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| Despite the claim of being 'Made in Pakistan', why is the availability of home appliances in Pakistan suffering from difficulties? |
When Humira Baig went to Karachi's electronics market recently with her husband to buy a new refrigerator for the house, her gaze was looking for a particular size refrigerator from a particular company. When Humira asked the shopkeeper about this company's refrigerator, he told that the refrigerator he wanted was currently in short supply in the electronics market and was not available at his shop.
According to Humira, she needed a new refrigerator because the refrigerator in her house was old and its performance had deteriorated due to frequent repairs.
The heat intensity has increased in Karachi since the temperature has increased for the past few days and Humira wanted to buy a refrigerator for the house before the heat intensity increases further and the prices of refrigerators increase in the market.
Humira says that after that she went to many shops in the Saddar area but she could not find the refrigerator she wanted. The largest electronics market in the country is located in the Sadar area of Karachi.
According to Humira, she is now researching which company's refrigerators she can find with the features she wants so that she can buy them before the heat rises.
On the other hand, Shujaatullah, the owner of a home appliances shop in Karachi's electronics market, is even more worried than Humira Baig at the moment and the reason is that every day many customers from Shujaat's shop go back empty-handed simply because home appliances they want are in short supply in the market and may not be available.
According to Shujaatullah, the situation is very dire at the moment. Firstly, home appliances like fridges, freezers, AC, microwave ovens, washing machines, etc. are not being supplied, on the other hand, their prices have increased a lot.
He said that the prices of home appliances have increased by 40 to 70 percent during the last four to five months.
According to Shujaat, the current situation is that those who used to buy three or four home appliances in the form of a package in the recent past at discounted rates of up to one and a half lakh rupees, now first of all, cannot get the products in the package and even if they get them. So the same package which used to be available for up to one and a half lakh is now available for more than two and a half lakh rupees. According to Shujaat, these packages are usually bought as dowry for marriage.
Humira Baig and Shujaatullah are among the consumers and vendors in Pakistan currently facing problems due to the unavailability and high prices of home appliances.
Javed Afridi, the head of Haier, a well-known company that manufactures electronics products, informed on Twitter recently that import restrictions and economic instability are increasing, due to which, unfortunately, the balance between supply and demand is at risk.
"This means that these restrictions may make it extremely difficult for consumers to find what they need, with a limited supply of some home electronics products."
According to Rizwan Irfan, president of the Karachi Electronics Dealers Association, the sale of home appliances has fallen by 30% due to low supply and increases in their prices.
But the question is that most of the home appliances sold in Pakistan have the 'Made in Pakistan' label clearly affixed, so why is their unavailability in the country becoming a problem now?
The question is also if these goods are completely 'Made in Pakistan', then how the unannounced ban on imports, including the non-opening of LCs, is affecting the production of these goods in Pakistan and their supply to the market. Is?
Are the home appliances available in the market really 'Made in Pakistan'?
Most home appliances manufactured and sold in Pakistan such as refrigerators, deep freezers, washing machines, ACs, TVs, water dispensers, microwave ovens, etc. are often labeled 'Made in Pakistan' which apparently means It is assumed that these items are locally produced in Pakistan itself.
However, Rizwan Irfan says that apparently they have a 'Made in Pakistan' label but the reality is that most of these products are assembled only in Pakistan while most of the parts used in them are imported.
According to the research conducted by Pakra (Pakistan Credit Rating Agency), a research institute working on various sectors of the economy, the localization of locally produced items in this sector is very low and it is not more than 25%, i.e. Only 25% of the parts are manufactured in Pakistan and the remaining 75% of the parts and raw materials are imported.
According to Pakra researcher Sania Tauseef, the localization of refrigerator production in Pakistan is 20 to 25 percent, that is, in simple words, if a refrigerator or a refrigerator is written 'Made in Pakistan', then in fact, only 20 to 25 percent of the parts used in it are made. It is manufactured in Pakistan while the rest of the parts are imported from outside.
