ISLAMABAD: Three new companies are set to establish manufacturing units for mobile phones after recent relaxations in withholding tax.
However, the investors will have to obtain multiple approvals as both the Pakistan Telecommunication Authority (PTA) and the Ministry of Industries and Production (MoIP) are the regulatory bodies in this regard.
The government recently promulgated an ordinance abolishing WHT on locally manufactured mobile sets in a bid to encourage assembling and eventually production of parts in the country.
Investors lauded the government’s move by the government to abolish the withholding tax on locally assembled sets as under the previous regime imported sets were cheaper than the manufactured ones.
“Now after tax relaxation, there is a difference of around Rs1,900 per set between a locally assembled mobile phone and an imported one with a value of $100,” said Amir Allahwala, chief executive of a company manufacturing Infinix and Techno mobile sets.
Meanwhile, a senior official of the Engineering Development Board (EDB) — an attached department of the MoIP — confirmed that three new entrants have applied for establishing manufacturing units in the country.
The three units being established in the country include Vivo mobiles in Faisalabad, Airlink in Lahore and Advance Telecom in Karachi.
The official said that the EDB was the policy secretariat for mobile sets manufacturing in the country.
At the same time, PTA, which is the telecom sector regulator, has also issued Mobile Device Manufacturing Regulations 2021.
The PTA regulations highlight the requirements for establishing a manufacturing/assembly plant which includes detail of the land, finances, nationality of investors etc. However, the EDB contests that such details are related to the establishment of a production unit fall under the MoIP.
The PTA regulations direct manufacturers to ensure a comprehensive localisation plan which includes complete locally produced packaging for at least two per cent of the of total devices manufactured by the company in one year.
The localisation plan is to be met by the manufacturers by the end of second year of production/assembling. It foresees local production of 2pc chargers and 1pc of blue-tooth hands-free of the total manufactured devices.
The companies are bound to go for at least 10pc local production of motherboards for the total manufactured devices by the end of second year. At least 8pc of housing and other plastic parts of total manufactured devices are also be made in Pakistan. Similarly, 8pc of display screens and components of total manufactured device have to be produced locally. The manufacturers need to make 10pc of total batteries locally by the end of second year.
The PTA will be responsible for the quality and control testing of all assembled devices and locally produced parts.
Published in Dawn, February 20th, 2021