Analysis of Pakistan’s Industries
Electronic Industry of Pakistan

Submitted to: Mehwish Ghulam Ali
Submitted by
Fatima Zafar 06836
Javeria Anees Rangoonwalla 06867
Munazza Arif 06962
Manal Yousuf 04276
Talha Zubairy 07544
Yusra Nasir 06878

Contents Letter of transmittal 3 Executive Summary: 4 Introduction 4 Historical Analysis of Key Variables 5 Inflation 5 Exchange rate 7 Duties and taxes 7 Growth Rate 7 Imports: 8 Current Scenario in the Telecommunication Industry: 8 Fixed Line Sector and Wireless Local Loop (WLL) Sector 9 Current Scenario of Electronic Industry in general 10 Diamond Porter Model: 12 Demand Condition: 13 Related Industries: 13 Conclusion 15 Problems and Hindrances Faced 15 Recommendations 16 Solutions 17 Appendix 1 18 Appendix 2 19 Appendix 3 20 22 Appendix 4 23 Appendix 5 24 Appendix 6 25 Appendix 7 25 Appendix 8 26 Appendix 9 26 Questionnaire 26

Letter of transmittal

10th April, 2016 Ms Mahvish Ghulam Ali Course Instructor Analysis of Pakistan’s Industries IBA, Karachi
Dear Ms Ali, It gives us pleasure to present our research report on the Electronic Industry of Pakistan, assign as a compulsory part of the course. This report is based on the analysis of the electronic industry, in relation to the economy, the major players and the theories learnt in class. Through this intense secondary research we collected information about the industry and improved it further through interviews.
Considerable and invaluable knowledge was obtained. This project helped us with an exposure to the real workings of industries. Most importantly, we would like to thank you for the opportunity to develop our research skills, which will help us in future projects and in practical life. I hope you enjoy reading this report as much as we did in forming it.
Best regards,
Fatima Zafar Javeria Anees Munazza Manal Talha Zubairy Yusra Nasir

Executive Summary:
The research paper aims to highlight the importance of electronic industry in Pakistan. First part of the report outlines the general trend of Pakistani economy. The inflation rate, the exchange rate, growth rates and imports and exports of the country. In this we see, Pakistan observed a subdue rise in inflation at 5% from 2011 to 2015. The country’s currency has depreciated, causing the value of imports to go up and value of exports to decrease. Moreover, the growth rates in Pakistan are meagre. The electronic industry has grown only at 0.14% from 2011 to 2015. Duties and taxes have no consistent trend and every government applies its own policies regarding duties and taxes. As electronic industry is highly dependent on imports, it is charged with have duties and taxes.
Generally, nothing is produced in Pakistan. All the parts are imported and only assembled in Pakistan. Some of the industries that are working in Pakistan are QMobile, LG, Philips, Samsung, Mitsubishi. All these companies only either assembles the gadgets or distribute the products in market. No production is done in Pakistan.
One sub sector of electronic industry that has bloomed in the last decade is of telecommunication industry. It has grown almost at 100% in the last 4 to 5 years. The national coverage of cellular networks has grown to 68.9% as compared to 25% in 2005.
Porter’s Diamond model is discussed for the industry aswell in which government policies, potential in the market and factor conditions are discussed.
Lastly, we have presented our recommendations that can be implemented to grow the industry in Pakistan.

Introduction
The era of power started in the nineteenth century and this prompted the advancement of all way of creations. The gadgets business, particularly meaning shopper hardware rose in the twentieth century and has now turned into a worldwide industry worth billions of dollars. Contemporary society utilizes all way of electronic gadgets worked in mechanized or semi-robotized industrial facilities worked by the business.
Gadgets things incorporate Radio, TV sets, MP3 players, Video recorders, DVD players, Digital cameras, Camcorders, Computers, computer game consoles, phones and cellular telephones, and so on.
Pakistan still needs legitimate designing and inclination to make a suitable mechanical base in the electronic business, as only 3 percent is aided by the part. The majority of the gadgets items are transported in and some are collected in Pakistan.
Hardware things incorporate Radio, TV sets, MP3 players, Video recorders, DVD players, Digital cameras, Camcorders, Computers, computer game consoles, phones and cellular telephones, and so on. Gadgets things have now turned into a piece of our day by day live and the vast majority of the general population can't consider their lives without them. We utilize cellular telephones to stay in contact with our friends and family. Television is utilized as a wellspring of amusement and news. PCs are use for amusement, work and for other distinctive purposes.

