Contraband Cosmetics, Toiletries Flooding Domestic Market

EghtesadOnline: Contraband cosmetics and toiletries currently account for 70% of the Iranian market, which a direct result of the government’s ban on imports of these products since May 2019, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture said.

News ID: ۷۵۱۰۵۳

21 September 2020

“Based on a report released by the Headquarters to Combat Smuggling of Goods and Forex, the share of contraband cosmetics and toiletries in the domestic market has experienced a threefold year-on-year increase since the ban came into effect last year. Most of these smuggled products are fake and of very low quality,” Hamid Moqimi was also quoted as saying by Fars News Agency on Saturday.

The official noted that before the ban, imported and domestic products made up 60% and 40% of the market respectively, but after the ban was imposed, imports of raw materials were also banned.

Moqimi, who is also the chairman of the Iranian Association of Cosmetics, Toiletries and Perfumery Importers, said earlier this year, the ban on imports of cosmetics and toiletries has killed 8,000 jobs since last year and is bound to cost thousands more.

“As of last year, the Iranian Association of Cosmetics, Toiletries and Perfumery Importers included 250 companies, which had 20,000 people on their payrolls and indirectly supported 50,000 jobs. However, the Ministry of Industries, Mines and Trade threw them a curve on May 21, 2019, when it introduced an outright ban on imports of cosmetics and toiletries. So far, these companies have laid off 8,000 of their skilled workers,” he said.

"Before the imposition of the ban, all imports were carried out without the need for government spending subsidized foreign currency. Imports were also subject to a 26-36% customs duty; a good part of tax revenues on imports of cosmetics and toiletries were spent on the import of hearing aid. The government has denied itself this revenue now that it has handed the market to smugglers.”

Given the advanced technology employed in the production of cosmetic and toiletry products, Moqimi said, domestic production is facing serious challenges.

“However, over the past two years, importers were intent on pursuing production by forming partnership with well-known international brands, despite sanctions,” he said.

“I dare say the remaining 12,000 jobs in this sector will disappear down the road, if the government fails to fix current rules and regulations regarding commerce. Insurance companies are not financially capable of supporting the unemployed population. Trade bans over the past year, as officials have acknowledged, have done little to improve production. On top of that, according to the Headquarters to Combat Smuggling of Goods and Foreign Currency, ban on imports have helped increase smuggling 3.5-fold.

Moqimi further said that by allowing the legal import of cosmetics and toiletries, the foreign currency that is now circulating in contraband market would be directed toward legal imports and consequently job creation.

“In addition, public health will be safeguarded and we won’t be forced to incur costs of diseases that are attributed to the use of smuggled, fake products,” he concluded.