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Import of mobile phones through legal channels witnessed a dramatic drop-off last year, blamed on the massive rise in illegal shipments in recent times.
According to importers, around 29.2 million mobile-phone handsets were legally imported into the country in 2018. The sales value of these cellular phones was around Tk. 83 billion.
This is a drastic fall from the preceding year of 2017 when a total of 35.4 million handsets were shipped legally. The total sales value of these handsets was Tk. 99 billion.
In terms of sales value, the import of mobile handsets through legal channel decreased by 19.27 per cent.
When asked about the reason for such a decrease in legal import, industry insiders blamed it on the massive rise in illegal shipment in recent years.
"While there has always been notable presence of illegally imported phones in the local market, the trend has picked up pace since 2016," said Ruhul Alam Al Mahbub, President of the Bangladesh Mobile Phone Importers Association.
While the share of illegally imported handsets stood at around 20 per cent just a year ago, it has increased to 30 per cent by the year 2018, according to the association's estimates.
The local handset industry is worth almost Tk 100 billion (10,000 crore), of which almost one-third is now taken up by illegal handsets, said Mr Mahbub.
Every year, around 2.5 million grey market handsets enter the country worth over Tk 30 billion, according to the association.
It is also estimated the government is directly losing Tk. 1.5 billion worth of revenue because of illegally imported handsets, mostly smart phones.
When asked about the underlying reason for such an increase in illegal shipment, industry insiders blamed it on the rise in import tariffs on mobile phones.
Import duty on mobile phones has been on an upward curve in recent years. In 2017, the government doubled the customs duty on imported mobile phone from 5.0 per cent to 10 per cent.
Even in the latest budget, the surcharge on the import of handsets doubled, increasing from 1.0 per cent to 2.0 per cent.
In total, mobile importers currently have to pay about 31 per cent import duty on the shipment of mobile phones.
"Such a high import duty ultimately increases the price of legally-imported phones while making illegal shipment a more viable option for a vested quarter," said Aminur Rashid, chairman of Edison Group, which markets the country's leading handset brand Symphony.
Officials, however, are hopeful that the recent BTRC (Bangladesh Telecommunication Regulatory Commission) step to build up an IMEI database for all handsets would reduce the amount of illegally imported handsets significantly.
The planned database is expected to be launched within a few weeks. Once fully operational, all the mobile handsets including the illegally imported ones will have to be registered on this IMEI database.
While the illegal handsets are already in use will remain usable for now, in the near future, any mobile phones that will be illegally imported will not work in the country, the Commission officials said.
Meanwhile, industry experts noted the recent emergence of locally assembled handsets is also slightly contributing to the decrease in import.
Consumer electronics brand Walton set the trend by becoming the first local company to set up a smart phone assembling plant in late 2017.
By the end of 2018, five other companies including world-renowned brand Samsung, Chinese company Transsion as well as local brands Symphony and Five Star followed suit.
"Although, we assembled a few thousand units from abroad in the first half of the last year, it was halted more than six months ago", said Uday Hakim, Deputy Executive Director of Walton.
"Now all the new Walton handsets in the local market are entirely made in Bangladesh," said Hakim, whose company is a major player in the local consumer electronics market.
Leading local brand Symphony has already set up an assembling plant in Ashulia while it is already constructing the second plant in the HiTech Park in Kaliakoir.
"The Ashulia plant already has a production capacity of three to four million units per year," said Mr Rashid, Chairman of Edison Group.
"The Kaliakoir plant will also be operational by the beginning of next year," he said, adding "We have invested around Tk. 1.0 billion in that plant."
In terms of market share, Symphony maintained its lead with 32 per cent in the local market last year.
It was distantly followed by Chinese brand iTel, which has a 13 per cent market share while global leader Samsung has 7.0 per cent share.
"Around 7.0 per cent of our market demand was met through locally assembled handsets in 2018," said Rezwanul Hoque, CEO of Transsion, which sells the brand iTel in the local market.
"This year, we are expecting to meet 40 per cent of our market demand through our local assembling plant," he added.