Regardless of much request and an awesome number of potential clients there is still no genuine assembling of hardware items in Pakistan. The vast majority of the hardware things are transported in as conclusive items while some are amassed here and some are stuffed here.
The greater part of the amassing plants of hardware items are situated in Lahore and Gujranwala. The amassing plants of some prevalent brands in Pakistan, for example, Samsung, Sony and Orient are situated in Lahore.

Historical Analysis of Key Variables

Inflation
Inflation: 2015
Headline CPI inflation (2007-08=100) is recorded at 3.2 percent on year-on year basis in December 2015. CPI inflation on month-on-month basis is recorded at -0.6 percent in December 2015 compared to 0.6 percent in the previous month and -1.0 percent during the corresponding month of last year. The CPI shows that from December 2014 to December 2015 inflation has gone down a bit and has managed to remain stable. This has been the general trend so therefore we can conclude that overall it has remained positive. (shown in appendix 1, YoY grapth)
The inflation diffusion index shows that based on MoM change inflation has increased between December 2014 to December 2015 for communication, and is significantly higher than than health and transport. It has seen a significant increase from 33.3 % to 41.7 %.( Apendix 1, table 5.1)
From Amongst the non-food group, transport has been given a weight of 7.2, the change in MoM terms has been positive whereas the change in real terms from 2014 tp 2015 has remained stable to 0.3%.Apendix 1 (table A1)
Inflation: 2014
Headline CPI inflation (2007-08=100) is recorded at 4.3 percent on year-onyear basis in December 2014 as compared to 4.0 percent in the previous month and 9.2 percent in the corresponding month of last year. Non-food, non-energy inflation measured by CPI Core (NFNE) on year-on year basis decreased to 6.7 percent in December 2014. In the top 15 contributors to Inflation communication lies at number 6
Inflation: 2013
Headline CPI inflation (2007-08=100) is recorded at 9.2 percent on year-onyear basis in December 2013 as compared to 10.9 percent in the previous month and 7.9 percent in the corresponding month of last year.
Inflation: 2012
Headline CPI inflation (2007-08=100) is recorded at 7.9 percent on year-onyear basis in December 2012 as compared to 6.9 percent in the previous month and 9.7 percent in the corresponding month of last year. 2. Table A3 Apendix 1
Inflation: 2011
Headline CPI inflation on base (2007-08 = 100) is recorded at 9.7 percent on year-on-year basis in December 2011 as compared to 10.2 percent in the previous month and 15.5 percent in the corresponding month of last year. 2. There has been a subdued increase in the prices of electronics (communication) as shown by table A2 for 2011 appendix 1.

