Mobile sets to go costlier

Mobile phone sets will be costlier as 25 percent customs duty has been imposed on the import value of each set in the proposed budget for the fiscal year 2009-10, scrapping the existing flat import duty of Tk 300 on each set.
If the new duty structure remains unchanged in the approved budget, the prices of the handsets, especially the high-end ones, will shoot up.
Prospective low-end customers will also feel the pinch as they will have to pay more for the market's low-priced handsets ranging from Tk 2,000 to Tk 3,000 now.
Bangladesh Mobile Phone Importers' Association (BMPIA) has opposed the new duty structure saying they will have to pay at least Tk 800 for import of each low-priced handset.
They also feared that it would encourage illegal import of handsets.
The importers now pay a flat import duty of Tk 300 for each handset. It will go up to Tk 800 for a $50 handset and much higher for high-priced handsets.
"I propose to impose 25 percent customs duty on mobile phone sets on an ad valorem basis instead of existing specific duty of Tk 300 per set applied irrespective of quality and waive all existing VAT, supplementary duty and AIT. This would entail higher duty on high priced sets and lower duty on low priced sets," said Finance Minister AMA Muhith in his budget speech.
Telepenetration rate is only 32 percent in Bangladesh at present. The new duty structure will create obstacle to the growth of the expanding mobile industry especially in untapped rural areas, observed industry insiders.
"We totally oppose the proposed duty structure which will create scopes for hassles between the customs and importers," said Faisal Alim, general secretary of BMPIA.
"Mobile handset prices fluctuate every day on the global market which makes it difficult to fix import duty based on their prices," said Alim.
The importers recently urged the government to cut import duty to Tk 100 from existing Tk 300 on each set in the budget for fiscal year 2009-10.
Mobile handset import increased by 92 percent to 60.82 lakh pieces in fiscal 2006-07 from 31.70 lakh in fiscal 2005-06 as import duty on handsets was lowered to Tk 200 in fiscal 2006-07 from Tk 300 in fiscal 2005-06.
However, handset import in fiscal 2007-08 witnessed a fall by 13 percent as the government re-fixed import duty at Tk 300 in the fiscal year when 53 lakh handsets were imported.