After deliberate consideration Pakistan’s mobile phone manufacturing policy prepared by the Engineering Development Board (EDB) has finally been approved by the Federal Cabinet.
The policy aims to incentivise local assemblers who will provide jobs to local engineers, skilled and semi-skilled educated youth. Pakistan is well poised to capitalize the competitive human resource advantage to attract investment in the sector from across the globe. Policy aims at localization/indigenization of the parts of mobile phone in a phased manner.
The salient features of the policy are as follows:(i) removal of Regulatory Duty for CKD/SKD manufacturing by PTA approved manufactures under Input/Output Co-Efficient Organization (IOCO) approved import authorization;(ii) removal of Fixed Income Tax on CKD/SKD manufacturing of mobile devices up to $ 350 category;(iii) increase in Fixed Income Tax on $ 351 -500 USD category by Rs 2000 and $ 500 by Rs 6300 on CKD/SKD manufacturing only;(iv) removal of Fixed Sales Tax on CKD/SKD manufacturing of mobile devices;(v) PTA shall allow activation of handsets manufactured in the country under import authorization of inputs by IOCO in CKD/SKD kit (8517.1211) and not under HS Code 8517.7000, ie, parts. This will eliminate misdeclaration in parts category at the import stage. Activation of CBUs imported through notified routes after payment of all levied duties and taxes as fixed by government from time to time shall continue till further amendment; (vi) in up to $ 30 category, words “except smart phones” to be inserted for CBU imports under 8517.1219 to avoid misdeclaration; (vii) R&D allowance of 3 percent to be given to local manufacturers for exports of mobile phones;(viii) Locally assembled/manufactured phones to be exempted from 4 percent of withholding tax on domestic sales; (ix) Government to commit maintaining tariff differential between CBU and CKD/SKD till the expiry of the policy; (x) local industry to ensure localization of parts and components as per roadmap included in draft policy and; (xi) EDB to act as Secretariat of Mobile Phone Manufacturing Policy and ensure development of allied parts, components and devices.
Pakistani market has the potential of over 40 million handsets. As many as 16 local companies are manufacturing mobile devices in the country out of which most of the companies are manufacturing feature phones, ie, 2G. The companies are now shifting to manufacturing smart phones as technology is shifting towards 4G/5G.