ISLAMABAD – As per the latest data released by the Pakistan Bureau ofStatistics, the country’s mobile handset import bill came in at roughly $388million for the Jul-Oct period, a growth of 49 percent year-on-year.
Such an unusual growth in cellphone imports is occurring at a time when theoverall import bill is shrinking in double digits. Overall goods’ imports,as per PBS data, have declined by 19 percent year-on-year to come down to$15.3 billion in 4MFY20. Between FY11 and FY19, cellphone imports averaged1.4 percent of good’s imports for the period under review. In FY20 thusfar, handset imports have surged to 2.5 percent of goods’ imports.
Historical quantitative data from the PBS suggest that imports of cellularmobile phones (HS Code: 8517.1219) typically grow in volume in one yearfollowed by a lean year. With imports averaging 11 million units in lastthree years, it is plausible that volumetric imports are picking up thisfiscal, after imports coming in at 9.8 million units in FY19.
Developments in recent months suggest a propensity to import more. First,the stability that has set in for PKR this fiscal provides commercialimporters a better visibility on their margins. Second, there has been noheadway with the government over regularizing millions of smuggled,non-functional phones that are already present in the market. This isdepleting the legit inventories, with vendors feeling the need to replenishtheir stocks, or lose business to others who do.
Third, the duty-free personal import of even one mobile phone was withdrawnunder the revised baggage rules earlier in July, dealing further blow tothe flow of smuggled smartphones in the main mobile markets. Last, but mostimportant, the federal government, since the FY20 budget in June, has beenlowering cellphone import duties. Recently, in September, the regulatoryduty on most slabs was significantly reduced, with the supposed aim toimprove volumes and collect more revenues for the exchequer.
Be that as it may, at the pace of growth seen this fiscal, the import tabfor talking machines will easily exceed the billion-dollar mark by the endof the fiscal year that is 2020. That will deplete roughly half a billiondollars in additional forex compared to FY19. This isn’t exactly a doomsdayscenario; however, these imports are among some areas where the countryneeds to start saving precious dollars by gradually moving towards importsubstitution.
While local assembly of cellphones isn’t exactly a low-hanging fruit, thelatest import data should nudge the economic team into action. Thecrackdown on smuggled phones ticks one important box in the checklist forincentivizing assemblers to set up assembly plants in Pakistan. But muchmore needs to be done. A “Mobile Device Manufacturing Policy” is reportedlyin the works at the Ministry of Industries. The sooner it is launched, thebetter.