Amid rapid network expansion and increasing SIM card sales from Myanmar’s three telecom players, legally imported mobile handsets are slim in number in a market overwhelmed by smuggled devices, a government official said.
Mobile handsets entering the country via air, sea or overland channels were previously subject to 10 percent custom tariff, 5 percent commercial tax and 2 percent advance income tax but the custom tariff has been cut to 5 percent this year to encourage legal imports.
However, the tariff cut has so far attracted more import licence applications while the numbers of legally imported handsets are not going up as expected, according to U Yan Naing Tun, director at the Central Committee to Control Illegal Trade.
“We have cut the custom tariff but the official imports are not rising,” he told Myanmar Business Today.
The government received import licence applications for 1.2 million handsets in 2013-14 fiscal year (FY) while 6.7 million applications have been submitted so far this fiscal, according to the Ministry of Commerce.
Most handsets enter the country through Muse-Mandalay route (from China) and Myawaddy-Yangon route (from Thailand).
“The total tax comes down to about K1,000 for each device, so people who import a high number of devices smuggle handsets through informal channels to avoid taxes,” U Yan Naing Tun said.
The Central Committee is preparing to handle the anticipated increase in illegal handset imports due to the recent launches of two international mobile carriers, Ooredoo and Telenor, in Myanmar.
As part of the process, mobile anti-smuggling teams (mobile teams) are operating in the town of Naung Cho to seize goods smuggled through Muse border trading station from China.
However smugglers are using water and train routes to bypass the government’s surprise checkpoints. To tackle that mobile teams have been deployed in Gaw Wain inland ports in Mandalay since the beginning of November.
According to the Ministry of Commerce, only 92,000 mobile handsets had been officially imported in the previous fiscal year while 132,000 mobile handsets have come through the official channel as of the end of August in the current fiscal.
The actual number of handsets in the domestic market is many times higher which can be attributed to smuggling. Mobile teams operating in Nyaung Khar Shea area of Bago region have seized 28,000 smuggled mobile handsets so far in this fiscal, according to the Committee.
Telenor has introduced one million SIM cards in Mandalay on September 25 before expanding its coverage to Nay Pyi Taw a week later, and to Yangon in late October. Ooredoo has also sold two million SIM cards since August, while the state-run carrier Myanmar Posts and Telecommunications (MPT) sold a million.
“The gap between the number of SIM cards issued and that of import licences for handsets is very large meaning the government is suffering high tax revenue losses,” U Yan Naing Tun explained.
The Central Committee has expressed its concern that increased availability of SIM cards will prompt further increase in smuggling activities of mobile handsets.
“Our store sources products from wholesale handset companies so these phones can be imported via all kinds of ways. I think in the market saturated with many stores and numerous models that keep getting outdated by new ones, many resort to informal trade channels,” Ko Wai Set, manager of Best One mobile store, told Myanmar Business Today.
Dr Pwint San, deputy minister for commerce, has recently said that the ministry will expand the mobile teams to curb illegal trade but currently illegally imported handsets are still dominating the market.
