KARACHI: Pakistan’s mobile phone industry is on the brink of collapse, with almost all of the country’s 30 mobile phone assembly units shutting down due to a lack of raw materials caused by import restrictions.
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The restrictions, which stem from government policies that make it difficult for importers to obtain letters of credit from banks, have stopped the import of key equipment and components used in mobile phone manufacturing.
As a result, most companies have furloughed their employees during the holy month of Ramzan, after paying them half of their April salaries in advance. Employees have been told that they will be called back as soon as production resumes.
According to a report published today, the Pakistan Mobile Phone Manufacturers Association (PMPMA) has warned the country’s IT ministry that the local mobile supply has almost stopped and that the markets have also started to face mobile phone shortages. The PMPMA has informed the IT ministry that the country’s mobile industry, which comprises 30 manufacturers, including three foreign players, is on the brink of shutdown as many investors may shift their focus to other sectors.
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Mobile manufacturers have stated that the industry requires imported parts and components worth $170 million every month to operate at full capacity. However, the government is not allowing the opening of credit letters amid a dollar shortage, and no LC had been opened since the last week of December. During the eight months from May to December last year, the industry was allocated a monthly quota of $83m, which was around half of the industry’s total LC demand, after which manufacturers feared that foreign investors will roll back their investments.
It is pertinent to mention here that Pakistan had been producing over 2.5 million phones per month on average in April last year, catering to around 90 percent of the total demand, and only the high-end sets are imported.The situation started worsening after the Imran Khan-led government was ousted by the opposition through a vote of no confidence in April last year after being accused of causing rising inflation.
The mobile phone industry employs 20,000 young Pakistanis and creates another 20,000 jobs indirectly.
The PMPMA has asked the government to allow the import of parts in a reasonable quantity, which should be enough to let the industry run at half capacity.
