Bangladesh is losing Tk 800 crore in lost revenues every year because of illegal imports of mobile phones, said Muyeedur Rahman, head of mobile at Samsung Mobile Bangladesh.
"One in every four Samsung branded cellphone in Bangladesh is brought in through illegal channels."
Last year, the company imported about 20 lakh handsets, including 15 lakh smart devices, at Tk 1,897 crore, according to Bangladesh Mobile Phone Importers Association.
The country imported 3.12 crore mobile phones last year, up 11 percent over the previous year, at Tk 8,000 crore, the association's data showed.
About 50 lakh pieces of mobile handsets are brought in to the country through illegal channels a year, according to a recent report of Bangladesh Telecommunication Regulatory Commission (BTRC).
The BTRC has recently taken an initiative to stop illegal imports by launching a database of the National Equipment Identity Register to store information of all legally-imported devices.
Rahman lauded the regulator's efforts to crack down on illegal imports. “This will encourage legal imports and customers will avail the maximum benefit of an original device,” Rahman told The Daily Star in an interview recently.
Samsung also faces challenges from low-cost and hazardous parallel imports carried out by travellers, he said.
“This has continued to deepen customers' sufferings as they can't avail after-sale services for such devices from our service points. This has been denting Samsung's reputation in terms of quality and safety.”
The establishment of assembly plant in Bangladesh would discourage illegal imports and encourage customers to buy original devices and make products more affordable, Rahman said.
However, high investment and business feasibility are some of the key factors that need to be taken into account before setting up an assembly plant, he said.
In July, the government cut custom duties for mobile parts and increased tax for imported finished mobile sets to encourage local assembly.
Rahman, however, declined to say whether Samsung would set up any assembly plant in Bangladesh. “We are unable to disclose this information at the moment.”
Bangladesh is recognised as the ninth-largest handset market in the world and Rahman said it would soon move up to the seventh position.
He said the country is moving towards digitalisation and smartphones are one of the main vehicles to connect the local people with the digital world.
“However, Bangladesh's smartphone penetration, now at 27 percent, is quite low compared to other developing countries.”
He blamed the low penetration on the existing tax structure. He stated the increase of duty on handset imports from 5 percent to 10 percent for 2017-18 as a case in point.
The price of smartphones has increased with the double amount of duty in place, he said.
It might impact our business growth and could slow down the pace of reaching the mass users.”
According to Samsung, the number of mobile phone users would grow significantly in Bangladesh by 2020.
Internet usage through mobile phone is also expected to grow, and the prospect of 4G rollout, favourable government policy and greater 3G internet penetration have created demand for smartphones, said Rahman.
“The rise in demand for smart devices will reach extraordinary heights in line with the fast changing lifestyle of the people.”
Samsung Mobile has been doing business in Bangladesh for the last seven years and has already become a top brand in the country.
“It's a sheer pride for the brand to see Samsung growing. We have grown at faster rate than the overall growth of the handset industry. We are committed to continuing our growth journey.”
He said the company sees a huge growth potential in Bangladesh in the coming days, and in order to cement its pole position, it always localises campaigns and products to enrich the taste of the customers.
Samsung has recently launched pre-orders for its new “Galaxy Note 8” in Bangladesh, and Rahman said it would be the best in class premium device in its segment for 2017 and might surpass all previous records.
“I believe, like previous products, this innovation is going to create history in Bangladesh.”