General Trend over the 5 year period:
There has been a subdue increase in inflation of about 5% from dec 2011 to dec 2015. Amongst the top 15 contributors, communication had fallen from number 4 to number 6. In general there has been a very moderate increase in mobile set prices and mobile charges have fallen.
Exchange rate
Pakistan economy is under threat as prominent sectors of the economy are portraying negative growth. The exports were increased midst of the financial year 2011 but on the other hand imports were also increased. The Federal Bureau of Statistics (FBS) stated that the overall imports for the duration of financial year 2011 were $40.414 billion as compared to$34.710 billion through financial year 2010, which is an increase of 16.43 per cent. Increase in imports is mainly due to import of petroleum & its related products. Pakistan imports most of the electronics item the depreciation of the country’s currency results into imports being more expensive and hence the deficit increases. But compared to 2014 the imports of computers have been decreased. Refer to appendix 2
The Prebisch singer hypothesis applies to Pakistan, the country major chunk of contribution to GDP is its primary goods. As the currency value falls the imports gets expensive and the since the demand for primary good is inelastic the revenue doesn’t increases as much. Thus the countries terms of trade worsen and deficits increases. Electronics are mostly imported from china or other parts of the world to Pakistan so changes in the exchange rate have major impact on our spending on the electronics industry.
Duties and taxes
There are diverse obligations on various sorts of gadgets things. There is no import obligation on the import of tablets and PCs of any sort and its embellishments, for example, console, mouse, hard circle, CD-ROM, and so on. Electronic incorporated circuits have an import obligation of 5%. Advanced cameras, video recorders, and so forth have an import obligation of 10% and its frill have an import obligation of 5%. Utilized CRT screens 25%, projectors 5%. Import obligation on TV sets is 30%, while import obligation on its segments ranges from 5% to 15%. Government has put a high obligation rate on import of TV sets to advance neighborhood amassing of these sets.
The vast majority of the gadgets things are transported in as definite items while some are amassed here and some are pressed here. There is no genuine assembling of hardware.
Growth Rate
The electronics industry has seen only sporadic growth between the censuses of manufacturing industries in 2001 and 2006. Analysis of these two documents shows that the overall growth of the electronics industry in Pakistan had only grown by roughly 0.41%. Throughout the provinces, the growth rate is similarly disappointing, and sometimes even in negative numbers, apart from Balochistan and KPK.
In Punjab, the total representation of electronics in the economy amounted to 1.32% in 2006- a small step up from the 1.28% in 2001. However, the total electronics industry has actually decreased in the region, by a rate of 0.12%.
Likewise, Sindh’s total representation amounted to 2.44% of its entire economy, up from 2.34%, but the region experienced a decline in the total electronics industry as well, of around 0.32%.
On the other hand, Balochistan is where the state of affairs turns around, with the province seeing a near 5 percentage point in the electronic industry’s representation in the economy, from 1.8% in 2001 to 6.4% in 2006. The total electronics industry also spiked at a rate of 6.98%, with all of the firms centered in Lasbela.
KPK had also taken an impressive jump, from a 0.89% in total representation in 2001 to 4.18% in 2006. There was an increase by 2.58% in the electronics industry.
Lastly, Islamabad’s total electronics industry increased by a measly 0.22%. This is despite a 4 percentage point spike in its representation in the total economy between 2001 and 2006. However, this can be majorly attributed to the city’s overall decline between these two time periods.
With the two largest provinces underperforming, there is little wonder the electronics industry was so stagnant. Balochistan and KPK have showcased relatively impressive growth, but there is little these provinces can do without the support of Sindh and Punjab. Refer to appendix 3 for calculations.
Imports:
Imports of machinery and communication have generally risen over the 5 year period. In 2016 the imports of electrical goods increase to Rs 23499520 as compared to Rs 20262482 in 2015 showing an increase of 16 %. This could be attributed to higher demand and decrease in oil prices worldwide. Over the 5 year period from 2011 to 2016 the increase in import bill for electrical bill has been almost (23499520 – 1559200) 149.9 % which suggests a huge, a huge increase in electrical goods over the 5 year period, according to calculations. Imports in general have also rise with the balance of payments being worse off. ( Appendix 4 )

Current Scenario in the Telecommunication Industry:

The tremendous growth in Pakistan Telecommunication Sector can be majorly attributed to the cellular sector. Demand is on the rise for telecom sector since telecom sector was opened for private companies in 1997. The sector grew about 80% in 2007 while it grew almost more than 100% from 2008 to 2011. Total teledensity has risen from 62.9% in 2014-15 to 68% in 15-16, which shows that untapped areas are now being developed and demand has been created where there was media darkness.

