Apple’s Foray into Pakistan’s Mobile Manufacturing
Apple is poised to initiate the refurbishment and subsequent assembly of iPhones in Pakistan, guided by a novel incentives framework, as disclosed by Hamad Ali Mansoor, CEO of the Engineering Development Board.
He envisions $100 million in re-exports in the inaugural year, alongside elevated localization targets for the burgeoning market.
In an exclusive interview with Express Tribune, Mansoor outlined Apple’s strategic entry into Pakistan’s mobile manufacturing sector, commencing with the refurbishment of iPhones designated for re-export.
“Apple’s critical prerequisites have been incorporated into the proposed Mobile and Electronics Manufacturing Framework, which will be submitted for Prime Minister Shehbaz Sharif’s approval,” Mansoor stated.
Moreover, he revealed that Apple outlined three principal incentives: the acquisition of land at discounted rates, the authority to refurbish iPhones aged two to three years, and an 8% performance-based incentive.
Currently, the government offers a 6% performance incentive to existing mobile manufacturers. We are elevating this to an 8% to entice Apple and other global stakeholders, Mansoor elaborated.
He noted Apple’s precedent of adopting a similar approach in Indonesia, Malaysia, and India, where the company commenced with repair and refurbishment capabilities to educate local talent before scaling up to full-fledged manufacturing.
Pakistan anticipates re-exports of refurbished iPhones to reach $100 million within the first operational year. Officials perceive this initiative as a pivotal step towards comprehensive iPhone assembly.
Since 2020, the mobile assembly industry in Pakistan has witnessed significant expansion. According to the Pakistan Telecommunication Authority, local plants assembled over 21 million mobile devices in 2023, a stark contrast to negligible figures five years prior. The commercial importation of fully assembled units has markedly decreased due to increased regulatory tariffs.
Nevertheless, localization remains suboptimal. “At present, localization in mobile manufacturing hovers around 12%,” Mansoor reported. “Manufacturers have pledged to elevate this to 35% within the first year, eventually reaching 50%.”
The government aims to cultivate a domestic supply chain for components. Recent data from the State Bank of Pakistan indicates that billions of dollars’ worth of mobile parts have been imported in the past few years. Officials believe that augmenting local value addition will alleviate pressure on foreign exchange reserves.
As part of the proposed framework, an export levy of up to 6% on high-end mobile devices is also included. This levy is intended to accrue Rs62 billion for a technology investment fund. Devices priced between Rs50,000 and Rs60,000 will remain exempt, while the levy applies to phones exceeding Rs100,000.
“These funds will facilitate the advancement of localization and technological innovation in mobile manufacturing,” he asserted.
This policy initiative aligns with Pakistan’s overarching strategy for export diversification. According to the State Bank, the nation’s total goods exports approximated $30 billion in fiscal year 2024, with textiles constituting over half of the export revenue. Electronics exports, however, remain minimal in comparison to regional peers.
India’s mobile phone exports surpassed $15 billion in fiscal year 2024, supported by its production-linked incentive scheme, based on official Indian sources. Over the past decade, Vietnam and Malaysia have emerged as significant electronics manufacturing hubs. Pakistan aspires to emulate elements of this model.
Mansoor noted that fresh investments from Chinese investors are forthcoming. “We anticipate $557 million in mobile manufacturing investments from Chinese enterprises,” he noted, referring to multiple memorandums of understanding signed during the Prime Minister’s recent delegation to China.
The policy initiative aspires to extend investments beyond smartphones, encompassing laptops, tablets, smartwatches, trackers, and wireless earbuds. The authorities’ objective is to transform Pakistan into a pivotal regional export hub for electronics.
In conjunction with electronics initiatives, the government is amplifying support for electric vehicles. The current fiscal year’s budget allocates Rs9 billion to subsidize electric two-wheelers, offering buyers a subsidy of up to 40%, financed through a 3% tax levied on conventional vehicles.
“In just six months, we have amassed Rs12 billion against a Rs9 billion target,” Mansoor remarked. This surplus might enable authorities to consider the extension of subsidies to four-wheeled electric vehicles.
A Lahore-based company is currently establishing a plant to manufacture small electric cars priced between Rs700,000 and Rs800,000, positioning them competitively with entry-level conventional models like the Suzuki Alto.
Plans are in place to broaden the e-bike scheme beyond a lottery system in the subsequent phase. Mansoor mentioned that the digitization of certification and regulatory mechanisms within the automotive sector is progressing to promote transparency.
Should the Mobile and Electronics Manufacturing Framework receive approval, it could signify Pakistan’s inaugural substantial venture to attract Apple for local assembly.
Mansoor emphasized the government’s unwavering focus on localization, export enhancement, and establishing Pakistan as a formidable player in electronics manufacturing.
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