Cellphones’ Suitcase Imports Soaring

EghtesadOnline: Suitcase imports of cellphones have been pushed to new high in Iran by a hodgepodge of state policies, in addition to the reimposition of harsh US sanctions against Tehran, in the past few months.

News ID: ۷۴۷۶۲۶

22 June 2019

Official data show that between March 2018 and April 2019, 11.5 million mobile phones were imported into Iran, of which 6.5 million were brought in by official distributors and the rest entered the country in the form of suitcase imports, Eghtesad Online reported.

Ebrahim Dorosti, the head of Iran Electronics and Mobile Phone Importers Guild, says suitcase trade has an 85% share in Iran’s mobile phone market.

Over the past year, the introduction of restrictive laws and regulations has shaken the mobile phone market and pushed prices to prohibitive levels, according to Financial Tribune.

One of the major changes in the sector was the implementation of the Mobile Registry Scheme, based on which local telecom operators are barred from offering services to contraband handsets.

According to the scheme, people visiting foreign countries are allowed to bring one handset into the country by paying an 18% import duty and registering their devices with the customs department.

However, by using the same provision, profiteers have been bringing large numbers of handsets into Iran. While they are paying the import duty, they do not offer after-sales services to customers and more often than not sell fake products.

Volatility in the forex rates has also disrupted the mobile phone market. To address the issue, the government announced plans to provide importers with subsidized hard currencies.

However, the mechanism for allocating subsidized hard currencies was changed twice. Initially, firms received USD at a subsidized rate of 42,000 rials and later at 80,000 rials.

Despite the allocation of subsidies, prices of mobile phones have gone through the roof and observed a sharp hike of up to 70%.

Prohibitive Prices

Following the imposition of harsh US sanctions against Tehran last summer, the Iranian national currency has lost about one-third of its value.

A year ago, $1 fetched 37,000 rials in Tehran. The greenback was traded at 134,500 rials in Tehran on Friday.

Over the past few months, the prices of all goods, including mobile phones, have jumped to unprecedented highs.

Apple and Samsung’s latest models are still available in Iran, albeit at prohibitive prices. For instance, an iPhone XS Max costs 270 million rials ($1,730), which goes for $1,449 in most other countries.

The latest Samsung Galaxy phone, S10 Plus, has a price tag of 170 million rials ($1,030). The same device sells at $999 in the global market. A Samsung Galaxy A7 costs 42 million rials ($250) in Tehran.

Mobile Registry Scheme

To curb cellphone smuggling, ICT Ministry, the Islamic Republic of Iran Customs Administration, Communications Regulatory Authority and Industries Ministry established the Mobile Registry Scheme that bars local operators from offering services to contraband gadgets.

For implementing the scheme, officials use an online database of IMEI, or the International Mobile Equipment Identity, the number of a functioning handset.

IMEI is a unique number—like fingerprint for electronic devices—that helps identify a mobile phone.

The IMEI number is used to identify valid devices. Therefore, cellphones that have entered the country legally can be identified.

Prior to the introduction of the scheme, smugglers had a 90% share in Iran’s mobile phone market.

At the end of the day, the government’s different schemes have failed to help the real consumers buy authentic cellphones at reasonable prices. And there seems to be no light at the end of the telecommunication tunnel.