Despite the fact that IT and Telecom industry in Pakistan is developing over the years, it has also been facing many hurdles on its journey of expansion. One most serious obstacle to this growth is the grey mobile market of Pakistan. Grey mobile market sells mobiles which do not have type approval/Certificate of Compliance (COC) issued by Pakistan Telecommunication Authority. The type approval process also ensures the imported handsets conform to quality standards specified by PTA. The sets sold in the grey market are smuggled into Pakistan, without paying customs duties/taxes and could be of inferior quality. The Looming Danger of Grey Mobile Market in Pakistan.
Grey mobiles are available in plenty, especially at shops located in rural and suburban areas where law enforcement is difficult due to the shortage of human resource required for the purpose.
The Looming Danger of Grey Mobile Market in Pakistan
Grey phones are popular because of the low price, but unsuspecting buyers may be tricked by the dealers who replace some of the original parts with replicas or substandard/cheap ones. Another disadvantage of buying non-type approved mobiles is that there are no warranties. Genuine dealers sell type approved, and duties paid devices and are bound by rules and regulations to provide after sales service and warranty.
Some of these illegal phones do not have their identity numbers called IMEI. IMEI is very helpful for law enforcement. If an owner loses his phone or it is snatched by a robber, he can get it blocked through PTA helpline so that the robber or the one who finds it cannot use it. It also helps in tracing robbers, kidnappers, terrorists, etc.
As of now, illegal import of mobile handsets and smartphones remains a challenge for the PTA and customs authorities. To overcome the problem Pakistan Telecommunication Authority (PTA) has planned to launch a system called ‘Device Identification, Registration and Blocking System (DIRBS). The aforesaid system is designed to automatically detect and block stolen and non-type approved/without COC mobile phones working on mobile networks. The system will also result in the elimination of smuggled mobile and smartphones.
Pakistan is successfully becoming a tech-savvy nation with each passing year and has been now known to be a smartphone-rich country. In fact, many companies have now predicted that Pakistan can become a smartphone affluent nation in the near future. As of now, the statistics speak for itself i.e. according to a German research institute Growth for Knowledge (GfK) Pakistan stands on number 6 position for smartphone market growth. Pakistan had more than 40 million smartphones by end of the year 2016 and has a plentiful room to expand in the Smartphone/mobile industry but in the presence of grey market, the chances of growth seem meager.As reported by Pakistan Bureau of Statistics (PBS) the country spent $333.7 million on import of smartphones/mobiles in the first quarter of year 2017.
Additionally, telecom imports (which also counted in smartphones/mobiles) observed a rise by 19.03% in the same quarter of the year 2017. Increase in telecom imports by 19.03% was in comparison with the previous year’s imports. This explicitly shows that how promising this market has become but the smartphones/mobile market will only be lucrative for the economy if it is regulated across legal channels and not through the grey market.
No doubt, everyone is getting hurt by the effects of the grey market. This grey market has an adverse effect on the manufacturing business, the industry, and the economy. In the grey market, Mobile phones are sold at a lower cost than the cost decided by the company. As a result of it, the company’s profitability is affected. Other than that, the mobile phones in grey market do not come with a guarantee backed by the company. So, the customers cannot differentiate between the original and the duplicate product in a grey market. Mobile phones which are sold through grey channels result in major loss to the revenues because government misses out on the collection of taxes.
In the grey market, Mobile phones are sold at a lower cost than the cost decided by the company. As a result of it, the company’s profitability is affected
Grey products are a menace to the economy of a country because of huge revenue loss to the government in the form of tax loss. The loss is not only monetary, but it also costs the reputation and the image that is definitely graver than the monetary gains and losses. Putting an end to illegal products will face-lift the goodwill and image of the country. Mobile brands will then be more willing to invest in Pakistan, consequently creating more job opportunities for the citizens.