90pc iPhones on sale are illegally imported

About 90 percent of the iPhones on sale in the local market were not imported legally and in the process the government was deprived of taxes close to Tk 200 crore, according to Compustar, the country's lone authorised dealer of Apple handsets.

“We were bleeding for the last few years but the scenario is much worse now,” said Raquibul Kabir, chairman of Compustar.

Market sources said after the launch of iPhone 7 in 2016, nearly 100,000 handsets entered the local market through the gray channels. Through their system they have noticed that more than 90 percent of the iPhones on sale in the local markets are not imported through them, Kabir said.

For instance, Compustar launched iPhone X in Bangladesh in the first week of December but the model was already available in Bashundhara City and some other shopping centres at that point. On November 14, the Customs Intelligence and Investigation Directorate conducted a raid in Bashundhara City and Molly Capita Centre and seized more than 200 units of iPhone X, which retails for Tk 130,990 to Tk 150,500.

 Kabir, subsequently, has urged customers to buy iPhones from authorised dealers as many grey market traders sell fake or refurbished handsets as brand new and genuine.

“We don't want to see people buying fake or refurbished iPhones at the price of a brand new one,” he added.

The curse of parallel imports has also struck its competitor Samsung despite having an official presence in Bangladesh: 40 percent of its handsets are not imported through the proper channel.

“The illegal imports have surged after the tax was increased in the current budget,” said Ruhul Alam Al Mahbub Manik, president of the Bangladesh Mobile Phone Importers Association.

The government has increased the tax on handset import by 10 percentage points to 34.05 percent. About 30 percent of the handsets are now imported by bypassing the legal channels, according to Manik, also one of the distributors of Samsung.

“For high-value sets, the number is much higher,” he added.

And the grey market operators are being encouraged by the absence of an International Mobile Equipment Identity (IMEI) database, complex customs system and high import duty, according to industry insiders. They also got a helping hand from the telecom regulator, which recently increased the number of handsets inbound passengers to Bangladesh can carry from five to eight.

The BMPIA had started a process of setting up a database two years ago but the Bangladesh Telecommunication Regulatory Commission is yet to complete the process.

 Importers said the government needs to take this matter very seriously as it is losing a few hundred crores of taka in taxes every year.

“If the government fails to stop the illegal channel, we cannot survive and then the whole market will be dominated by the gray segments,” said Rezwanul Hoque, immediate past general secretary of BMPIA and the chief executive officer of Transsion Bangladesh.

Last year, the handset industry imported about 3.40 crore units through the legal channel, less than 90 lakh of which were smartphones.

The industry had targeted to import one crore smartphones in 2017 but was thrown off its tracks by the increase in tax rate in June last year, said industry insiders.

“Hearing the importers, it seems the situation has taken a turn for the worst,” said Moinul Khan, director general of CIID, adding that his department is not taking the matter lightly.