An economic meltdown has resulted in a grinding halt in Pakistan’s mobile assembly industry, resulting in Chinese engineers leaving the country. Muhammad Azfar Ahsan, the former chairman of the Board of Investment, has called on the government to take immediate action in order to revitalize the mobile manufacturing industry.
There is a risk that the industry may collapse completely, including Transsion Tecno Electronics, a project under the China-Pakistan Economic Corridor (CPEC).
Ahsan claims that due to their inability to open Letters of Credit, Transsion Tecno Electronics and 30 other mobile phone manufacturers, including well-known names like Samsung, Xiaomi, Vivo, Oppo, Nokia, Tecno, Infinix, and Itel, have been experiencing a shortage of raw materials and components since January 2023.
Transsion Tecno Electronics was among the businesses that had to completely cease operations as a result of the situation, which also forced the companies to make significant job cuts.
A joint venture between China and Pakistan called Transsion Tecno started producing products as part of the CPEC initiative in the beginning of 2019. 300,000 smartphones were produced each month by the company, which also had 2,500 employees, 400 engineers from Pakistan, and 12 Chinese managers.
Aamir Allawala, the CEO of Tecno Pack Electronics, disclosed that while 30 to 40 Chinese engineers were employed by various companies in the sector, more than half of them had left due to a lack of work. All cell phone manufacturing facilities were shut down as a result of the LCs being postponed from December 27, 2022.
According to Ahsan, the industry needs $100 million per month to operate at even 50% capacity and maintain 35,000–40,000 direct and indirect jobs. Mobile assembly plants are facing the same difficulties as other sectors of the economy that rely on imported raw materials or spare parts, according to Nasheed Malik, an information and communication technology (ICT) analyst with Topline Securities.
Waqas Ghani Kukaswadia, an analyst for JS Global ICT, noted that Pakistani smartphone manufacturers have encountered difficulties as a result of the shortage of raw materials brought on by the restrictions on opening LCs.
According to him, plants have low utilisation rates, with some units on the verge of closing. Another factor contributing to the slowdown, according to Kukaswadia, is the current economic climate’s impact on demand.
Despite the present difficulties, Malik believed that mobile assembly plants’ long-term prospects were positive, with plenty of room for local producers to fill the void left by pricey imported mobile phones. Ahsan urged the federal ministries and the government to arrange for foreign exchange in order to revive the labor-intensive sector of the economy.
The hi-tech sector, which Ahsan noted is the foundation of the economy, may become irreparably damaged if the issue is not addressed. In order to create jobs and accelerate growth, he emphasised that Pakistan must continue to earn the confidence of both foreign and domestic investors. This will show that Pakistan is still a land of opportunities with boundless potential.
