"A substantial number of smartphones have entered the country illegally over a long period," the regulatory body tells NBR
The Bangladesh Telecommunication Regulatory Commission (BTRC) has sent a letter to the National Board of Revenue (NBR), requesting a reduction in import duties on mobile phones and VAT on domestically produced handsets.
The letter also proposed reducing the import duty on mobile phone manufacturing components.
The regulatory body also called for steps to legalise mobile phones that entered the country illegally.
BTRC Deputy Director Md Zakir Hossain Khan said the letter was sent to the NBR chairman on Nov 4.
The BTRC move comes amid the government setting the stage to introduce the National Equipment Identity Register (NEIR) system from Dec 16, the Victory Day.
The government aims to register every mobile handset through the NEIR. Unauthorised handsets will no longer be able to connect to any network after the NEIR system becomes operational. Changing handsets will require deregistration, and changing phone sets randomly would not be possible.
All phones in use before Dec 16, however, will be automatically registered.
The BTRC has proposed to reduce duties and VAT under the impression that the initiative to legally import and market mobile phones might result in price hikes.
The current total import duty on mobile phones is 58.6 percent.
"Once the NEIR is implemented, illegal imports of mobile handsets will stop. This will not only increase the production of locally manufactured handsets but also significantly raise the volume of legal imports for brands that are not produced domestically," the BTRC said in its letter to the NBR.
"The commission believes the existing high import duty on mobile handsets needs to be reduced. The adjustment should be made in a way that protects the interests of the country's mobile handset industry and everyone working in the sector," the letter added.
The BTRC cited case studies of India and Sri Lanka to justify its proposals.
The BTRC cited NBR information to state in the letter that illegal handset infiltration caused the local handset manufacturing industry losses worth Tk 20 billion.
The letter also mentioned that VAT and import duties on locally produced handsets in Bangladesh are "much higher" compared with other countries.
About 90 percent of mobile handsets currently used in the country have been imported illegally. Reining in the illegal market could surge mobile phone prices and lead to a monopoly, argued grey market traders.
At a press conference on Nov 6, Zakaria Shahid, president of the Mobile Phone Industry Owners' Association of Bangladesh (MOIB), said mobile phone prices would not increase by even one taka following the NEIR implementation.