Mobile Sector

In 2014-15 the annual cellular subscriber hit 114 million mark while the data shows that till February 2016 this number rose to 129.8 million. Since the introduction of 3g and 4gspectrum in 2014 in Pakistan the demand has skyrocketed. The cellular teledensity has reached 77.5% to that of 22% in 2005, meaning that 77% of the population have access to mobile networks in Pakistan now.
As per the current market share analysis there are five cellular service providers ruling in the market and at the end of June 2015 Mobilink has 33.42, Telenor has 31.49, Zong has 22.10 and Ufone 17.81 and Warid has 9.91 million subscribers. Refer to Appendix 5

Fixed Line Sector and Wireless Local Loop (WLL) Sector

Even after the recent issuance of LDI licenses to private operators by PTA across Pakistan have encouraged competition in the market and allowed the consumers to attain maximum benefits with cheaper nationwide and international calls the growth patterns in the fixed line sector has been disappointing over the last couple of years.
On the other hand the Wireless Local Loop (WLL) technology was introduced in Pakistan in 2004.

The fixed line connections improved from 2001 till 2006 and then faced a declining trend after since refer to appendix 6. The annual fixed local line subscribers reached a total of 3141700 million tapping 1.55% of the total population. On the other hand the trend of fixed wireless local line subscriptions showed a positive pattern till 2013 with a total of 3108595 which dropped down to 789595 by the end of 2015 tapping only 0.6% of the total population.

Internet Services:

After the launch of android smartphones and easy Wi-Fi access in Pakistan it has become an integral part of everyday life particularly in urban areas where not only the household uses it but it is also used by several business for different purposes. Domestic Air lines including PIA have introduced to provide better and cost and time effective service to its customers.
The performance of Pakistan’s broadband market has shown apositive but a slow improvement from its introduction in 2004 till year 2014 after which it showed an improvement of 344.8% tapping 16885518 people which further increased to 29323215 by February 2016

Foreign Direct Investment (FDI)

Foreign Direct Investment is an important source for economic growth in Pakistan and has seen a positive trend with the easy access to fair and transparent licenses by the Pakistan Telecommunication Authority. During the years 2005-2006, telecommunication sector of Pakistan attracted over US$ 1.8 million and was the only sector to attract such a huge investment. But the trend then took a downturn and the investment went to the negative in the years 2012-2014. According to the current figures US$ 121 million were invested as FDI in the telecommunication industry of Pakistan. Appendix 7

Telecommunication Sector is growing at an outstanding rate where government and all the other stakeholders are benefiting from it by providing employment and contributing to national exchequer through taxes and attracting huge foreign investments. In the year 2014 the total revenues for the telecommunication industry reached an estimated of Rs.465 billion and portrayed an annual growth of 5.6% which was lower than of 7.4% in 2013 and contributed Rs.243.84 billion to the Revenue GDP of Pakistan in the year 2014.

