Govt urged to allow below $100 CKD kits for mobile phones

Our Correspondent
Sunday, Jun 05, 2022

KARACHI: Pakistan Mobile Phone Manufacturers Association (PMPMA) has requested the government to allow establishment of letter of credits (LCs) for mobile phones completely knocked down (CKD) kits worth below $100, saying lack of materials could lead to layoffs in the industry, The News learnt on Saturday.

PMPMA is a representative body of 26 mobile phone manufacturers located across the country.

The association says they employ more than 50,000 Pakistani workers, technicians, engineers, and management professionals.

“Unfortunately, due to lack of materials, all of the 50,000 workforce will have to be laid off by the industry by mid of next week,” read a letter to Finance Minister Miftah Ismail. The association said it had also forwarded the letter to the ministry of Industries and Production and State Bank of Pakistan (SBP).

Mobile phone CKD kits (HS Code 8517.1211) have been placed in the list of items for which prior approval from the central bank is required before LCs can be established by banks.

Since last two weeks, the SBP, due to foreign exchange constraints, has not permitted opening of any LCs for mobile phone CKD kits. As a result, the local industry is running out of raw materials, the association said.

“Our workforce will have to be laid off, which may cause huge resentment among lower middle class employees and negatively impact goodwill of the government,” the association said.

“We fully understand the difficult economic condition inherited by the government and the importance of preserving valuable foreign exchange,” the letter added.

The association has proposed the government to allow feature phone and low-end smartphone CKD kits worth below $100, which constitutes 70 percent of the total produced quantity. But in terms of import value, this category only requires 30 percent of total foreign exchange consumed by the industry.

“We recommend for SBP to immediately allow the establishment of LCs for import of mobile phone CKD kits below $100. For categories above $100, the decision can be made by SBP later subject to foreign exchange constraints,” the association said.

PMPMA said that the strategy could ensure that 70 percent of the production facilities to continue function, and 35,000 jobs could be saved, minimising hardship and unemployment for the masses.

Engineering Development Board (EDB) and Pakistan Telecommunication Authority (PTA) have given manufacturing certificates to 31 manufacturers, and the association claims they all have started operations and most of them are

now struggling to continue their operations with depleting CKDs over stalled supply.