LCs Ban Pushes Some Entities towards Importing Smartphones Illegally in Pakistan

The Federal Board of Revenue (FBR) in Pakistan has released a report revealing the illegal import of smartphones worth $7.19 million. The mobile phones were imported without the opening of letters of credit (LCs) or utilizing any banking channel. It is in clear violation of an unannounced ban imposed by the State Bank of Pakistan (SBP).

Between December 2022 and February 2023, 52 Goods Declarations (GDs) valued at $8.65m were cleared to import mobile phones, which were brought in Completely Build Units (CBUs). Shockingly, only $1.46m of the total amount was paid legally through the banking channel, while $7.19m was illegally transferred out of Pakistan.

While the FBR report didn’t detail how payments were made to suppliers in Dubai for the illegal imports, the Pakistan Telecommunication Authority (PTA) has stated that more than 190,000 mobile phones in CBU condition were imported by manufacturers, who used a facility allowed to them.

Despite the banking sector’s import restrictions, some companies continue to import mobile phones under their manufacturing licenses. The import of smartphones surged significantly after over 30 manufacturing units in Pakistan halted production, citing the import restrictions.

A country’s economy can suffer as a result of illegal phone imports. As import fees and taxes are not paid on these items, it results in a loss of money for the government. Legal importers who comply with import laws and pay tariffs and taxes may be susceptible to unfair competition as they will have to pay more money for importing the phones.

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