Imports of mobile devices
drop by 85 percent

Illegal trade is back in first half of 2015

Imports of mobile devices have dropped by 85 percent in the first half of 2015, compared to the same period last year. Based on Customs figures, the value of the imports was $11 million this year, compared to $73 million in 2014.

George Azar, Group Strategy Director and Business Developer for AC Holding, local agent for Samsung, said that this was due to the cancellation of the International Mobile Equipment Identity (IMEI). “Smuggling is back at an even higher pace than before the IMEI decree implementation,” he said.

In June 2013, the Ministry of Telecom (MoT), issued Decree number 9474, which made it mandatory for mobile phone importers to register the new IMEI phone codes on both local operator networks. This regulation aimed at reducing illegal imports and increasing Government revenues. In November 2013, the ministries of Telecommunications and Finance said that revenues from mobile phone imports increased to $9.26 million between June and August 2013. Imports during the first half of 2013 were valued at $25 million.

One year later, the MoT cancelled the obligatory registration of the IMEI, despite the opposition of the Association of Mobile Phone Agents. The Ministry said it was a time consuming and complicated procedure. The Ministry said that additional Customs revenues from mobile phones did not exceed $13 million last year. The financial gains obtained through registration were offset by losses in income due to roaming charges, which are a straight loss to the State, since most visitors opted to use the roaming service rather than register their phones.

But according to Azar, the Ministry’s decision has caused importers great losses. “Our operations are getting smaller due to high competition with illegal importers. We are losing money despite the growing size of the market,” he said. His company is able to sustain itself because it has a diversified portfolio, but smaller companies are facing hard times, according to Azar. He said that all devices are being smuggled, but it is more profitable to smuggle expensive ones.

“Legal importers pay a tax of 15 percent on each device: Ten percent as VAT, and five percent as Customs fees,” he said. According to Azar, even if the company was to sell the devices at cost, it would still be losing out to smugglers.

“We have presented these figures to the Ministry, but were not able to reach an agreement,” Azar said.