Cabinet Approves First Ever Mobile Device Manufacturing Policy

The Federal Cabinet on Tuesday approved the first ever Mobile Device Manufacturing Policy (MDMP) pursuant to a summary moved by Ministry of Industries and Production

ISLAMABAD, (UrduPoint / Pakistan Point News - 2nd Jun, 2020 ):The Federal Cabinet on Tuesday approved the first ever Mobile Device Manufacturing Policy (MDMP) pursuant to a summary moved by Ministry of Industries and Production.

The policy prepared by the Engineering Development Board (EDB), a techno-economic arm of Ministry of Industries and Production through extensive consultation with relevant public and private sector stakeholders, was okayed by the Economic Coordination Committee (ECC) on May 21, a Commerce Ministry press release said. Minister for Industries and Production Muhammad Hammad Azhar congratulated his ministry's team and also acknowledged the support from Ministry of Commerce, Ministry of Information Technology and Telecom, Pakistan Telecommunication Authority, Ministry of Planning, Federal Board of Revenue (FBR) and the ECC. The market carries a potential of over 40 million handsets, which has become a practical possibility especially after the successful launch of Device Identification, Registration and Blocking System (DIRBS), that eliminated smuggling of mobile phones.

The policy aims to incentivize local assemblers who will provide jobs to local engineers, skilled and semi-skilled educated youth.

Pakistan is well poised to capitalize the competitive human resource advantage to attract investment in the sector from across the globe. The policy aims at localization/indigenization of the parts of mobile phone in a phased manner. The prominent features of the policy are the removal of regulatory duty for CKD/SKD manufacturing by the PTA approved manufactures under Input/Output Co-Efficient Organization (IOCO) approved import authorization.

The policy also includes the removal of Fixed Income Tax on CKD/SKD manufacturing of mobile devices up to USD 350 category.

The cabinet also approved the increase in fixed Income Tax on USD 351 -500 USD category by Rs 2,000 and USD 500 by Rs 6,300 on CKD/SKD manufacturing only.

The removal of fixed Sales Tax on CKD/SKD manufacturing of mobile devices was also approved by the cabinet. Under the policy, the PTA will allow activation of handsets manufactured in the country under import authorization of inputs by IOCO in CKD/SKD kit (8517.1211) and not under HS Code 8517.7000 i.e. parts. This will eliminate misdeclaration in parts category at the import stage.

Activation of CBUs imported through notified routes after payment of all levied duties and taxes as fixed by government from time to time will continue till further amendment.

In up to USD 30 category, words "except smart phones" will be inserted for CBU imports under 8517.1219 to avoid misdeclaration. R and D allowance of 3% will be given to local manufacturers for exports of mobile phones.

Locally assembled /manufactured phones will be exempted from 4% of withholding tax on domestic sales.

The government will commit maintaining tariff differential between CBU and CKD/SKD till the expiry of the policy.

The local industry will ensure localization of parts and components as per roadmap included in draft policy. EDB will act as Secretariat of Mobile Phone Manufacturing Policy and ensure development of allied parts, components and devices. A total of 16 local companies are manufacturing mobile devices in the country, mostly feature phones i.e. 2G, and are now shifting to manufacturing smart phones as technology is shifting towards 4G/5G.

The local manufacturers have shown satisfaction on approval of mobile phone policy and are of the considered opinion that investment in this sector will start pouring in.The policy ensures that local manufacturing of allied parts and components such as Bluetooth, hands free, mobile accessories etc. will attract intelligent interventions at par with international best practices.