According to Sana, localization is 20 to 25 percent in AC manufacturing, 5 to 10 percent in deep freezers, 20 to 25 percent in water dispensers, 2 to 5 percent in LED TVs, and 20 percent in washing machines. 25 percent from
According to him, fan blowers and evaporators used in AC in Pakistan and almost all important parts used in refrigerators and deep freezers are imported from foreign countries.
According to this research, low localization in the home appliances sector is a weakness of this sector, and exchange rate m.It is adversely affected due to fluctuations and prices in the international market.
Asim Ayaz, the spokesperson of the Pakistan Engineering Development Board, a government organization working for the development of the industrial sector in Pakistan, also confirmed that in the field of home appliances, the production of their parts at the local level, i.e. localization, is only 20 to 30 is up to percent.
Why are home appliances affected by the ban on imports despite being 'Made in Pakistan'?
According to the Secretary General of the Pakistan Electronics Manufacturers Association, Phanesh Hanif, the representative organization of the industries that manufacture electronics products in Pakistan, electronics products are written as 'Made in Pakistan', but in reality, it is not 100% because these products are made in Pakistan. The parts used in manufacturing are either imported from abroad or the raw materials are procured from abroad for their manufacture in Pakistan, so when there are problems in imports, despite the claim of 'Made in Pakistan', problems arise. Will occur.
He explained in this regard that the most important part of AC, fridges, and freezers is the compressor which has to be imported because it is not manufactured in Pakistan. Similarly, some other necessary parts also have to be procured from outside.
Explaining the reasons for the decrease in the supply of home appliances, Fanwak Hanif said that the biggest problem of production in this sector is the lack of raw materials and parts used in the production of home appliances, which is the difficulty in opening LCs of imports in Pakistan. Due to problems.
According to him, the first hurdle came in April 2022 when the State Bank circular for increasing the cash margin on imports came.
He said that after the quota was fixed by the State Bank till December last year, some LCs continued to open for the home appliances sector due to which some production continued and their supply was ensured in the market. This quota was also abolished in the first month of the current year i.e. January 2023 as the parts and raw materials required for the manufacture of home appliances are not included in the priority list for opening LCs and this situation has remained till now.
According to Panash Hanif, due to this situation, the production of home appliances fell by 70 to 80 percent and the little production that is going on is possible due to the parts and raw materials in stock by the companies.
Why is Pakistan not able to complete the localization of domestic products?
According to the experts associated with this sector, the main reason for less localization in the home appliances industry in Pakistan has been technical and financial problems, including their non-viability in Pakistan in terms of technology and finance.
Asim Ayaz said in this regard that localization in an industry requires a large volume of sales only then localization becomes financially viable.
Explaining this, he said that compressors are used in most of the products, but the capital required to set up a compressor factory is necessary to return the investor including profit, which is locally manufactured. have high consumption in the local market so the project or factory can stand on its feet financially.
He said that if the economic and industrial situation of Pakistan and the problems faced by investors are carefully examined, it will be clearly known why making compressors in Pakistan is not such a viable business right now.
There are many problems in this work that someone can bring the compressor technology from outside to Pakistan, set up a factory, and then make a profit. Therefore, it is considered better to import most of the parts of home appliances.
He said that the same situation is also about other important parts which are being ordered from outside.
On the other hand, Shahab Hanif also pointed out that apart from the compressor, other parts and raw materials used in making the body of home appliances are not made in Pakistan, so it is forced to be imported.
According to Sania Tauseef, there is currently no law in this regard in Pakistan, based on which any check and balance can be kept in this regard.
He said that in the home appliances sector, there are no guidelines at the government level to achieve localization in this sector in a certain period, just as there are some timelines in the auto sector to do so much localization in so many years.
According to Sania, the home appliances sector in Pakistan is 'assembling' and not 'manufacturing'.
In this regard, Asim Ayaz, the spokesperson of the government agency Engineering Development Board, while commenting on writing 'Made in Pakistan' despite the low localization, said that as the size of the market is increasing, localization can be done in many parts.
He said that even though these products are assembled in Pakistan, it is still better than importing them in the form of Complete Built Up (CBU).