Pakistan asks Huawei to relocate manufacturing units

[ghazi52]

Pakistan asks Huawei to relocate manufacturing units

Pakistan has asked Chinese telecom giant Huawei to relocate its manufacturing units as the South Asian nation offers scores of incentives including cheap labour.

The matter was discussed during a meeting between Huawei Supervisory Board Chairman Li Jie, who was leading a delegation, and Prime Minister Imran Khan on Thursday.

Addressing the delegation, the prime minister highlighted the attractive incentive packages being offered by the government to the potential relocating industries. He also talked about the availability of inexpensive labour and the competent and enterprising youth in Pakistan.

Talking about the huge business opportunities created under the new e-commerce policy, Imran invited the Chinese IT giant to explore business avenues in the sector. He urged the company to engage the brilliant young minds of Pakistan working in technical fields.

The IT ministry had launched the Digital Pakistan campaign and was interested in including them, he said

 

[FuturePAF]

This is the crucial part of CPEC. To Make CPEC work, we need these kinds of factories, where our people can earn income from an export oriented industry that doesn't put out of business domestic producers.

 

[Baby Leone]

HUawei is almost banned in western nations or specifically countries where US influence is much more, right time Pakistan get benefit of friendship with China with technology not only lip service.

 

[khansaheeb]

We should not only encourage joint ventures and innovation seed centres but complete package of research universities, innovation and research campuses, training and skill centres and IT technology parks, software houses, Silicon wafer manufacturing , AI and CPU design centres ,funding business centers etc all in one location. Suck up all the local and offshore brains to this area and start producing results.

 

[Smarana Mitra]

Huawei will not manufacture in Pakistan without Pakistan offering a major market for it. The cost involved in export and import customs and shipping will be huge and disincentivise manufacturing without market presence. Countries like Vietnam get manufacturing plants because Vietnam is close to China and gets tax concession from USA. India gets manufacturing because India has big market. But Pakistani market for phones is quite low - about 8 million a year combining all brands. This is insufficient for any company to set up manufacturing. The logistics cost and infrastructure cost will be far too high

 

[S.Y.A]

The cost involved in export and import customs and shipping will be huge and disincentivise manufacturing without market presence.

You really think that Pakistan will not incentivize them? what is the use of inviting them, if we are not going to offer them these incentives.

But Pakistani market for phones is quite low - about 8 million a year combining all brands. This is insufficient for any company to set up manufacturing.

That is because they are being imported, and heavy duties are charged on them. incentives will include lower gst etc and duties on machinery. dont you worry about it.

 

[AwA.]

Huawei will not manufacture in Pakistan without Pakistan offering a major market for it. The cost involved in export and import customs and shipping will be huge and disincentivise manufacturing without market presence. Countries like Vietnam get manufacturing plants because Vietnam is close to China and gets tax concession from USA. India gets manufacturing because India has big market. But Pakistani market for phones is quite low - about 8 million a year combining all brands. This is insufficient for any company to set up manufacturing. The logistics cost and infrastructure cost will be far too high

This is not just about Pakistani market size. HUAWEI can lower the manufacturing cost by utilizing the low labor cost in Pakistan as compared to China.

 

[Smarana Mitra]

This is not just about Pakistani market size. HUAWEI can lower the manufacturing cost by utilizing the low labor cost in Pakistan as compared to China.

Pakistani labour cost is low. But Pakistan does not have enough access to market. Only market which can be exported from Pakistan will be Africa and Gulf countries. But neither are major markets. Gulf countries generally buy phones like Apple, Samsung and rarely Chinese ones. Africa has limited market. Markets of Europe or USA will require long travel which will be extremely expensive. So, overall, though Pakistani labour is cheap, the geographic location of Pakistan does not allow for easy exports of phones. Secondly, other countries which are major markets of phones, will impose import duties on phones made in Pakistan. So, it will become expensive to export from Pakistan instead of manufacturing in those countries itself.

That is because they are being imported, and heavy duties are charged on them. incentives will include lower gst etc and duties on machinery. dont you worry about it.

