Local Mobile Assembly Units Fear Closure as LC Crisis Deepens

The local mobile phone assembly units in Pakistan are afraid of the closure of their operations after commercial banks have refused to open Letters of Credit (LCs) for the purchase of raw materials of different brands.

According to the reports, different brands such as Infinix, Tecno, itel, etc were denied the opening of LCs in the wake of new regulations from the banking regulator which aimed at controlling the depletion of foreign exchange on imports.

The State Bank of Pakistan (SBP) asked for its prior approval before the opening of LCs or registration of contracts for certain types of imports like cars (CKD), cell phones (CKD), and certain types of machinery.

Commercial banks have been asked to seek State Bank of Pakistan’s (SBP) permission before initiating import transactions worth $100,000 in an attempt to ease dollar shortages and conserve eroding foreign exchange reserves.

Banks are not opening LCs for mobile phone CKD units due to a shortage of dollars since May 20, Tecno Pack Electronics CEO Aamir Allawala said.

Speaking to a local media, he said the industry has used all its raw materials and 80 percent of the industry is closed, unfortunately. Jobs of almost 50,000 people working in the industry are at risk, he added.

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Local manufacturing plants manufactured/assembled 12.41 million phones during the first five months (January-May) 2022, as compared to 0.94 million imported commercially, according to the Pakistan Telecommunication Authority (PTA). The 12.41 million locally manufactured/assembled mobile phone handsets include 6.99 million 2G and 5.42 million smartphones. Furthermore, 53 percent of mobile devices are smartphones and 47 percent are 2G on the Pakistan network, according to the data.

Earlier, the commercial imports of mobile phone handsets stood at 10.26 million in 2021 compared to 24.51 million in 2020, as per the PTA’s official data.

The local assembly units had been a success story with local production are replacing the imported handsets, causing the transfer of technology along with the generation of employment.



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