Local Mobile Phone Assembly May Shut Down

Major smartphone companies that have set up local production to remain competitive and keep prices low may end up shutting down the local mobile phone assembly plants as the letters of credit (LCs) for import are not being opened, which is causing a shortage of raw material inventory.

According to a report by Express Tribune, the letters of credit (LCs) for import of completely knocked down (CKD) units are not being opened due to shortage of dollars since May 20 and the industry is facing a shortage of raw material inventory, which may cause these companies to shut down their local mobile phone assembly plants.

However, the State Bank of Pakistan (SBP) has clarified that it had not stopped import payments and commercial banks had sufficient dollar liquidity to make these payments. The inter-bank market has already made import payments of $4.7 billion during the current month.

The matter has created confusion among smartphone companies and businessmen over the restriction of LCs, which is allegedly caused by scarcity of dollars in the market. “Banks are not opening LCs for mobile phone CKD units due to shortage of dollars since May 20,” Tecno Pack Electronics CEO Aamir Allawala told Express Tribune.

“The industry has used all its raw material and 80% of the industry is closed unfortunately,” he said, “Jobs of almost 50,000 people working in the industry are at risk.” If this keeps up, the local assembly of phone phones may come to an end in the country, which will raise prices of these products significantly.

ICT expert Parvez Iftikhar said that supply of locally assembled low-cost mobile phones will stop and only those who can afford costly imported phones will be able to buy them. “We will have to say goodbye to our dream of becoming an exporter of mobile phones,” he added.

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