Lower duties will still not mean that the price will be drastically lower. The current duty structure of Pakistan is :

1. Customs Duty = PKR 250 Fixed

2. Regulatory Duty (Based on phone prices in USD)

• If $1 to $60 = PKR 250
• If $61 to $130 = 10% of Mobile value
• If $130+ = 20% of the Value of the Phone

3. Sales Tax = PKR 1500

4. Additional Sales Tax = 3% Fixed

5. IT Duty = 9%

6. Mobile Levy (based on phone prices in PKR)

if cell phone value is PKR 10,000 to 40,000 = mobile levy will be PKR 1000

If PKR 40,000 to 80,000 = PKR 3000

If Over PKR 80,000 = PKR 5000

7. Provincial Tax = 0.9%

Add the above values and you will get the exact tax value that you’ll have to pay.

There is not much incentive which Pakistan can give to enhance sales. Most of the phones bought in Pakistan is below $130 which means only about 10% is paid in customs duty. Rest of the duty in terms of sales tax IT duty and other tax will be under 20%. So, total of 30% tax. Pakistan will have to eliminate all of these taxes, not just customs duty, which can in turn cause finance problems. Moreover, Pakistan will still have to import the parts which cost upto 80% of the value. So, is it really worth it to give such huge incentives for little gains?

 

[Desi_Guy]

Pakistani labour cost is low. But Pakistan does not have enough access to market. Only market which can be exported from Pakistan will be Africa and Gulf countries. But neither are major markets. Gulf countries generally buy phones like Apple, Samsung and rarely Chinese ones. Africa has limited market. Markets of Europe or USA will require long travel which will be extremely expensive. So, overall, though Pakistani labour is cheap, the geographic location of Pakistan does not allow for easy exports of phones. Secondly, other countries which are major markets of phones, will impose import duties on phones made in Pakistan. So, it will become expensive to export from Pakistan instead of manufacturing in those countries itself.


Lower duties will still not mean that the price will be drastically lower. The current duty structure of Pakistan is :

1. Customs Duty = PKR 250 Fixed

2. Regulatory Duty (Based on phone prices in USD)

• If $1 to $60 = PKR 250
• If $61 to $130 = 10% of Mobile value
• If $130+ = 20% of the Value of the Phone

3. Sales Tax = PKR 1500

4. Additional Sales Tax = 3% Fixed

5. IT Duty = 9%

6. Mobile Levy (based on phone prices in PKR)

if cell phone value is PKR 10,000 to 40,000 = mobile levy will be PKR 1000

If PKR 40,000 to 80,000 = PKR 3000

If Over PKR 80,000 = PKR 5000

7. Provincial Tax = 0.9%

Add the above values and you will get the exact tax value that you’ll have to pay.

There is not much incentive which Pakistan can give to enhance sales. Most of the phones bought in Pakistan is below $130 which means only about 10% is paid in customs duty. Rest of the duty in terms of sales tax IT duty and other tax will be under 20%. So, total of 30% tax. Pakistan will have to eliminate all of these taxes, not just customs duty, which can in turn cause finance problems. Moreover, Pakistan will still have to import the parts which cost upto 80% of the value. So, is it really worth it to give such huge incentives for little gains?

Udne do inhe. Sach mat batao

 

[S.Y.A]

Pakistani labour cost is low. But Pakistan does not have enough access to market. Only market which can be exported from Pakistan will be Africa and Gulf countries. But neither are major markets. Gulf countries generally buy phones like Apple, Samsung and rarely Chinese ones. Africa has limited market. Markets of Europe or USA will require long travel which will be extremely expensive. So, overall, though Pakistani labour is cheap, the geographic location of Pakistan does not allow for easy exports of phones. Secondly, other countries which are major markets of phones, will impose import duties on phones made in Pakistan. So, it will become expensive to export from Pakistan instead of manufacturing in those countries itself.


Lower duties will still not mean that the price will be drastically lower. The current duty structure of Pakistan is :

1. Customs Duty = PKR 250 Fixed

2. Regulatory Duty (Based on phone prices in USD)

• If $1 to $60 = PKR 250
• If $61 to $130 = 10% of Mobile value
• If $130+ = 20% of the Value of the Phone

3. Sales Tax = PKR 1500

4. Additional Sales Tax = 3% Fixed

5. IT Duty = 9%

6. Mobile Levy (based on phone prices in PKR)

if cell phone value is PKR 10,000 to 40,000 = mobile levy will be PKR 1000

If PKR 40,000 to 80,000 = PKR 3000

If Over PKR 80,000 = PKR 5000

7. Provincial Tax = 0.9%

Add the above values and you will get the exact tax value that you’ll have to pay.

