LAHORE, June 5: The federal government is likely to encourage local assembly of all electronic goods including cellular phones by giving an incentive package in the budget for the financial year 2002-03.

The package will include reduction of customs duties to woo investors in this sector. It can be five per cent on CKD (completely knocked down) parts and 10 per cent on the SKD (semi-knocked down) parts.

Commerce Minister Abdul Razzaq Dawood has long been advocating assembly of electronic and other goods within the country.

The products might include cellular phones, microwave ovens, video products (VCR, VCP, DVD), cameras, audio products, radio and satellite receivers.

According to sources on Wednesday, the government will allow the assembly of electronic goods under the EPAS (electronic products assembly scheme)) to provide low-cost products to the people and to generate job opportunities for hundreds of thousands of unemployed youth.

The scheme is being made in view of the success of the local assembly of television sets through reduction in duties, they say.

The sources say that those making television sets are likely to benefit from the new scheme and to immediately start assembling the products.

They say the products whose assembly is being allowed are being smuggled into the country mainly by khepies (carriers). And the government also aims at curbing the smuggling by allowing the low-cost production of these items in the country.

Another aim is to introduce Pakistan to the world market first through the assembly of items through foreign parts which is a low-cost option against the production through locally made parts.

This policy has been adopted in countries like Malaysia, Thailand Indonesia and the Philippines, producing electronics without making investments in the vendor industry, they say.

The production of electronics in Pakistan is zero at present.

The government had reduced duties to encourage investors to assemble televisions here around three years ago.