Republica Roundtable

Clarion call to check illegal import of mobile phones

Published On: July 15, 2016 01:15 AM NPT By: Sujan Dhungana

KATHMANDU, July 15: Mobile phone importers have urged the government to check illegal imports of mobile phones in the domestic market. Speaking at a roundtable organized by Nepal Republic Media, they said the growing grey market of mobile phones has posed a serious threat to authorized importers and also made negative impact in the industry.

“Illegal imports of mobile phones is leading to price war and creating unhealthy competition,” GL Karna, Business Head of LifeCom Pvt Ltd -- the authorized distributor of Lenovo mobile phones for Nepal, said. Karna recommended urgent intervention of regulatory bodies to control such unethical practices.

Some importers also said illegal imports can be controlled by strictly implementing existing laws and policies. "Nepal Telecommunication Authority (NTA) has introduced good policies. Strict implementation of these policies and effective monitoring by NTA can promote healthy competition in the market," Bhupal Chhetri, sales and marketing manager of Pashupati Trade Link -- the authorized distributor of Micromax mobile phones for Nepal, said.

Importers also accused the government of not supporting genuine traders and the mobile phone industry on issues related to taxes. "The (mobile phone) industry is generating huge revenue for the government and as mobile phones worth Rs 2 billion are sold in Nepal every month. If the government brings industry-friendly policies and support authorized importers, the grey market will be automatically controlled,” Sanjay Agrawal, chief executive director of TeleTalk Pvt Ltd -- the distributor of Colors Mobiles, said.

Meanwhile, officials of NTA said they were serious about controlling illegal flow of mobile phones into the Nepali market. "Implementation of equipment identity registry system, which requires users and importers to register IMEI number of their device with NTA, is a step in that direction,” Ananda Raj Khanal, director of NTA said, adding. "Once all mobile devices are registered with NTA, we can make mobile phones entering the country through illegal channels inoperable.”

Khanal also said that NTA was aware of demands placed by traders. He, however, said daily work of the telecommunications regulator has been affected due to lack of sufficient staffers.

NTA will address all genuine demands

Ananda Raj Khanal
Director, Nepal Telecommunication Authority (NTA)

Tax related issues including VAT refund raised by the importers are not in our jurisdiction. The government doesn't even listen to our recommendations regarding tax relaxation as its number one target is revenue maximization. However, we believe that ICT sector should be overburdened with taxes.

Manpower crunch is affecting our work performance. Despite having few staffers at our disposal, we are doing our best to provide timely service to stakeholders. We have shown flexibility to demands raised by the traders time and again. NTA will address all genuine, issues raised by traders. But they should come up with a common stand.

In a bid to facilitate customers, NTA is preparing to go into automation. However, service seekers and traders have to be updated with minimum technology so that NTA can go into automation.

Grey market of mobile phones has to be controlled. The implementation of equipment identity registry system will be crucial to control illegal import of mobile phones. We can track and make mobile phones not registered in the system inoperable. By introducing an interim directive, we have asked importers and owners of mobile phones to register IMEI of mobile devices.

Regular monitoring of market needed

Pawan Kumar Bhimsaria
Managing Director, Generation Next Communications

Some retail shops are openly selling duplicate phones or original phones with duplicate accessories. Because of these shops, people have a feeling that even popular brands sell fake products. They sell phones imported illegally at cheaper price and show the same purchase bill multiple times during monitoring. Inland Revenue Department can easily track such illegal activities. This problem is serious, particularly in case of smart phones that cost above Rs 10,000. Surveillance, regular monitoring and surprise inspection is needed as mobile phone is a sensitive product. The government should monitor the market of mobile phones like the market of other daily consumable goods.

These retailers are affecting our business as their products are cheaper than ours as they do not pay taxes to the government. We are waiting for full-fledged implementation of equipment registry system as it would eliminate trading of phones in the grey market. This might be a crucial step to control sale of expensive refurbished phones. NTA should concentrate on these issues.


Control unhealthy competition in the market

Sanjay Agrawal
CEO/Director, TeleTalk Pvt Ltd

Market of mobile phones has seen many ups and downs in the past five years. However, the industry is not getting due policy support from the government. The industry, which has monthly turnover of around Rs 2 billion, is making significant contribution to government exchequer. The government has been saying that it would remove VAT refund provision and levy more duties. We are against this moving. Removal of VAT refund provision will only benefit big brands, not brands like Colors which has been doing local OEM. I think withdrawal of the provision will only increase grey market. The government should bring necessary policies to control unhealthy competition among traders which is affecting this industry.


Our demand regarding VAT refund must be addressed

Bhupal Chettri
Manager, Sales and Marketing, Pashupati Trade Link

The government has not addressed our demand regarding VAT refund. It has been one of our major demands for the past many years. The government, NTA to be precise, has good policies. But the implementation aspect has been rather weak. Strict implementation of these policies is the need of the hour as it can control foul players. Once that happens, only the capable brands, which meet all the criteria specified by the regulator, will be available in the market.


Control illegal import of mobile phones 

Sumit Pradhananga
Device Marketing Manager
Huawei Technologies Nepal

Mobile phones that come through the grey market have been troubling firms dealing on authentic phones. The grey market is making negative impact on the Nepali mobile phone industry. Not only traders, consumers are also facing different troubles while using mobile phones that come through illegal channels. The government should make needful policy arrangement so that flow of illegally imported mobile phones is controlled. All stakeholders have to work together to make that happen.

IMEI registration should be implemented strictly

Bikash Shah
Director, Prisma Technologies

We too have felt that NTA is understaffed. The process of taking type approval certificate is often delayed because of manpower shortage at NTA. Other problem is we are forced to pay high demurrage charge in different places. NTA should facilitate the traders so that they have to pay low charges. Similarly, consumers are being cheated by products that are supplied through the grey market. It is one of the biggest problems at present. We believe that strict implementation of equipment identity registration system can control the flow of mobile phones via illegal channel.


Ask importers to provide effective after-sale services

Manish Pd Rajbhandari,
Managing Director, Allied Trade Link Int'l

With the implementation of equipment identity registration system, NTA should now monitor use of unauthorized smartphones in the market. The market is very competitive and we cannot do business in cash. We do not have good experience of credit sales as retailers often run away or delay payment. There is no authority to look into matters related to back-checks. NTA should support us in trading on bank guarantee so that we won't be cheated by such unscrupulous retailers. NTA should also put in place needful measures that require importers to provide effective after-sale services across the country as far as possible.

NTA should facilitate importers

GL Karna
Business Head
LifeCom Pvt Ltd

NTA should seriously listen to issues raised by the traders. Recently, a big consignment of smartphones was stuck at the customs. It could be cleared only after passing different hurdles. In such cases, NTA must coordinate with concerned government so that importers do not have to face unnecessary hurdles. Similarly, the government should also control price war by introducing needful policies and laws. The regulatory body should also address different issues related to VAT and other taxes.
(As told to Kuvera Chalise, Sujan Dhungana and Rudra Pangeni.)

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