Dawn has reported a decrease in mobile phone imports in the last few months. The decrease has been seen in July till October where it reached $198 million which is 18% lower than the average number. Though many international brands have cited different reasons for this decrease but the most common among them is the rise in import duties.
Pakistan’s rising rate of internet penetration makes it an attractive region for sale of smartphones but in the budget 2016-17 the duties imposed on mobile phone import have made them expensive for the general public. Official figures reported by Dawn states that the imports of mobile phone reached $753 million in 2015-16 after increasing from 4.15pc from the year before. Also, the share of smartphones in total imports dropped in October from 43pc in March to 37pc.
Measures like imposing more taxes and import duties always lead to some peop[le finding a way around to get the product in the market. Thus, with smartphones, it leads to the entry of smuggled mobile phones in Pakistan. According to the statistics that we reported earlier, of all the iPhone 7 & iPhone 7 Plus, only 2000 were sold legally. In Pakistan, 80% of iPhones sold are smuggled into the country while the rest of the 20% are sold through official channels and distributors.
The smuggled mobile phones in Pakistan are sold at reduced prices as they don’t have to pay the import duties and thus saving cost for the customer. Such an act benefits the user but hurts the economy of the country and also is an unfair practice for the companies pursuing legal channels. The smartphone manufacturers get no reward for its fair practices when the market is flooded with smuggled phones. The increase in taxes and import duties takes away the level playing field for all the parties.
Pakistan Telecommunication Authority (PTA) needs effective measures in place to combat this issue of illegal entry of mobile phone because as long as the import of mobile phones will remain expensive, the illegal phones in the country will be on the rise. Customs officials need to devise a new plan for combating this evil because their current one doesn’t seem to be working.