Current Scenario of Electronic Industry in general Like any making economy, usage and utilization of electric items, for instance, TVs, ice chests and ventilation frameworks has extended in Pakistan. Nonetheless this construct has not been comparing regularly and demographically. This report will examine the past scattering of electric items in Pakistan and the future examples that they indicate concerning TVs, circulating air through and cooling, refrigeration and tube light industry. Television viewership has reliably extended in Pakistan. In Punjab the assessed number of TV sets is more than the joined (surveyed) number of TVs in various districts. This differentiation is fundamentally significant, for apparent reasons, when we consider the nation and urban people. 89% of common masses and pretty much 100% of the rural house­holds in Baluchistan are without TVs. The greatest centralization of TV sets is in the urban scopes of Sindh where more than half of the family units have reported having TVs. Despite the way that basic numbers are an attractive measure of the difference that has appeared by the dissemination of this industry, a more particular mix that could be seen by analyzing the use of Black and White and Colored TVs. Such an examination also explains the business part sets of used or more prepared TVs. The survey regarding TVs in the urban and rural domains shows that the extent of TV sets of Black and White sets is most surprising in the urban zones of NWFP and slightest in the common scopes of Sindh and Baluchistan, where obligation regarding TV has not been represented by any of the families. On the contrary, Philips, National and Hitachi are the most well known TV brands. In the urban markets of the country Toshiba is more standard than Hitachi while Philips excels in the most imperative bit of the general business in nation and furthermore urban scopes of the country. Given the growth in GDP, each capita improvement could be required to continue creating business and extending competition from various brands. Another industry that has created in Pakistan is that of circulating air conditioner and cooling and refrigeration. The enthusiasm for Air Conditioners was assessed to be 63,528 in 1994-95 and was required to create at the rate of 4.8% for each annum for the accompanying five years. Growing example in urbanization, pay and change in way of life has helped the enthusiasm for ventilation frameworks. In 1994-95, 70% of the total demand was met by neighborhood creation which extended at the rate of 18.7% for as far back as six years. Air circulation and cooling frameworks are distributed in the country on a broad scale. Despite blacklist on imports of Air conditioners through Afghan travel, trade pilfering of ventilation frameworks is depended upon to continue. Snuck brands are open at two-third of the expenses of neighborhood brands. Two heading brands, PEL (close-by brand) and General (worldwide brand) accounted for75% of the bit of the general business in 1995. However there is a growing example towards part ventilation frameworks the country over. Refrigeration industry has demonstrated massive advancement in Pakistan. The enthusiasm for coolers is evaluated to be at 300,000 for each annum for 1994-95 and is depended upon to create at the rate of 10% for each annum for the accompanying five years. Growing example in urbanization, charge of towns and the increasing CFC air coolers and cfc refrigerators were assessed as promoters of hobby. A substitute clarification behind the extending design had been general society suspicion that Deep Freezers are the best trade of coolers when electric weight shedding happens. Extending design in urbanization, pay and change in way of life have bolstered the enthusiasm for Deep coolers. Almost 40% of the enthusiasm for significant coolers was from the business fragment i.e. retailers, hotels et cetera, albeit 60% hobby is from the down home division. Practically 100% of the total hobby is met by adjacent creation while imports and sneaking of significant coolers is inconsequential. Three heading brands charging 85% of the bit of the general business are Waves, Dawlance and Candy. The degree of endorsed dealers in primary 31 urban territories shows that Dawlance revels in most extended arrangement of traders imitated by PEL, Philips, Indesit and Samsung while the purchases data of vendors inspected in the fundamental eleven urban groups exhibit that Dawlance acknowledged most astonishing bit of the general business took after by PEL, Philips and Indesit. The traders expect that the business for refrigerator would create at a rate of 11.4% in the propelling couple of years. In 1994 it was evaluated that families were 15.10 million, amongst which 9.97 million were destroyed family units. Families having another fridge were assessed to be 2.39 million (24% of destroyed family units) while families that obtained another cooler in the latest 3 years was 0.828 million (8.3% of charged family units). These figures indicate quick advancement in the business and the example was evaluated to continue as customers were ensured of Guarantee and After Sale Support. The Government has in like manner invigorated adjacent era through the deletion system and appraisal free zones. There was moreover a growing slant towards no ice coolers, however the higher quality, obstructions in power supply and weight shedding controlled its improvement. The piece of vendors in affecting brand choice of refrigerators can't be undermined particularly in the main purchase. Then again, with extending degree of substitution demand the makers are drawing closer customers particularly through expansive correspondences elevating to reinforce their choice and to influence reiterated purchase. Tube light use, as a consequence of its whole deal cost savvy inclinations stood out from globules has furthermore created. The overwhelming a portion of electrical specialists are careful that using tube lights comes to fruition inside of assets in the usage of power anyway they reported that only half of their customers are aware of these benefits. The basic part controlling usage of tube lights is their high starting cost. Indeed, even now according to a 1983 evaluationThe telecoms business sector was contrarily influenced by the import charge on handsets was presented by the Pakistan government in April 2013, in which Rs 500 duty was forced on typical phones and Rs. 1000 assessment on cell phones. This measure supported interest for less costly Chinese imports that increase a few special cases because of the China-Pakistan Free-Trade Agreement.

