Apple Set to Launch iPhone Manufacturing Operations in Pakistan
In a significant development for Pakistan's technology sector, American tech giant Apple is preparing to commence iPhone manufacturing within the country. This move follows the Pakistani government's agreement to extend substantial incentives under a newly proposed policy framework, as reported by Islamabad-based media on Thursday.
Strategic Manufacturing Approach and Conditions
According to Engineering Development Board (EDB) Chief Executive Officer Hamad Ali Mansoor, Apple will follow a strategic model similar to its approach in Indonesia, Malaysia, and India. The company plans to initiate operations by repairing two to three-year-old iPhones to train local workforce before transitioning to full-scale manufacturing.
Apple has presented three key conditions for establishing manufacturing operations:
- Provision of land at discounted rates
- An 8% performance incentive (increased from the current 6% offered to existing manufacturers)
- Initial focus on repairing older iPhone models to develop local expertise
The company has also committed to refurbishing iPhones in Pakistan for re-export under the new policy framework. Government projections estimate earnings of approximately $100 million during the first year from the re-export of these refurbished devices.
Policy Framework and Government Support
"We have incorporated these three conditions into the new proposed Mobile and Electronics Manufacturing Framework awaiting approval by Prime Minister Shehbaz Sharif," stated Mansoor during his interview with The Express Tribune.
The enhanced 8% performance incentive represents a strategic move designed to attract Apple and other global electronics manufacturers to Pakistan. Mansoor emphasized that Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan, along with the secretary of industries, have provided comprehensive support for this new mobile and electronics policy.
Broader Investment and Localization Goals
The new policy framework is expected to generate substantial foreign investment beyond Apple's entry. Mansoor revealed that Pakistan anticipates investments totaling $557 million from Chinese companies in mobile manufacturing, with memorandums of understanding signed during Prime Minister Shehbaz Sharif's recent visit to Beijing.
The policy aims to position Pakistan as a regional hub for mobile and electronics exports, with Mansoor noting that "the new policy has been framed while looking at this objective."
Beyond smartphones, the framework is projected to attract investment into manufacturing laptops, tablets, smartwatches, fitness trackers, and wireless earbuds.
Localization Targets and Funding Mechanism
A crucial component of the new policy involves increasing local content in manufactured electronics. Manufacturers have assured the government they will elevate the use of local parts from the current 12% to 35% during the first year, with plans to reach 50% localization subsequently.
To support this localization push and fund technology investments, the government intends to implement an export levy of up to 6% under the new framework. However, this levy will not apply to phones priced between PKR 50,000 and PKR 60,000, targeting instead devices costing above PKR 100,000.
This comprehensive approach represents Pakistan's strategic effort to transform its electronics manufacturing landscape, create employment opportunities, and establish itself as a competitive player in the global electronics supply chain.
