RECORDER REPORT MULTAN (April 30 2009): The mobile industry has attributed the sale of legally imported cellular phones and the drop to Rs500 customs duty per set imposed in the last budget and a regulatory duty of Rs250 introduced in August 2008.
Wholesalers, importers and manufacturers were of the view that invariably high taxes are impeding the growth of this market.
The teledensity in Pakistan has reached 60 percent, but high taxes are proving to be a hurdle in its further growth. However, they were not interested in setting up their manufacturing units in Pakistan, as majority of them have been facing tough financial setback following the slump in demand all over the world. The mobile handset imports have significantly decreased by 76 percent in the three-quarters of the current fiscal year 2008-09, the Federal Bureau of Statistics (FBS) reported.
During July-March 2008-09, the value of mobile handset imports has contracted to $139.480 million, against $581.807 million in the corresponding period of last fiscal year.
Rs750 of duty imposed on mobile phones under the category of luxurious items has in fact encouraged the illegal import that has affected legal trade, which has fallen drastically. He said that as part of their budget proposals, Nokia had requested the Ministry of Finance a method of taxation to 'do away with one duty for all mobile phones' and provide relief to cell phones valued under $100.
A spokesman of Nokia said that they had proposed the government to reduce taxes on mobile phones, as they were a necessity than a luxurious item. Global recession had affected Nokia's expansion plans, forcing it to trade cautiously, as the world's economy was down, he added. Further, he said that though his organisation had postponed some of their future plans for the time being owing to global crises, they were focusing on optimising current capacity and adjusting cost structures of their products to remain competitive in the market and on remaining cost effective for their consumers.
Manufacturers of mobile handset have proposed policymakers to reduce duties on cell phones in order to minimise the burden on customers and to increase business in the country. He said the government should realise the importance of mobile handset in the modern age, as it is an essential item rather than luxury.
'The mobile handset having value of under $100 could not be luxurious item,' he said and added that the government should exempt and reduce the duties on small sized mobile sets so that it could be used by the low income group of the country.
The spokesman also stated that the government should not impose duties more than Rs300 on medium sized sets as well so that it can also generate revenue from its imports and sales. He also declined to disclose any investment plans of his company regarding setting up of manufacturing plants in Pakistan.
Besides, Motoralla, Sony Erricson and LG are considered other preferable brands. The manufacturers of mobile sets have also been facing tough competition with affordable Chinese-made handsets, but they were of the view that their brand conscious customers are in good numbers.
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