There is not much incentive which Pakistan can give to enhance sales. Most of the phones bought in Pakistan is below $130 which means only about 10% is paid in customs duty. Rest of the duty in terms of sales tax IT duty and other tax will be under 20%. So, total of 30% tax. Pakistan will have to eliminate all of these taxes, not just customs duty, which can in turn cause finance problems. Moreover, Pakistan will still have to import the parts which cost upto 80% of the value. So, is it really worth it to give such huge incentives for little gains?

Like I said. You dont need to worry about it. All of these taxes can be removed to incentivize in house production. Pakistan govt in past waived complete income tax and gst for IT exports for new entrants. They can do it again for manufacturers.

 

[PakSword]

Pakistani labour cost is low. But Pakistan does not have enough access to market. Only market which can be exported from Pakistan will be Africa and Gulf countries. But neither are major markets. Gulf countries generally buy phones like Apple, Samsung and rarely Chinese ones. Africa has limited market. Markets of Europe or USA will require long travel which will be extremely expensive. So, overall, though Pakistani labour is cheap, the geographic location of Pakistan does not allow for easy exports of phones. Secondly, other countries which are major markets of phones, will impose import duties on phones made in Pakistan. So, it will become expensive to export from Pakistan instead of manufacturing in those countries itself.

1) Cheap labor is a major incentive
2) Access to Gulf is quite easy from Pakistan
3) Gwadar port is available to provide for the export operation.

 

[fitpOsitive]

HUawei is almost banned in western nations or specifically countries where US influence is much more, right time

No they are not.

 

[War Thunder]

Huawei will not manufacture in Pakistan without Pakistan offering a major market for it. The cost involved in export and import customs and shipping will be huge and disincentivise manufacturing without market presence. Countries like Vietnam get manufacturing plants because Vietnam is close to China and gets tax concession from USA. India gets manufacturing because India has big market. But Pakistani market for phones is quite low - about 8 million a year combining all brands. This is insufficient for any company to set up manufacturing. The logistics cost and infrastructure cost will be far too high

Well if you can use your brain a bit. Pakistan is offering a lower production cost and hell lot of other incentives and duty free/Tax Free Gwadar to manufacture stuff and sell to their international audience.

india is slowly dying as a market for anything on its own and soon the manufacturers will be looking at ways to get out of there anyway.

Pakistan on the other hand is geographically places to reach far more markets than india ever would out of her own.

 

[Smarana Mitra]

Well if you can use your brain a bit. Pakistan is offering a lower production cost and hell lot of other incentives and duty free/Tax Free Gwadar to manufacture stuff and sell to their international audience.

india is slowly dying as a market for anything on its own and soon the manufacturers will be looking at ways to get out of there anyway.

Pakistan on the other hand is geographically places to reach far more markets than india ever would out of her own.

Indian market is dying? When did that happen? India is still a bigger market than Pakistan. Pakistan is actually in recession as of now.

Pakistan giving tax concession is not enough as shipping parts from China, Korea to Pakistan is much more expensive than shipping to India. The ships have to travel around India and then land in Pakistan which increases travel distance by 3000-4000km. In addition, India offers much better location as Indian labour is also cheap and India has vast domestic consumption to get profits.

Pakistan on the other hand is geographically places to reach far more markets than india ever would out of her own.

The geographical position of India is better than Pakistan as India has a massive peninsula that helps in getting better shipping lanes than Pakistan. Pakistan is only better in supplying central Asia but Afghanistan is in the middle which blocks that Path. China is better off selling to central Asia via Tajikistan rather than Pakistan. I can't understand how you can to conclusion that Pakistan has better geography for trade

1) Cheap labor is a major incentive
2) Access to Gulf is quite easy from Pakistan
3) Gwadar port is available to provide for the export operation.

Other countries want to ensure that jobs in their countries are not threatened unduly. If Pakistan is unable to offer a big market, cheap labour becomes irrelevant. Moreover, India already provided cheap labour for manufacturing phones for export to nearby countries. India makes a lot of phones and they can be shipped to gulf countries.

The key factor in setting up of phone manufacturing unit is market size. Small market means that the plant will become unprofitable and recovering the cost itself becomes difficult

 

[beijingwalker]

HUawei is almost banned in western nations or specifically countries where US influence is much more, right time Pakistan get benefit of friendship with China with technology not only lip service.

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