Pakistan to manufacture cellphones, smartphones

Rs800 billion to Rs1 trillion telecom revenue estimated in the near future.

Pushed by burgeoning demand, and encouraged by examples of China and India, Pakistan has decided to domestically manufacture cellphone and smart phones.
"Foreign investors, who are seeking investment in the telecom sector are likely to get big incentives," Ministry of Finance sources say. They include prospective investors, particularly from UAE, Saudi Arabia, and Asean. Some of these investors propose to join hands with Chinese companies which have reputed and cost-effective technology and trained manpower. Their pans are to make Pakistan as the production base to feed the Pakistan-Central Asia-Iran, and Middle Eastern and African markets for telecom and cellular products.
Domestically, with a population getting close to 200 million in Pakistan itself, there is a huge big market for these new, hand held sets as their demand is equally strong both in the urban as well as rural areas, like far away Gilgit-Baltistan on the Chinese border in the north and Chaman in the south, bordering Iran.
Beside China, which is a big suppler of mobile phones through official-channels imports and trade, thousand more of the mobs, smart phones, and the rest of these telecom  products are smuggled duty-free into Pakistan every week.
"The decision has been made by our Ministry of IT and Telecom, Minister of State Mrs Anusha Rehman told this writer.
"As soon as our domestic manufacturing starts, Prime Minister Nawaz Sharif's government would have fulfilled one more promise to provide cheaper products to people, expand local manufacturing and ensure more jobs to Pakistanis," she also said.
The immediate steps to be taken are to float Expression of Interest (EoIs) for local manufacturing of mobile phones and smart meters under he revival and revitalisation plans of Telephone Industry of Pakistan (TIP) - the factory built by Seimens of Germany. It was the first factory which started making telephone apparatus and later on full fledged telephone exchanges and telecom equipment at Haripur in Khyber Pukhtunistan Province in 1950s. It is called of Mother of All Telecom products. This state-run factory has recently performed poorly both financially and production-wise.
IT and Telecom Ministry sources say after the recent launch of $46 billion China-Pakistan Economic Corridor (CPEC) prospects of Chinese investment in Seimens have brightened. It may run in public-private partnership mode, says Azmat Ali Ranjha, secretary, Ministry of IT & Telecoms. When it resumes working in that mode, the plant will start manufacturing mobile phones and smart meters. Zia-ul-Haq, managing director of Seimens says an EoI is expected to be submitted soon.
When the prospective investors look at the demand within the region and Pakistan, itself, it is huge - and still rapidly growing. Shipments of smartphones in Pakistan massively surged by 214 per cent on year-on-year basis during the first three moths of 2015 compared to the last year, says the just unveiled report of the International Data Corporation (IDC).
"The shifting dynamics of the Pakistan mobile market to the deployment of 3G/4G networks across the country and the subsequent rise in the demand of devices that are compatible with the infrastructure," according to the report.
IDC report further said Pakistan has traditionally been a feature phone market; indeed just three years ago in 2012, around 93 per cent of all mobile phone shipments in  the country were feature phones since here was no network to support smartphones.
"Even those consumers that did not own smartphones had to be content with only using traditional voice and SMS services. Last year, however, the market has experienced a drastic shift to the smartphone form factor. Smartphones now account for around 30 per cent of all devices shipped to Pakistan up from 25.3 per cent previously."
The IDC report also pointed out another important factor and said mobile phone penetration currently stands at around 75 per cent in Pakistan, meaning here is a sizeable share of the population that has yet to acquire any type of mobile device. Uptake among the fist-time buyers is sure to spur the smartphone market's development even further.
What brands are being purchased? IDC said QMobile continues to dominate the market with an overall share of 58 per cent, leading in both feature phone and smartphone segments. Nokia and Voice are the other key players, with the share of 17 per cent and five per cent, respectively. The market is also witnessing an influx of new vendors, trade marks and brands.
The IDC also expects that the competition will intensify as other players such as Voice, Samsung, Huawei, and Lenovo make inroads into the market. Samsng, for example, initially, had a hard time in the Pakistani market, but recent changes to its product mix and target price bands have helped it to finally gain traction in the market, recording six per cent share of smartphone shipments in the first quarter of 2015, IDC says.
How big is the market-revenue-wise? The entire telecom sector revenue totaled Rs300 billion in the first half - July-December of financial year 2015, tax officials say.
A big surge is forecast in the future as the sector expand all round. One estimate puts the additional annual revenue at Rs800 billion to Rs1,000 billion in the near future. Dr Ismail Shah, chairman of Pakistan Telecommunication Authority (PTA) said with the use of 3G /4G services since last year 900,000 to 1.2 million people are being employed in the IT sector.
This scale of growth, and with prospective cellular and IT investment by foreign and domestic investors will provide a huge growth and big profits. Everyone inside Pakistan and among the foreign investors, is sure of that.
Views expressed by the author are his own and do not reflect the newspaper's policy.

• Pakistan