Diamond Porter Model:

Factor Condition:

Physical Resources: After 2000, the developing countries of the world realized the importance of the telecommunication industry for the improvement in economic growth of the country and the struggled to develop and excel their telecommunication infrastructure, keeping up with the trend Pakistan Telecommunication Authority (PTA) has issued 92 Wireless Local Loop (WLL) to 18 companies around the country, out of which a total of 14 companies have started WLL services in different regions of the country(Pakistan Telecommunication Authority, 2006), the trends show that not only the telephone network service providers but also the mobile phones and wireless internet service providers are introducing innovative technology to provide better service at cheaper rates.

Technologies in the Telecommunication Industry: In the current growing telecommunication landscape, the recent introduction of 3G and 4G wireless communication technology along with the 3G and 4G enabled tablets and phones based on Evo-DO Rev. B technology achieved the global standards andthe benchmark.

Human Resources: Telecommunication industry of Pakistan is labour intensive considering all the different divisions and networks like the local computer networks, the internet providers, the telephone networks and etcetera and plays an important role in providing employment and employs around 1 million people directly and indirectly and approximately 220,000 high paying jobs. The introduction call centers, cellular phone franchises and customer service centers by the service providers established a highly competitive labour market.

Knowledge Resource: Micheal Porter States that for a country to achieve competitiveness, in any industry, in its true sense, the academic institutions of the country should have an advanced academic backbone in that industry too. In Pakistan, after the major growth in the importance of telecommunication industry, there are many institutions like Preston University, Islamabad, Institute of Advanced Technology, Islamabad and etcetera offering diplomas, bachelors and masters level degrees in telecommunication engineering.

Demand Condition:

Telecommunication industry is the fastest growing sector in Pakistan with an ever increasing demand for telecommunication services.

The graph pasted above shows the yearly trend and pattern of cellular subscribers in Pakistan. The total number of cellular subscribers has increased by 115 million since 2003 till 3013. According to PTA, in a survey conducted in 2013, out of every 100 people in Pakistan, 62 people were the subscribers of cellular services.

According to a survey by Pakistan Telecommunication Authority conducted after the bio-metric re-verification of SIMs at the start of 2015, the total number of mobile phone users in Pakistan was around 114.7 million with 33.42 million subscribers of Mobilink, 31.49 million subscribers of Telenor, 22.10 million subscribers of Zong,
17.80 million subscribers of Ufone and 9.91 million subscribers of Warid.

Firm Strategy, Structure & Rivalry:

Due to the fierce competition in the industry, companies use means like branding, product differentiation, and price wars to maintain the market share and the customer base. Price wars among each other are lowering the profit margins for these companies.
The recent price wars are hitting their extreme limit as the average revenue per user has been facing a decline since 2007 and they are now compromising on quality for quantity. Appendix 9

Related Industries:
Telecommunication is the main industry that provides with a communicating tool to every industry and allow then to develop a competitive edge and stay in contact with their customers for example restaurants, health care, retail industries and etc.

Government Policies:

The telecommunication policy 2015 states the following:
- MoIT will develop separate competition rules for the telecommunication industry.
- Class Licenses Regime associated with satellite services will have a separate licensing category and MoIT with the help of PTA will go over the licensing policy by the end of 2016 and evaluate if any changes are required.
- Pakistan Telecommunication Authority in accordance with Federal Government will design a regulatory framework to allow VoIP and OTT services in the country. This new framework will also include the revenue sharing laws and percentages between local licensees and OTT service providers in the industry.
- Local peering or exchange points will be promoted to be used for internet and other data to cut down the unnecessary cost and security risks.
- Wi-Fi and hot spots will be allowed for commercial and public use.
All these policies will help and encourage the use of internet for the household and commercial use and help improve the quality of communication in the country.

