Mobile Phone Assembly Units Shut Down In Pakistan

 

The future of about 20,000 workers is in jeopardy as nearly all of the country's 30 mobile phone assembly plants, including three operated by foreign companies, have closed due to manufacturers' claims that they have run out of raw materials due to import restrictions.

After paying workers half of their April wages in advance, the majority of businesses have placed them on furlough. They have been informed that they will be contacted once manufacturing has started up again. 

Assembly unit owners attributed the closure of all mobile production units to the "incompetent and odd policies" of the finance minister. He was alluding to government regulations that have made it challenging for importers to obtain letters of credit (LCs), which are documents from banks that promise that payments from buyers to sellers will be made on time and in full. 

As a result, shipments of crucial machinery and parts used in the production of mobile phones have been halted. The letter, penned by the association's chairman Haji Abdul Rehman, emphasized how consumers, who must pay noticeably higher prices for mobile sets made locally, were also troubled by the situation. 

In the letter, he added that the country's mobile industry, which consists of 30 manufacturers and three international players, was in danger of closing down because many investors might turn their attention to other industries. 

He claimed that businesses were nearly out of basic materials, which were primarily imported from China, South Korea, and Vietnam.  We worry that banks across Pakistan have received verbal orders from the SBP (State Bank of Pakistan) not to consider imports from mobile phone makers, said Mr. Rehman. 

He claimed that local manufacturers had sent their workers home, and 90% of Chinese specialists had returned to China. This is a significant setback for Pakistan's standing as a mobile maker, he continued. 

A monthly quota of $83 million, or roughly half of the industry's total LC demand, was given to the sector for the eight months from May to December of last year, according to producers. They worried that investors from abroad would reduce their investments. 

Since April of last year, Pakistan has been manufacturing over 2.5 million phones per month on average, meeting about 90% of the market's demand; only the most expensive models are imported. 

Muzzaffar Hayat Piracha, CEO of Air Link Communication Ltd, one of the nation's biggest smartphone distributors, manufacturers, and retailers, said that in addition to satisfying domestic demand, the Made in Pakistan sets have also been exported. 

The industry's next goal, according to Mr. Piracha, was to move toward localizing accessories like chargers, batteries, earphones, cables, etc. "All such plans have now been put on pause,'' he said. We are currently even concerned about the basic industry's prospects," he said. 

According to him, once industry confronted widespread closure, it will be very challenging to restart because investor confidence will be shaken. Twenty thousand young Pakistanis work in the mobile phone business directly, and another twenty thousand indirectly.