Smartphone Manufacturing in Balochistan: Next Step to Unprecedented Economic Growth

Balochistan is the largest and the richest province of Pakistan in terms of area and valuable natural resources respectively. With its enormous and underutilized economic potential, the province is thought to be the future hub of international trade, manufacturing, and industrialization. The province is blessed with a number of natural resources that are valued at trillions of dollars. In addition to Natural gas in Sui, at present, there is a large number of minerals being mined in the province.

The most prominent of these are Iron in Chaghi and Mastung, Lead-Zinc in Khuzdar and Lasbella, Coal in Quetta, Sibi, Harnai, Mach and, Duki Chamalang,  Marble in Khuzdar, Kalat, Loralai, Zhob, Chaghi and Ziarat, Barite in Lasbella, Khuzdar and, Chaghi, Chromite in Muslim Bagh, Killa Saifullah, Khanozai and, Pishin, Limestone in Lasbela, Coastal area, Chaghi and, Zhob, Copper and Gold reserves in Saindak and Rekodiq.

Mineral resources of the province are abundant and provide countless opportunities for foreign investors to reap the benefits. Investment opportunities include Copper Processing Unit, Steel Mills, Marble Cutting Factories, Coal Washing Plant, Cement Manufacturing Plant, Coal and Gas based Power Plants, Mineral Exploration and Extraction, Minerals Processing Plants, Value Addition and Processing Plants and Automobile Industry among many others.

There have always been local and international interests in investing in extracting and exporting raw material in Balochistan. The provincial government is also offering various incentives to invest in the manufacturing industry in the Special Economic Zones (SEZs) under China Pakistan Economic Corridor (CPEC). In addition to extracting and exporting raw forms of minerals and metals, the Balochistan government intends to utilize these raw minerals in the manufacturing industry by making high-tech, value-added products and goods in the SEZs. This could attract investors interested in utilizing Balochistan’s minerals. This would make the economy more inclusive by utilizing Balochistan’s untapped human resource potential in the manufacturing industry.

The manufacturing industry alone could be enough to drive Balochistan’s economy to noteworthy growth. The Federal Cabinet and Economic Coordination Committee (ECC) has already approved the first-ever Mobile Device Manufacturing Policy, pursuant to a summary. Moved by the Ministry of Industries and Production (MoIP), the policy has been prepared by the Engineering Development Board (EDB), a techno-economic arm of the MoIP. The EDB has devised it through extensive consultation with relevant public and private sector stakeholders.

SEZs under CPEC in Balochistan can begin with mobile phone assembly factories and build up to other manufacturing and assembly lines. It is also beneficial for Pakistan to have smartphone manufacturing capability as it could increase foreign direct investment (FDI) and foreign exchange savings on smartphone imports.

It could also result in earning foreign exchange through export-focused local smartphone manufacturing and creating employment opportunities for our people. It would promote the growth of related support industries within the country like packaging material and smartphone accessories, etc.

According to a report released by the Pakistan Bureau of Statistics (PBS), Pakistan is the 7th largest market for mobile phones with annual sales of up to 34 million in 2019. Mobile phone imports have increased by 81% in the last year alone. Imports reached around $1.4 billion compared to around $756 million during the same period last year.

Mobile phone imports increased by 300% in June 2020 as compared to $57.7 million in imports in June 2019. Overall telecom imports saw an increase of 34% during the last fiscal year (2019-20). Total imports were recorded at around $1.9 billion when compared to $1.4 billion in the fiscal year 2018-19, while registering a growth of around 72% in June 2020.

With increasing local and international demand of smartphones, SEZs in Balochistan for mobile manufacturing could give us a competitive advantage of low labour costs. This can develop into a major industry capable of generating an export surplus and selling our own brand of “Made in Pakistan” cellphones in the local and international market.  The cellphone industry could potentially contribute $500 million to $1 billion through the export of engineered goods.

The Chinese being “The World’s Factory” and producing everything at low costs but high profits are a good case study. Today, massive industrial areas located all over China are producing high-tech and complex products like smartphones and selling them worldwide. Each year, the country imports more than $200 billion worth of semiconductors which are essential in the manufacturing of mobile devices. For instance, in the global smartphone industry, four main Chinese smartphone manufacturers Oppo, Huawei, Vivo, and Shamay take more than 10% of the global profits in this industry.

To create a global ecosystem, China has invested in developing countries in Asia, Africa, and Latin America from where the raw materials are extracted especially for the manufacturing of smartphones. It has also created an international and national supply chain and ecosystem. They have made many supply chain cities through Industrial Network Clustering like SEZs in Pakistan under CPEC. These supply chain cities fulfil all the prerequisites and provide amenities, and facilities needed for making a product.

For instance, to make a smartphone, elements like processors, camera, body, ram, etc. are available in a single region. This means that a manufacturing city is created with a single product in mind.

To make this type of clustering, the Balochistan government has already offered a myriad of incentives, regulations and tax relaxations under CPEC SEZs. The government intends to cooperate for such clustering by funding workforce training and helping in the financing. They are also encouraging potential investors and incentivizing with required land, arrangements, and infrastructure to attract Foreign Direct Investments, especially for utilizing and making value-added products by manufacturing from its raw materials and minerals.

Therefore, establishing smartphone manufacturing factories in Balochistan could be of great benefit to not just the provincial economy but also the national economy. It would tap into our underutilized economic potential.