Government urged to allow CKD kits below $100 for mobile phones

KARACHI: The Pakistan Mobile Phone Manufacturers Association (PMMPA) has requested the government to allow Letters of Credit (LC) to be issued for completely knocked down (CKD) mobile phone kits worth less than 100 dollars, saying the lack of equipment could lead to layoffs in the industry, The News learned on Saturday.

PMPMA is a representative body of 26 mobile phone manufacturers located across the country.

The association claims to employ more than 50,000 Pakistani workers, technicians, engineers and management professionals.

“Unfortunately, due to lack of materials, all 50,000 workers will have to be laid off by the industry by the middle of next week,” reads a letter to Finance Minister Miftah Ismail. The association said it had also forwarded the letter to the Ministry of Industry and Production and the State Bank of Pakistan (SBP).

Mobile phone CKD kits (HS code 8517.1211) have been placed in the list of items for which prior central bank approval is required before LCs can be issued by banks.

For two weeks, the SBP, due to foreign exchange constraints, has not authorized the opening of any LC for mobile phone CKD kits. As a result, local industry is running out of raw materials, the association said.

“Our workforce will have to be laid off, which can cause huge resentment among lower-middle-class employees and negatively impact government goodwill,” the association said.

“We fully understand the difficult economic situation inherited by the government and the importance of preserving valuable foreign currency,” the letter added.

The association has proposed to the government to allow CKD kits for low-end feature phones and smartphones worth less than $100, which accounts for 70% of the total quantity produced. But in terms of import value, this category requires only 30% of the total foreign exchange consumed by the industry.

“We recommend that SBP immediately authorize the establishment of LC for the import of CKD kits of mobile phones below 100 USD. For categories above 100 USD, the decision can be made by SBP later subject to constraints exchange,” the association said.

The PMPMA said the strategy could ensure that 70% of production facilities will continue to operate and 35,000 jobs could be saved, minimizing hardship and unemployment for the masses.

The Technical Development Board (EDB) and the Pakistan Telecommunications Authority (PTA) have issued manufacturing certificates to 31 manufacturers, and the association says they have all started operations and most of them they are

are now struggling to continue their operations with the depletion of CKDs on blocked supply.