After commercial banks declined to grant Letters of Credit (LCs) to the various Smartphone manufacturing brands for the purchase of raw materials, local mobile phone assembly companies in Pakistan are scared that their operations may be shut down. This indicates of an emerging LC Crisis, which is alarming.
According to sources, a number of brands, including Infinix, Tecno, and Itel, were prohibited from creating LCs as a result of new banking regulator laws designed to prevent the depletion of foreign currency through imports.
Before opening LCs or registering contracts for specific imports such as vehicles (CKD), cell phones (CKD), and specific machinery, the State Bank of Pakistan (SBP) requested its prior clearance.
Speaking to local media, he said that the industry had exhausted all of its raw resources and was now 80 percent shuttered. Nearly 50,000 people’s jobs in the sector are in jeopardy, he continued. Hence, the situation supports the argument that LC crisis can considerably impact the local economy.
According to the Pakistan Telecommunication Authority, local manufacturing facilities produced or assembled 12.41 million phones during the first five months of 2022, as opposed to 0.94 million commercially imported phones (PTA). 6.99 million 2G and 5.42 million smartphones are among the 12.41 million mobile phone handsets that were produced or assembled locally.
Additionally, the data shows that on the Pakistani network, 53% of mobile devices are smartphones and 47% are 2G devices.