'Serious blow': Chinese experts leave Pakistan as 30 mobile phone assembly units shut due to cash crunch

Almost all of Pakistan's 30 mobile phone assembly units, including three run by foreign brands, have shut down as manufacturers have run out of raw materials due to import restrictions. Pakistan has been running low on foreign currency, which is why it has restricted imports of a host of products. However, these import curbs have created a huge shortage of materials needed to run industries. So far, hundreds of textile factories have shut down, causing thousands of job losses.      

Pakistan's daily Dawn on Sunday reported that most phone assembly units in the cash-strapped country have halted their operations. They have furloughed employees after paying them half of their April salaries in advance. They, the report said, have been told that they will be called back as soon as production resumes.

A mobile phone manufacturer expressed disappointment that the companies had to send employees home in Ramazan. "My family has three mobile production units, and all are closed,” he told the daily. He pinned the blame on the finance ministry, which he said was rolling out 'strange policies'.

The manufacturer was referring to government policies that have made it difficult for an importer to get a letter of credit (LC). This, the report said, has stopped the imports of key equipment and components used in mobile phone manufacturing.

Dawn said the country's top mobile phone manufacturers association informed the IT ministry that the local mobile supply had almost stopped and the markets had also started to face mobile phone shortages.

The chairman of the association said the situation was equally troubling for consumers, who have to pay significantly higher prices for mobile sets manufactured locally. He said the price of low-cost imported phones and the locally assembled units were getting close, which he said would eventually hurt sales of local sets.

The chairman said the country's mobile industry, comprising 30 manufacturers including three foreign players, was on the brink of shutdown as they had almost run out of raw materials, which mostly came from China, South Korea, and Vietnam.

According to the report, mobile manufacturers said that the industry required imported parts and components worth $170 million every month to operate at full capacity, but the government was not allowing the opening of credit letters amid dollar shortage. They said no letter of credit had been issued since the last week of December.

The association chairman said the manufacturers feared that banks had been verbally instructed by the central bank not to entertain imports by mobile phone makers across Pakistan. He said local manufacturers had sent their employees home and 90 per cent of Chinese experts had gone back to their country. "This is a serious blow to Pakistan’s reputation as a mobile manufacturer," the chairman was quoted as saying by Dawn.

Meanwhile, the country's year-on-year inflation hit 35.37 per cent in March -- the highest in nearly five decades. The government headed by Prime Minister Shehbaz Sharif has been making efforts to unlock a tranche of $1.1 billion from the International Monetary Fund (IMF), but it has not succeeded yet.

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