Areas of Future Research
The electronics industry has one of the largest industrial as well as consumer markets in the world. It is also one that sees continual evolution, with new sectors constantly arising in order to meet the increasingly technology dependent needs of industry, consumers and military.
Pakistan is relatively backwards when it comes to the development of this sector, with only around 3% of the total GDP being contributed to by electronics. In many ways, it has failed to carve a niche for itself here, thanks in part to its long history of importing major electrical components. However, considering the ever-changing nature of the industry, it should be possible to develop it in Pakistan by taking advantage of new opportunities within it.
There is thus huge scope for research within the country. The local electronics industry could investigate defense and aviation as potential sectors to be catered to: not only by producing the required electronic components, but also by researching the future needs of these sectors and developing new technology for them.
Power and energy, especially sources of alternate energy, should also be looked into as areas of potential progress for the electronics sector. Electronics can significantly help the development of alternate energy sources such as biomass and solar by participating in the creation of relevant sophisticated machinery.
Another possible industry to cater to is advertising and marketing. Companies in the developed world are able to make use of technology to create multimedia and even interactive ads on display systems, something that is sorely lacking in Pakistan. The electronics industry should research this as a promising and lucrative foray to develop itself.
Barring a select few of the population, safety and security systems are another market left mostly unfulfilled in Pakistan, despite a potentially high demand for them. The electronics industry could tap into this market by developing affordable and effective surveillance systems.
Finally, core electronics, which focus on the intricate electronic circuits that are required for virtually all electronic devices, are an area that has been all but completely underdeveloped in Pakistan. Focusing on the progress of this sub-sector would mean a) reducing our dependence on imported components, and b) integrating these local components into local electronic devices, which would further expand the electronics industry.

Conclusion
Problems and Hindrances Faced 1. Tariff discrepancies 2. Lack of technological skill and machinery 3. No deletion policy adopted 4. Loopholes in the import tariff structure for different regions 5. High duty rates of 5% 6. Corruption 7. Smuggling 8. No drastic measures adopted to counter smuggling. 9. Preference given to imported consumer goods over locally manufactured products 10. Higher prices due to negligible economies of scale

Recommendations

1. Electronics industry is not capable to produce television sets with local components 2. In 2011, spending on mobile handset imports continued to grow strongly, but demand for high-cost consumer durables such as television sets were affected by inflation and rising interest rates. A weak economy means that market development will depend on action to reduce the inflow of illegally imported television sets and fake brand mobile handsets. 3. Pakistan still lacks appropriate technology and expertise to establish a viable industrial base in electronics sector, as only 3 percent is contributed by the sector. 4. However, BMI expects that growth will be driven by improved information technology infrastructure and more credit availability. The market’s considerable potential is currently depressed by a large grey market, poor intellectual property rights protection, an unstable economic and security situation, and weak distribution channels. Reforming high national and provincial taxes and tariffs on products ranging from computers to prepaid mobile cards would boost the market. 5. Customs are clearing cargo to these unregistered importers at Sust Border without sales tax numbers. Even there is no record about the volume of import through that border. As against that at Karachi and other Dry ports the importers have to file returns every month and they have also to maintain the input and output registers. 6. One of the major reasons for not developing the local industry is the culture of giving preference to the imported goods as compared to those produced locally. 7. Unlike automobile industry, there was no deletion policy adopted in electronics industry as a result of which transfer of technology did not take place. All major components in electronics industry are imported

8.

Growth Trend

Solutions

1 Setting up of Electronics Facilitation Centers with modern electronics design and quality assurance laboratories is a must to fortify this sector. 2 Development of automation controllers for the automation of the local industry, CNC controllers and PC-based controllers for CNC machines would help boost industrial production as well as improving the quality of the products 3 Current revenues for the government from the local TV Industry would increase manifold.

4 Expert services for design and prototyping as well as high-tech SMT machines for assembly of printed circuit boards (PCBs) would facilitate the industry in the production of internationally competitive products in terms of price and quality 5 Setting-up Electronics Facilitation Centers for providing advice, training and services to support production of electronics goods and electronics-based equipment 6 Ensured availability of quality products at competitive prices 7 Increasing local production significantly 8 With the implementation of the opinioned solutions current production level could be doubled. 9 Employment for thousands & thousands skilled and non-skilled could be created.

