Sci & Tech

A Billion Dollar Market

A Billion Dollar Market
A Billion Dollar Market

Despite measures by the Iranian government in recent years to stem the growing tide of smuggled cellular phones into the country, a new announcement by a top official says illegal imports now amount to a billion dollar market.

In a report that quotes an official from the Economic Monitoring Coordination Committee, which works with the government and Iran’s Customs Administration, illegal imports of mobile phones now equate to 78% of the entire mobile phone market, Zoomit writes.

The committee quotes a number of reasons for the persistent growth of illegal imports, noting that fluctuations in the exchange rates were the main cause, stressing that contraband electronics are smuggled through both land and sea borders.

According to Alireza Golestanizadeh, assistant director of the committee, the total value of this illegal market now exceeds $1.8 billion.

“In 2014, more than $700 million of unpaid taxes from retailers and importers would be the equivalent of three ministries’ budgets for the year,” he said.

Golestanizadeh said that due to the never-ending suitcase imports of mobiles and accessories, the cost to the national coffers is unsustainable.

“Organized gangs on the borders have taken advantage of Iran’s large size and geographic location,” he said.

The official noted that the ultimate losers are customers, as smuggled phones, although cheaper, carry no company support like warranties or repair services. He also said fake phones, made in China, are a worrying growing trend, as they could pose dangers to phone users.

Golestanizadeh also noted that a new mobile phone registration system is now in its initial phases.  

The deputy also responded to criticisms from some government circles blaming the committee for the increase in contraband phones.

“One way to reduce the impact of smuggled mobiles would be to sign up with international corporations to produce phones inside the country instead of importing them. Countries such as Turkey, Ukraine, Azerbaijan, India, Egypt and Columbia have enacted such a policy,” he said.

Golestanizadeh announced that currently over 138 million registered telephones are in use in Iran, confirming previous reports that a majority of people still carry two phones.

 Annual Sales & Imports

The comments come as the year-on-year imports of cellular phones fell 17% during the first five months of the current Iranian year (started March 21), according to Iran Customs Administration.

During the first five months of the year, $103 million worth of mobile phones have been imported which, factoring in the fluctuation of rial against the US dollar, translates into a 2% decline in value.

For the month ending August 21, Iran imported $12.5 million worth of mobile phones while the same figure for last year stood at $19.5 million.

Officials noting the decline in official imports have begun discussions to counter the threat of the contraband electronics through measures such as cutting off reception to smuggled phones via the phones’ registered IMEI numbers.

The International Mobile Station Equipment Identity number is usually used by network providers to identify valid devices and can help prevent stolen or illegal phones from being used. Thus, all phones must be registered on the network with phones having the ability to be blocked by the country’s networks.

In September, Masoud Karbasian, head of Iran Customs Administration, announced that a new law might be implemented in a matter of months to block non-registered phones.

“The codes for legally imported phones are available with the customs administration and those not registered can be cut off from the network,” he said.