ISLAMABAD: Mobile manufacturers have urged the government to adopt conducive policies to encourage large-scale assembly of smartphones, which will also boost exports.

In a letter to the Federal Board of Revenue (FBR), which is currently finalising taxation proposals for the upcoming budget, the Pakistan Mobile Phone Manufacturers Associ­ation (PMPMA) highlighted that the existing tariff structure favoured the import of finished products. In contrast, up to 50 per cent of high duties were imposed on parts, raw materials, and accessories used for local phone assembly.

“There is around 10pc additional cost in assembling various parts to make a finished product, while import of mobile charger, hands-free, Bluetooth devices, etc are zero-rated,” senior member of PMPMA Zeeshan Miannoor said.

He added that due to this lacuna, the localisation of key parts was suffering, and it was also restricting the expansion of the ‘Make in Pakistan’ branding of mobile phone sets. “We need to overcome such minor issues if the exports have to be increased and maintained over a long period,” he added.

The association has also asked the FBR to continue the sales tax relief on local mobile phone assembly in the budget 2024-25. Otherwise, its withdrawal would increase the price of smartphones.

The mobile assemblers warned that imposing 18pc sales tax on all mobile phones assembled in the country would seriously blow the whole industry.

The Mobile Device Manufacturing Policy 2020 exempted phone sets up to $350 from sales tax, while sets above this price range were charged sales tax.

The association stated that most phone assemblers fall within this range, accounting for 55pc of smartphones used in the country.

PMPMA Chairman Mian Abdul Rehman said that around 40pc of phone sets were still feature phones, and smartphone usage needed to expand to around 80pc.

“What we have asked the authorities to consider is the fact that this industry was still at its infancy stage as soon after the policy was launched, Covid-19 hit the world economy, and it was followed by letters of credit crisis in Pakistan”, Mr Rehman added.

He added that Pakistan needs to move ahead with prevalence of 80-90pc smartphone usage as it also helps generate employment and earning opportunities.

Published in Dawn, May 26th, 2024