According to Ebrahim Naqdi, a senior official with the Islamic Republic of Iran Customs Administration, a shipment of 420 containers of Bosch home appliances worth €12 million entered Shahid Rajaee Port in Bandar Abbas in the year ending March 2019, the same year the government banned the import of non-essential, luxurious goods with domestic counterparts (Group IV products) to prevent the outflow of forex resources.
“The importer filed a complaint with the Court of Administrative Justice against the Ministry of Industries, Mining and Trade and the Islamic Republic of Iran Customs Administration, and wins the case in a lower court. The appellate branch of the court, however, ruled in favor of the customs administration,” he was quoted as saying by IRIB News.
Naqdi noted that IRICA only follows the policies set by the government.
“Since the country needs foreign currency resources to increase the import of essential goods, the administration won’t allow the import of non-essential goods,” he added.
In related news, Abbas Hashemi, secretary of the Association of Household Appliance Industries of Iran, has written a letter to Industries Minister Alireza Razm-Hosseini, expressing concerns regarding the likelihood of the cargo’s customs clearance, ILNA reported.
“The supply of forex for importing raw materials is of higher importance. Home appliance manufacturers are facing challenges related with the procurement of raw materials, US sanctions and the outbreak of coronavirus. Under the circumstances, the clearance of international brands of appliances would an unfair blow to home appliance industry,” he said.
Rising Costs
The average price of steel has increased by 212% from March to October, Hashemi said, adding that copper and aluminum prices have also risen by 150% during the period.
“Raw materials of home appliance industry are calculated based on global prices and foreign exchange rate. Therefore, how can you expect the 25% rise in the price of appliances approved by Iran Consumers and Producers Protection Organization earlier this year to be sufficient to meet the production costs?” he was quoted as saying by IRIB News.
In June, CPPO issued a permit allowing producers of home appliances to raise their prices. Prices of audiovisual products are allowed to go up by 20% and other home appliances can implement a 25% increase compared with prices registered in the Iranian month ending Feb. 19, it said.
Until last year, which ended on March 19, 2020, imports accounted for 60% of household appliance market, Hamidreza Ghaznavi, the spokesman of Home Appliances Manufacturers Union, said.
“The sudden departure of international companies from Iran’s market due to US sanctions and problems related to the supply of raw materials are to blame for the lack of balance between supply and demand, and the rise in prices.”
Thriving Black Market
The rise in prices of home appliances, plus problems associated with the decline in supply, has prompted customers to approach unofficial markets that have developed across the country’s borders to the west and south, the Persian daily Etemad reported. In fact, the gap between supply and demand is filled by contraband home appliances and smugglers have overtaken licensed importers.
Baneh in the western province of Kurdestan is a well-known gateway for smuggled products for 15 years now. “Buying from Baneh” is one of the main Google trends now.
There are more than 50 websites dedicated to selling home appliances from Baneh. These websites are not filtered; various methods of purchasing and long-term warranty and after-sales services have been posted on these websites to ensure customers feel they are in the right place. By and large, the prices of products on these websites indicate a wide gap with those in official markets. They are all available and are sometimes offered on discount.
Bandar Genaveh in the southern province of Bushehr is another gateway to smuggled home appliances. Close to 30 channels on Telegram messaging app encourage customers to buy cheaper, high quality home appliances.
For example, a washing machine of an international brand is valued at 70-100 million rials cheaper in Genaveh compared with Tehran’s online or bricks-and-mortar shops. You can find a variety of such offers in Qeshm and Daragahan in Hormozgan Province.