Appendix 1

Appendix 2

Taxes
Duties and Imports:

Import commitment and obligations are normal when importing stock into Pakistan whether by a private individual or a business component. The valuation strategy is CIF (Cost, Insurance and Freight), which suggests that the import commitment and charges payable are registered on the complete transportation regard, which consolidates the cost of the outside stock, the cost of payload, and the cost of security. Then again, import commitment can moreover be charged for each unit of measure. Despite commitment, imports are at risk to arrangements charge (VAT), separate on a couple of things, and import regulatory commitment.
Obligation Rates
Obligation rates in changed from 0% to 100%, with a normal obligation rate of 20.67%. Few merchandise can be transported in free of obligation (e.g. laptops and other electronic items).
Deals Tax
Imports of Pakistan aren’t subject to deals impose naturally. Some items, like beauty care products or nourishment supplements, are liable to GST when foreign into Pakistan. At the point when required, the GST rate is 17% and the decreased rate is 5%, computed on the whole of the CIF esteem, duty, import administrative obligation, and extract.
Least limits
No base limit for imports in Pakistan are present, i.e. charges and import obligation are constantly relevant on imports paying little respect to their worth.
Different assessments and custom expenses
Extricate commitment is significant on a couple of items, for instance, alcohol and tobacco things. It could be associated commercial valorem registered on the aggregate of the CIF regard and applicable commitment, or it may be specific, i.e. charged for each unit of measure.
Import regulatory commitment is charged on a couple of things at a rate some place around 5% and half found out on the CIF regard.
Appendix 3

Growth rate calculation

Appendix 4

Appendix 5

The pie-chart on the left shows the market share by each of the cellular service providers and their market share

Appendix 6

Appendix 7

Appendix 8

Appendix 9
Questionnaire
During our study we interviewed many people working in this industry who manufacture different electronic goods. The questions were basically to explore and have a good insight in the industry. This helped us in having a broader vision of the weaknesses and strengths of this industry in today’s market. Their answers helped us in gathering all the information that was helpful for us to complete this report and analyze it.
These are all the questions that were asked by our group members:
Q1Can you give us some statistics about the market share?
Q2. What difficulties are faced in consumer market?
Q3. What is the production cycle and how supply chain managed?
Q4. What is the size of labor force working under your firm? What percentage of them is of skilled working and unskilled?
Q5. How often do you upgrade your machinery?
Q6. How much will you rate your machineries based on their condition?
Q7. What have you done at your end for the betterment of this industry?
Q8. Give us a brief overview of the electronics industry?
Q9. How has the sales been effected in the recent years due to energy crisis?
Q10 Which areas of electronics do you most service?
Q11. How do you create awareness amongst your workers about the industry?
Q12. Who are the Major players in this industry?
Q13. How do big brands like samsung and sony operate here?
Q14. What are the weaknesses of local electronics industry?
Q15. What are the strengths of local electronics industry?
Q16. What are the opportunities in the local electronics industry?
Q17. How do you get your basic raw materials?
Q18. What threats does this industry face?
Q19. Are you receiving any kind of assistance and support from government organizations?
Q20. Is there any scope of development in the industry both nationally and internationally?
Q21. How do you cater to customer needs?
Q22. How do you identify customer needs domestically?
Q23. Recent trends observed in this industry?

References: www.pbs.gov.pk www.sbp.org.pk/ www.worldbank.org/ www.psx.com.pk/ http://store.businessmonitor.com/pakistan-consumer-electronics-report.html http://finance.gov.pk/survey/chapters_14/Highlights_ES_201314.pdf www.pta.gov.pk --------------------------------------------
[ 1 ]. Appendix 2
[ 2 ]. Appendix 3
[ 3 ]. Appendix 3
[ 4 ]. Appendix 4
[ 5 ]. Appendix 7
[ 6 ]. Appendix 9