Pakistan’s Mobile Phone Industry is At The Brink of Collapse
Almost all of Pakistan’s 30 mobile phone manufacturing facilities, including three facilities with foreign ownership, have ceased operations. This is because trade restrictions are causing a shortage of raw materials, endangering the employment of about 20,000 people.
The majority of companies have fired workers after paying them half of their April salary in advance and pledging to call them in once production started. However, a manufacturer of mobile phones voiced worry that the businesses were forced to fire employees during Ramadan due to the “incompetent and peculiar practices” of the finance ministry.
The limitations have made it challenging for importers to obtain a letter of credit (LC), a financial document that guarantees a buyer will pay a seller on time and in the correct amount. As a result, the import of essential machinery and parts required for the production of mobile phones has been restricted.
The Pakistan Mobile Phone Manufacturers Association (PMPMA) informed the IT ministry that there was a shortage of mobile phones in the market and that local mobile supply had all but stopped.
The situation was equally troubling for customers, according to Haji Abdul Rehman, head of the PMPMA, who had to pay significantly more for locally made mobile phones. The industry needs to import $170 million worth of components and parts each month to operate at maximum capacity, but imports have been halted due to government LC restrictions.
The majority of the raw materials used by manufacturers, which came from China, South Korea, and Vietnam, have almost run out, and banks had been warned not to take imports. As a consequence, Pakistan’s reputation as a mobile manufacturer has been severely damaged. Pakistani manufacturers have sent their employees home, and 90% of Chinese exports have returned to China.
In order for the industry to run at half its normal capability, the PMPMA has asked the government to permit the import of the necessary quantity of parts.
CEO of Air Link Communication Ltd. Muzzaffar Hayat Piracha is concerned about the future of the industry as a whole because it is difficult to revive a sector that has been extensively shut down. Twenty thousand young Pakistanis are employed immediately and another twenty thousand are employed indirectly in the mobile phone industry.
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