Pakistan’s Smartphone Industry at Risk of Collapsing, Analysts Say

• Pakistan’s smartphone industry is facing a possible collapse due to various factors.
• All 30 mobile phone manufacturing plants in Pakistan have ceased production, causing a significant crisis in the industry and endangering the employment of approximately 20,000 workers.
• The primary cause of the crisis is the need for raw materials resulting from import restrictions, making it difficult for importers to obtain a letter of credit (LC) and leading to a shortage of critical equipment and components.

Pakistan’s smartphone industry, once considered a thriving market, is now facing a bleak future as analysts warn of a possible collapse. 

The industry’s woes are attributed to several factors, including the ongoing pandemic, the depreciation of the local currency, and the influx of cheaper imported smartphones. 

With the future of the local smartphone market in question, stakeholders and policymakers are grappling with how to revive the industry and prevent its collapse.

Pakistan’s mobile phone manufacturing industry is facing a crisis, as all 30 plants, including those owned by foreign entities, have ceased production. 

The primary cause is the lack of raw materials resulting from import restrictions, endangering the employment of roughly 20,000 workers. Most companies have compensated their employees by paying half their April wages upfront and promising to rehire them once production resumes. 

However, a phone manufacturer has expressed concerns over the finance ministry’s “incompetent and strange practices,” which have led to unfortunate layoffs during the holy month of Ramadan.

The mobile phone manufacturing industry in Pakistan is facing a significant crisis due to import restrictions that have made it difficult for importers to obtain a letter of credit (LC). This has resulted in a shortage of critical equipment and components required for mobile phone manufacturing, leading to virtually all of Pakistan’s 30 mobile phone manufacturing plants shutting down production, including three foreign-owned plants. 

The Pakistan Mobile Phone Manufacturers Association (PMPMA) has reported that the local mobile phone supply has almost stopped, resulting in a shortage of mobile phones in the market.

The LC restrictions have resulted in manufacturers depleting their raw materials supply, mainly from China, South Korea, and Vietnam, and banks being advised only to accept imports. 

The situation has forced Pakistani manufacturers to send their staff home, causing severe damage to the industry’s reputation. Furthermore, to function at total capacity, the sector requires imported components and parts worth $170 million per month, making the situation equally troubling for customers forced to pay much higher costs for locally produced mobile phones. 

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The government must act swiftly to resolve the import restrictions and support the mobile phone manufacturing industry to prevent further job losses and long-term damage to the ccountry’seconomy.

The PMPMA has appealed to the government to permit the import of necessary parts to enable the industry to operate at half its capacity.

Muzzaffar Hayat Piracha, CEO of Air Link Communication Ltd, is anxious about the sector’s future. It is challenging to revive an industry once it has been shut down on such a large scale. The mobile phone industry is a significant employer in Pakistan, providing direct employment to 20,000 young individuals and indirectly supporting another 20,000 jobs.