Pakistan’s mobile phone industry is currently facing a major setback as several manufacturers have halted their operations in the country. This has been mainly due to the non-opening of Letters of Credit (LCs), which has made it challenging for smartphone manufacturing in Pakistan. Additionally, the shortage of raw materials has made it even more difficult for these companies to continue their operations.
One such company that has stopped production in Pakistan is Transsion Techno Electronics, a Chinese company that produces mobile phones under the China-Pakistan Economic Corridor (CPEC). The company started its operations in early 2019 as a joint venture between a Chinese and Pakistani company. It produced around 0.3 million smartphones per month and provided employment to 12 Chinese managers, 400 Pakistani engineers, and 2500 male and female employees.
However, due to the shortage of raw materials and components, the company has been forced to shut down. Former Chairman of the Board of Investment (BoI), Azfar Ahsan, has written a letter to Prime Minister Shebaz Sharif urging him to take immediate action. In his letter, he stated that 30 other mobile phone manufacturers, including Samsung, Xiaomi, Vivo, OPPO, Nokia, Tecno, Infinix, and Itel, are also experiencing similar challenges. The raw materials shortage and the frozen LCs since January 2023 have put employment and the economy at risk, he remarked.
Azfar further added that massive layoffs are further exacerbating the situation, while the industry requires $100 million per month to stay operational at even 50% capacity and to retain the 35,000-40,000 direct and indirect jobs.
This news is concerning for the country’s mobile phone industry and its economy. With several major manufacturers experiencing challenges, there is a risk of a significant reduction in employment opportunities, which can lead to long-lasting effects on the economy.
The Pakistan government needs to take immediate action to address this situation. The government should work closely with the manufacturers to identify the root causes of the problems and develop an action plan to address them. This could include measures to facilitate the opening of LCs and the procurement of raw materials and components.
Moreover, the government should consider providing financial assistance to these manufacturers to help them overcome their current challenges. This could be done by providing loans, grants, or tax incentives to these companies, which would enable them to continue their operations and retain their employees.
Another option is for the government to focus on developing the local supply chain for the mobile phone industry. This could involve identifying potential local suppliers and supporting their development to ensure a steady supply of raw materials and components. By doing so, the government can create new employment opportunities in the country and ensure the sustainability of the mobile phone industry.
In conclusion, Pakistan’s mobile phone industry is currently facing a significant challenge due to the shortage of raw materials and the non-opening of LCs. This has resulted in several major manufacturers stopping their operations in the country, putting employment and the economy at risk. The government needs to take immediate action to address this situation by working with the manufacturers and providing financial assistance and developing the local supply chain. By doing so, the government can ensure the sustainability of the mobile phone industry and the creation of new employment opportunities in the country.