Should governments get into phone manufacturing?

Posted on November 21, 2015  /  0 Comments

I first heard about government entering the business of manufacturing phones when I was (futilely) advising the government of Bangladesh on formulating a national telecom policy. They had some bankrupt telecom equipment factories and I was asked what to do with them. I said, not much.

Then my friends in India started to show me numbers for what India was spending on importing equipment for the telecom industry. This cannot continue, they said. We must start manufacturing in India (this was before Prime Minister Modi got elected). My daughter had been engaged in rustling up components for a medical equipment startup in Bangalore, so I had heard about the ease of working with Chinese suppliers and the difficulties of working with Indian suppliers. I suggested that they should try to attract Chinese/Taiwan firms to India so they could straighten out the supply chain problems. Fortunately, no one talked to about the government getting into manufacturing.

Now it is Pakistan’s turn. More informed than their Bangladeshi counterparts, the government is not contemplating directly manufacturing smartphones according to the report.

After thorough deliberations, the meeting agreed that the TIP management would prepare EoI inviting interest for local manufacturing of mobile phones and smart meters at TIP. The meeting was informed that TIP has adequate land of 432 kanal and infrastructure besides a skilled manpower, therefore an EOI for the purpose needs to be floated soon to materialize the revitalization plan. Local smartphone manufacturing can empower communities and increase employment rate as well.

So the deal is that the government will offer land and employees. Obviously, this is not enough to attract a good manufacturer. Next will come offers of tax breaks and preferential treatment for locally manufactured phones.

And no attention will be paid to the extremely dynamic nature of the business that no entity tied up even faintly with government can hope to keep up with.

I thought a recent report about a USD 10 smartphone being marketed by Walmart would be of interest. It has better specs than the original iPhone.

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