The government has backtracked again on its earlier decision to disconnect the illegal handsets from the mobile-phone network much to the frustration of the local manufacturers and assemblers.
The telecom ministry at a recent high-level meeting took the decision, meeting sources said, allowing new handsets - be it legal or illegal - will automatically be registered with the National Equipment Identity Register (NEIR).
The decision comes only a couple of months after the state minister for telecommunication insisted on disconnecting illegal and smuggled handsets from the system, and amid the telecom regulator's public notice to launch its drive in this regard in July next.
With the latest move, the initiative to restrict illegal handsets was thwarted twice since the introduction of the NEIR in July 2021.
The mobile handset manufacturing industry has expressed frustration over the decision, terming it is a hopeless and destructive move that may drive away foreign investment from the local industry.
The ministry sources, however, said the legality of handsets and evasion of tax would be looked after by the law enforcing agencies and the National Board of Revenue (NBR).
Immediately after taking charge in January last, State Minister for Posts, Telecommunication and ICT Zunaid Ahmed Palak repeatedly stated that the government would ban the illegally imported or unregistered handsets to help strengthen the local digital device manufacturing industry.
"Seventeen smartphone assemblers are already operating in Bangladesh, creating 50,000 jobs. Stopping illegal imports would protect them, help attract investments, create more jobs and better law enforcement," he said.
Bangladesh Telecommunication Regulatory Commission (BTRC) also issued a public notice in January last, saying that the regulator would start disconnecting all illegal handsets from the system from July next.
The BTRC has taken steps to initiate full-fledged operations of the NEIR system to ensure revenue collection by preventing the use of illegally produced or imported mobile phones and theft, and restricting unauthorised use.
It said that unregistered mobile phones will be disconnected soon and urged the users to check the validity of the handsets before buying it.
It was advised that if the illegal mobile phones remain active, the users will not be able to avail any services on their SIM cards, such as mobile data usage, making or receiving calls.
So what happened as of now, Rizwanul Haque, vice president of the Mobile Phone Industry Owners' Association of Bangladesh, expressed his frustration saying that it seems the smugglers are more powerful than the industry.
The local industry and production would be doomed if the government keeps allowing illegal handsets in the gray market, he said.
Mr Haque also said that they are aware of the ministry decision and would keep pursuing the government for taking action to deactivate the illegal handsets.
Domestic mobile-phone manufacturing hit a seven-month low in January 2024 with factories operating at a 50-60-percent capacity.
As key reasons for the slump, industry insiders cited erosion in customers' purchasing power amid high inflation and a growing grey market for mobile handsets.
According to the latest BTRC data, local manufacturers produced 1.89 million units in January 2024, down from 2.32 million in July 2023 and 4.14 million in January 2022.
The decline coincides with an increase in the grey market sales, with imported mobile phones returning after a one-month break.
In December 2023, Bangladesh imported 10,009 units - all equipped with 4G or 5G technology. No feature phones were imported during this period.
Industry insiders also blamed stubbornly high inflation, a weakening of Taka against the US dollar and an unfavourable tax structure on components of mobile phones for the disappointing smartphone production figures.
The BTRC launched the NEIR system on July 1, 2021, aiming at ensuring receiving and delivering different government services by registering the handsets tagging with the National Identity (NID) cards and registered SIM, increasing revenue collection by stopping use of illegally produced/imported mobile phones, preventing stealing and illegal use of mobile phones and helping the law enforcement agencies for the interest of the national security.
The move was meant for combating the grey market by linking smartphones' international mobile equipment identity (IMEI) numbers with users' national ID and SIM card details, effectively rendering unauthorised devices unusable in local networks.
However, it was later suspended after a few days in 2021, letting the grey market flourish unabated.
Around 50-60 per cent of the local demand for handsets is met by unofficially imported phones, according to Mohammad Mesbah Uddin, chief marketing officer at Fair Electronics. He labeled the unofficial imports a serious threat to the country's thriving mobile phone manufacturing sector.
The mobile phone industry has seen remarkable growth in the country since 2017, riding on the tax incentives. Seventeen factories have been established, creating a significant number of jobs.
Talking to The Financial Express, Mr Uddin earlier warned that unless the government steps in to control the grey market, domestic manufacturers may be forced to scale down operations further or even shut down entirely.
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