ANL 12.80 Decreased By ▼ -0.20 (-1.54%)
ASC 15.02 Increased By ▲ 0.20 (1.35%)
ASL 15.52 Decreased By ▼ -0.23 (-1.46%)
AVN 104.40 Decreased By ▼ -3.65 (-3.38%)
BOP 8.40 Decreased By ▼ -0.03 (-0.36%)
CNERGY 6.13 Decreased By ▼ -0.13 (-2.08%)
FFL 8.90 Decreased By ▼ -0.20 (-2.2%)
FNEL 8.38 Decreased By ▼ -0.27 (-3.12%)
GGGL 12.90 Decreased By ▼ -0.32 (-2.42%)
GGL 19.50 Decreased By ▼ -0.89 (-4.36%)
GTECH 9.07 Decreased By ▼ -0.33 (-3.51%)
HUMNL 6.71 Decreased By ▼ -0.04 (-0.59%)
KEL 3.07 Decreased By ▼ -0.07 (-2.23%)
KOSM 4.07 Decreased By ▼ -0.08 (-1.93%)
MLCF 33.80 Decreased By ▼ -0.50 (-1.46%)
PACE 3.98 Decreased By ▼ -0.15 (-3.63%)
PIBTL 7.17 Decreased By ▼ -0.06 (-0.83%)
PRL 14.08 Decreased By ▼ -0.36 (-2.49%)
PTC 8.55 Decreased By ▼ -0.11 (-1.27%)
SILK 1.27 Decreased By ▼ -0.05 (-3.79%)
SNGP 33.76 Decreased By ▼ -0.40 (-1.17%)
TELE 17.05 Decreased By ▼ -0.69 (-3.89%)
TPL 11.80 Decreased By ▼ -1.17 (-9.02%)
TPLP 26.65 Decreased By ▼ -1.87 (-6.56%)
TREET 38.40 Decreased By ▼ -1.25 (-3.15%)
TRG 77.20 Decreased By ▼ -5.65 (-6.82%)
UNITY 27.49 Decreased By ▼ -0.36 (-1.29%)
WAVES 15.43 Increased By ▲ 0.33 (2.19%)
WTL 2.13 Decreased By ▼ -0.08 (-3.62%)
YOUW 7.34 Decreased By ▼ -0.43 (-5.53%)
BR100 4,610 Increased By 11.6 (0.25%)
BR30 17,620 Increased By 286.2 (1.65%)
KSE100 44,955 Increased By 67.3 (0.15%)
KSE30 17,738 Increased By 42 (0.24%)

coronavirus
Coronavirus
VERY HIGH
Source: covid.gov.pk
Pakistan Deaths
29,137
1524hr
Pakistan Cases
1,386,348
5,19624hr
Sindh
531,008
Punjab
467,698
Balochistan
34,032
Islamabad
120,813
KPK
186,537

Amid the downbeat economic environment, a rather encouraging trend is the rising number of mobile phones being assembled here at home. Referring to the telecom regulator PTA’s data for the Jan-Sep period of CY21, this column had previously highlighted that local assembly of mobile phones (16 mn units) exceeded (for the first time) commercial imports of mobile phones (9 mn units). About 42 percent of locally-assembled phones in this period were smartphones, as per the PTA.

Now the SBP in its latest Annual Report has also singled out this trend. Imports of CBU mobile phones (finished product) stood at $1.5 billion in FY21, growing 15 percent per annum, as per PBS data cited in SBP report. Number of devices grew by 12 percent year-on-year to 21.8 million units. Meanwhile, value of CKD/SKD mobile imports (used in local assembly) jumped 13 times to $636 million, and number of CKD/SKD mobile kits surged 10 times to 18.5 million units.

Clearly, the latter – CKD/SKD mobile imports – have the momentum. The central bank’s report also suggested that the pace of this shift in favor of local assembly accelerated in the ongoing calendar year. Some 14 million CBU units were imported in 1HFY21, compared with some 8 million CKD/SKD mobiles. Come 2HF21, CKD/SKD imports had gone up to about 11 million units, overtaking CBU imports that clocked 7 million units.

This shifting trend is not an accident. The government’s Mobile Device Manufacturing Policy has played a key role in turbo-charging local assembly. The recently-introduced duty differential in favor of CKD/SKD over CBU imports has also worked well. It would be remiss of this column not to mention the role played by the PTA’s Device Identification, Registration and Blocking System (DIRBS) regime, which comprehensively curtailed illegal imports and leveled the playing field for local assemblers.

The figures provided in the SBP report also highlight another interesting dynamic. The unit value of CBU imports was recorded at $51 in 1HFY21, which jumped by 88 percent to $96 per unit in 2HFY21. This suggests that the imported ready-to-use mobile phone market is moving towards comparatively higher-end brands. Meanwhile, unit value of CKD/SKD imports also increased by 58 percent, from $26 in 1HFY21 to $40 in 2HFY21. This suggests local assemblers are moving away from 2G phones.

Whether the trend seen in the two halves of FY21 holds up remains to be seen. What is missing from the equation is how demand-side is responding to this shift. Growing volumes of local assembly may indicate that customers do not have major issues with the quality of locally-assembled phones. But there could be other factors at work, too, such as affordability in this inflationary environment, which make users opt for these phones instead of imported ones. It’s a query that needs detailed research.

Be that as it may, the localization needs to level up, with an eye on exports in the long term. Local assembly of digital electronics products, such as smartphones, provide a good ramp to enter complex global value chains and build high-tech human resource base.

The policymakers as well as entrepreneurs need to evaluate where in the value chain of smartphone parts and accessories can Pakistan specialize and build a competitive advantage for itself.

The journey has only just started!

Comments

Comments are closed.