Islamabad, February 19 The American tech giant Apple is set to begin manufacturing iPhones in Pakistan after the government agreed to offer incentives in the proposed Mobile and Electronics Manufacturing Framework, according to a report on Thursday.
Apple has also agreed to refurbish iPhones in Pakistan for re-export under the new framework. The government expects $100 million from the re-export of refurbished iPhones in the first year.
Apple management has requested the provision of land at discounted rates, an 8% performance incentive, and plans to repair iPhones that are two to three years old.
"We have included these three conditions in the new proposed Mobile and Electronics Manufacturing Framework, which will be approved by Prime Minister Shehbaz Sharif," said Hamad Ali Mansoor, CEO of the Engineering Development Board (EDB), in a statement to The Express Tribune newspaper.
He said that Apple had already entered Indonesia, Malaysia, and India with the same model, where it initially started repairing two to three-year-old iPhones, initially aimed at training local manpower, and later began manufacturing those phones.
The government is already offering a 6% performance incentive to existing mobile phone manufacturers. However, it will be increased to 8% to attract Apple and other global manufacturers.
He added that Special Assistant to the Prime Minister on Industries and Production, Haroon Akhtar Khan, and the secretary of industries, had extended full support to the new mobile and electronics policy.
"We are also expecting investments of $557 million from Chinese companies in mobile manufacturing," the EDB CEO said, adding that MoUs had been signed during Prime Minister Shehbaz Sharif's visit to Beijing.
He anticipated that the new policy would also bring investment to the manufacturing of laptops, tablets, watches, trackers, and air buds. The government wants to make Pakistan a regional hub for mobile and electronics exports. "This new policy has been framed with this objective in mind," he remarked.
"We are focusing on the localization of mobile phones and electronics," Mansoor said, adding that phone manufacturers had assured the government that they would increase the use of local parts up to 35% in the first year, which would later be pushed to 50%.
Currently, there is 12% localization in phone manufacturing.
The government has planned to impose an export levy of up to 6% in the Mobile and Electronics Manufacturing Framework to generate funds for technology investment. It expects a collection of Rs62 billion, which would be used for accelerating localization in phone manufacturing.
"There will be no export levy on phones costing between PKR 50,000 and PKR 60,000," the CEO said. The levy will be imposed on phones above PKR 100,000.
Currently, the government is implementing a policy to provide electric two-wheelers to people at subsidized rates. It has allocated PKR 9 billion in the budget to provide a 40% subsidy. A tax of up to 3% has been imposed on the gross sale value of conventional local and imported vehicles to roll out the e-bike scheme.