Mobile importers recovering from turmoil losses

Mobile handset importers are gradually recovering from the damage inflicted on their businesses by the political turmoil in the first quarter of the year.

The importers brought in 27.38 lakh units of handsets in June, up 75.2 percent month-on-month, according to Bangladesh Mobile Phone Importers' Association.

The industry passed a sluggish phase in the first half of the year, but customers are now coming back to the market, said Rezwanul Haque, general secretary of BMPIA.

Last fiscal year, some 2.6 crore units of handsets were imported, up 29.4 percent year-on-year.

But between January and May, only 15.85 lakh handsets were imported on average, down from the preceding six months' average of 25.55 lakh.

Of the 2.6 crore handsets imported in fiscal 2014-15, 47.55 lakh units were smartphones.

After the introduction of 3G service, there was a spike in smartphone imports, but there is yet to be any real growth, said Haque, also a director of Symphony. 

He however said the handset market is facing a setback due to heavy taxes and strong presence of the grey market.

The government imposed a 20.75 percent import duty on mobile handsets, which includes 5 percent customs duty, 15 percent value-added tax.

The taxes will continue into fiscal 2015-16 as well. Traders estimate that about 20 percent of the handsets come into Bangladesh through illegal channels due to the high taxes.

The importers said the damage to their businesses would not have been that acute during the political turmoil if the tax structure had been favourable to the industry.

“We could have achieved more growth and the legal import number would have been close to four crores yearly,” Haque said.

Another leader of BMPIA said the government realises only a few hundred crores of taka from handset imports a year.

If the government had a sense of the ecosystem of the digitisation process, it would have kept the duty on handset imports on the low side, as there is more value for the economy that way.

At present, there are about eight crore handsets in Bangladesh. The average lifespan of a handset is less than two years, so the market requires more than four crore handsets a year.