Saturday, June 22, 2024


Dhaka Tribune

Manufacturers warn investors will leave if illegal mobiles flood the market

Illegal handsets currently capture around 40% of the market

Update : 28 Mar 2024, 06:10 PM

The country's mobile phone industry risks losing a large chunk of foreign investment due to the government's delay in implementing the National Equipment Identity Register (NEIR.)

The central identity register, launched in 2021 after consultations with stakeholders, was meant to curb the entry of illegal and smuggled handsets, according to handset-makers.

At an event in Dhaka on Wednesday, the Mobile Phone Industry Owners' Association of Bangladesh (MIOB) said the industry has received substantial foreign investment in a short period, based on assurances of action against illegal imports.

With investments currently at Tk2,000 crore, the association fears investor withdrawal if the issue drags on.

According to the association, illegal handsets currently capture around 40% of the market.

The association leaders argued that smuggled handsets -- evading the 58% import tax -- are cheaper and undercut locally manufactured phones.

MIOB President Zakaria Shahid said key phone importers established local factories with the understanding that the central identity register would address tax-evading imports.

The Bangladesh Telecommunication Regulatory Commission (BTRC) purchased and installed the equipment in 2020 and launched it the next year.

"But unfortunately, within days of launching the NEIR, the operation was suspended or relaxed significantly in the third quarter of 2021," said Zakaria Shahid.

He said legitimate factories now face "high licence fees" under BTRC rules, while illegal phones operate unchecked.

The association president said the relaxation of the NEIR system is causing the government to lose thousands of crores in revenue. The government will lose a potential revenue of Tk 20 billion from this sector in the current financial year.

Since 2018, mobile factories have been established in the country due to government incentives and so far 17 domestic and foreign mobile phone factories operate in Bangladesh.

About 99% of the phone demand in the country is now capable of being met by locally manufactured handsets.

But because the illegal imports of phones is not stopped, around 40% of the local market is now occupied by stolen phones.

The government has backtracked recently on its earlier decision to disconnect the illegal handsets from the mobile phone network much to the frustration of the local manufacturers and assemblers.

The Telecom Ministry at a recent meeting took the decision, meeting sources said, allowing new handsets - be it legal or illegal - will automatically be registered with the NEIR.

With the latest move, the initiative to restrict illegal handsets was thwarted twice since the introduction of the NEIR in July 2021.

According to the latest BTRC data, local manufacturers produced 1.89 million units in January 2024, down from 2.32 million in July 2023 and 4.14 million in January 2022.

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