The credit rating agency Fitch Solutions has released a report stating that Pakistan will benefit from global smartphone manufacturers entering the country.
The report that was released after the opening of Chinese Vivo establishing its new smartphone manufacturing facility in Pakistan suggests that the initiative will make Pakistan more self-reliant in the local production of handsets.
Other similar companies have already either opened up their local manufacturing sites or are in the process of doing so. Xiaomi and Realme are both currently securing MDM authorizations, said Fitch Solutions.
The report contained the recommendation that Pakistan needs to become less dependent on imports and falling total ownership costs (TCOs) for “premium devices will be key to unlocking the full value of the country’s fast-growing mobile broadband market”.
Vivo has invested $10 million in a plant in Pakistan with an annual production capacity of 1 million smartphones. This will still be a modest addition to Pakistan’s overall handset trade deficit of $1.02 billion, considering that “11 million new mobile subscriptions [were] recorded in 2019,” according to the report.
The report also stated that Vivo’s decision to establish local manufacturing facilities may be a result of Pakistan’s government hiking import duties and associated certification fees for the key categories of complex electronics goods.
It read: “With the country’s mobile operators set to rapidly roll out mobile broadband services during the coming decade, being able to keep smartphone average sales prices (ASPs) within the reach of consumers will be paramount”.
The report highlighted that if Xiaomi and Realme’s upcoming plants are capable of manufacturing nearly five to six million handsets annually, the local sources might be able to nearly fulfill future demands.
Fitch Solutions said, “We expect annual handset sales volumes to rise from 69.56mn in 2021 to 75.44mn by 2025, with smartphones expected to take an ever-larger share of overall sales as prices fall,” and added, “A faster fall in handset ASPs, driven by the new local manufacturing initiative, would likely change the scale of these forecasts as more consumers would be able to purchase mid-range and premium devices”.