Importers Demand Withdrawal of ‘Cruel’ Policy on Smartphone Industry December 14, 2024

The Mobile Phone Importers and Manufacturers Association (MPIMA) has requested the abolition of the 100 percent cash margin and prior approval from the central bank on import LCs in a letter to Finance Minister Miftah Ismail (letters of credit).

They also demanded that the R&D budget be increased to 8-10% and that an SRO for a New Duty Drawback Scheme on local mobile phone production be issued.

The Pakistani government, according to this letter, has changed its import strategy in order to relieve pressure on the country’s foreign exchange reserves. These alterations, in their current form, are detrimental to the mobile device manufacturing business.

Obtaining a letter of credit with a 100% cash margin, according to the MPIMA, locks up a company’s capital. According to the letter, the government should erase the 100 percent cash margin and banks should be able to conduct business as usual.

According to the letter, the State Bank of Pakistan (SBP) issued a directive on May 20, 2022, urging licenced dealers to acquire prior authorization from the Foreign Exchange Operations Department to avoid the outflow of US dollars.

Because the mobile manufacturing industry is so new, it will be forced to close or significantly reduce its operations. The Association has asked the government to abolish the requirement for prior authorization from SBP in order to ensure the smooth functioning of mobile manufacturing businesses.

The letter continued by stating that the R&D allowance should keep up with worldwide competitors such as India (9- 10%), Vietnam (10%), and China (10%). (10 percent ). 12% of the population.

This exemption, according to the industry, is only available to businesses who export mobile devices and compensates the exchequer’s impact in terms of value addition and employment creation, among other things.

According to the MPIMA, the R&D grant should be increased from 3% to 8% to 10%. According to the Association, a 10% R&D budget would be equivalent to that of Vietnam, India, and other countries, and would be particularly useful for mobile phone exports.

According to this letter, the SRO for the New Duty Drawback Scheme (DLTL) should be issued as soon as possible. The Economic Coordination Committee (ECC) of the previous government’s federal Cabinet adopted DLTL on March 20, 2022, and ratified it on April 2, 2022. The technique, according to reports, had a 5% disadvantage.

According to sources, the Mobile Phone Importers and Manufacturers Association (MPIMA) represents over 80% of the country’s major mobile phone importers and manufacturers.

MPIMA and its members were instrumental in the development of Pakistan’s mobile phone and related product sector, including the creation and implementation of the Device Identification, Registration, and Blocking System (DIRBS) and the formulation of the country’s first Mobile Device Manufacturing Policy.

All of the industry’s key players have declared their support for MPIMA as their representative forum before relevant authorities on matters affecting the industry’s interests, including Xiaomi, Infinix, Oppo, Vivo, Techno, iTel, Alcatel, Maxfone, VGOTel, and QMobile.

According to stakeholders in the mobile phone industry, MPIMA members have an export goal of $2.5 billion in 2023-24 and $5 billion in 2024-25. Concerns about 100 percent cash margins, Duty Drawback Schemes, and R&D allowances, among others, should be addressed in order to achieve this aim, according to the Association.

The Pakistan Mobile Phone Manufacturers Association (PMPMA), a self-proclaimed unregistered organisation, was also cited in the letter as having given some suggestions on the aforementioned issues.

PMPMA represents less than 20% of the country’s manufacturers, who mostly make low-cost 2G/3G phones with a retail value of less than $100. As a result, they have no potential for export. As key stakeholders in the industry, all members have openly rejected and distanced themselves from PMPMA’s suggestions.