Iranian Government Pulling Cellphone Market Out of Disarray

EghtesadOnline: In a move aimed at soothing the disheveled Iranian mobile phone market, the government of President Hassan Rouhani has sped up the release of handsets from customs warehouses and in the coming days some 600,000 cellphones will receive clearance and enter the market.

News ID: ۷۴۵۸۲۸

08 August 2018

During recent weeks, as the people were preoccupied with price jumps in the mobile phone market, they came to realize that purchase is not possible even at exorbitant prices as profiteering practices together with government import policies had hampered imports and the distribution chain of handsets.

However, as evidenced by positive signals from the government, the shortage of mobile phones in the market is apparently in its final days as reports suggest more than 600,000 handsets will be cleared from customs warehouses in the very near future, reported Zoomit.

Furthermore, the government in collaboration with legal authorities is moving ahead with a clampdown on profiteers, according to Financial Tribune.

ICT Minister Mohammad Javad Azari-Jahromi has responded to questions posted on Twitter asking him about certain mobile phone importers which received subsidized currency from the government but overcharged customers or hoarded products to later sell at higher prices.

>Anti-Graft Measures

A Twitter user posted a question on the disappearance of 12,000 Apple iPhones which were brought into the country with subsidized currency with the total value of $26 million. Responding on the social media platform, the minister said the company had overcharged customers for a segment of the imported mobile phones and hoarded the remaining.

He added, "We have taken legal measures against the company for profiteering and have seized the remaining phones." The seized products are awaiting judicial order to be distributed in the market.

Meanwhile, Tehran province's industries organization has announced that it has audited 40 importers, out of which 24 have been charged with various offences and are going through judicial proceedings. According to the organization, three have been cleared of charges and four have not cleared the commodities from the customs yet.

>Roots of the Problem

Following the US pullout from the historic nuclear accord, the rial steadily lost its value against the USD, propelling the government of President Hassan Rouhani to step in and make the costly mistake of unifying the dollar exchange rate at 42,000 rials overnight.

In addition, the administration established the Forex Deals Integrated System, locally known as Nima, as a platform for importers to declare their currency needs.

Due to faulty mechanisms, Nima turned into a liability bottlenecking imports and made many goods scarce including mobile phones. As per the government's initial forex policy, importers were not allowed to obtain foreign currency from the unofficial market and had to go through protracted government bureaucracy to bring goods into the country.

When the dollar exchange rate started to scale mind-boggling heights, the average Iranians became anxious that soon they will be forced to dig deeper into their pockets to purchase even a mid-range handset.

Furthermore, defective government policies made mobile phones a rare commodity, plunged market into mayhem and provided grasping dealers to have a field day.

Many business insiders had criticized the government over the policies, maintaining that allocation of subsidized currency to the privileged few would inevitably lead to corruption.

The recently appointed head of Central Bank of Iran's Abdolnasser Hemmati announced the revised forex policy Sunday night on television, saying the monetary watchdog will no longer require importers to only obtain foreign currency through government channels. The CBI's new forex policy can hopefully ease the acute market shortage and lead to even a slight drop in prices despite the badly hobbled economy.