing sales tax rates of Rs 500 and Rs 1,000 are proposed to be increased to Rs 1,000 and Rs 1,500 for medium and high category mobile phones respectively. The rate of tax on low category mobiles will remain unchanged at Rs 300.
However, analysts say that with increase of tax rate, mobile import through proper channel will decrease, thus depriving the government of revenue as it would result in increase of smuggled mobile. According to the Federal Board of Revenue (FBR) assessment, the country sustained $1.1 billion losses due to smuggling of mobile phones last year. Further, increase in mobile prices is also hindering the growth of 3G/4G technology in the country.