Price of Computer Devices Skyrocketing in Iran

EghtesadOnline: Market reports indicate a sharp spike in prices of computer devices in Iran, with business insiders saying that the recent forex fluctuations and hurdles in the way of imports are turning the goods into a luxury that many cannot afford anymore.

News ID: ۷۴۵۴۳۹

11 June 2018

According to the head of Tehran's Information Technology Union, Mehdi Mir-Mehdi Komijani, computer accessories have seen a staggering 70% hike in prices and computer hardware has experienced a 60% rise, reported ICTNA.

Komijani says with imports bottlenecked, the commodities have become scarce in the market with customers facing empty racks visiting shops. This has consequently triggered an across-the-board price surge.

Providing examples, he pointed to the cost of a MacBook, now standing at 220 million rials ($5,238). Some of the most expensive MacBook models are priced around $4,000 in international markets, Financial Tribune reported.

The union head maintained that importers' activities heavily depend on foreign exchange rates, adding that "almost 98% of electronics and IT goods are imported into the country, as well as the raw material and parts necessary for the production of keyboards, computer mouses, speakers and such."

Since last December, the foreign exchange market has been in a volatile state as the US dollar exchange rate jumped to unprecedented levels several times before the government of President Hassan Rouhani stepped in and unified the rate at 42,000 rials in April to put an end to the raging market.

The Central Bank of Iran then launched an online Forex Deals Integrated System, dubbed "Nima", through which businesspeople can validate their purchase orders and directly purchase their required foreign currencies from certified exchange shops. However, many business insiders have told reporters over the past few weeks that the government has been unable to provide their foreign currency requirements.

>Profound Changes in Business

The import business has undergone major changes due to the new system established by the government. Komijani complains that Nima has failed to properly cater to the IT sector's needs.

"On average, from every ten requests for 42,000 rials dollars, two are referred to Nima and the rest are rejected."

According to him, on the whole, computer accessories have seen a 70% surge in their prices and computer hardware has registered a 60% rise.

Furthermore, Komijani says homegrown products have also experienced 35% price jumps. Several Iranian companies are assembling devices like keyboards and speakers from imported parts.

Along with the shortage in supply, demand for such goods has also plummeted which has further complicated the situation. With the latter goading sellers to further increase the prices.

According to the head of the union, with the market plunging deeper into bottomless chaos every day, authorities need to intervene and regulate the situation.

Komijani says goods imported from China and Malaysia have experienced a milder upturn in costs, as opposed to American-made devices.

>Dashed Hopes

Komijani noted that the government of President Hassan Rouhani decreased the customs duties on laptops in March, a move which raised the expectation that the prices will go down soon. However, customers' hopes have been dashed during the past months.

Laptop tariffs had been raised by the Industries Ministry in two phases over the past four years, from 5% to 10% and later to 15%.

Following the private sector's pressure and a rise in public demand, import tariffs on laptops were again reduced to 5% in March.

Authorities and some market insiders had hoped for a reduction in prices to follow and make laptops affordable to the public again, but forex fluctuations and US President Donald Trump's withdrawal from the 2015 Iran nuclear deal, heralding the return of harsh sanctions, unsettled the fragile market.

Komijani says, "An average-quality laptop had seen a 10% price increase before Norouz (the new Iranian year starting on March 21)."

IT market activists had hoped the 10% decline in laptop tariffs would decrease prices and fuel a boom in demand. "But after the dollar exchange rate was unified, along with other setbacks, an average laptop is now 60% costlier compared to prices before Norouz."

>Stark Prospects

The laptop market is plagued with stagnation and the union chief does not foresee a rosy future for those active in the field.

Komijani concluded his remarks by outlining the repercussions of the rampant inflation.

"Even before the recent hike, the public's purchasing power had dwindled and they would spend their money on food and clothes. But now even a student or an employee cannot afford to purchase computer devices as their purchasing power has tumbled by 70% compared to the year which ended in March."

Another obvious outcome is the rise in unemployment across the country since companies, especially the importers, have to lay off employees to compensate for the sluggish market.