While some domestic brands are currently dominating the local market, many top foreign brands have begun manufacturing handsets by establishing factories in the nation.
By capitalizing on the expanding market, both domestic and international companies have begun to reap the benefits of establishing mobile phone manufacturing facilities in Bangladesh. In spite of a sharp decline in imports, “Made in Bangladesh” handset output and sales are rising quickly.
The majority of Bangladesh’s demand for smartphones and feature phones is being satisfied by locally produced handsets from a dozen small and big factories.
Numerous renowned international companies have opened facilities in the nation to begin producing mobile devices. Due to their production of handsets at competitive rates, some domestic brands are currently dominating the local market.
Due to their local manufacturing, consumers can purchase high- and medium-configuration phones at reasonable prices. Additionally, low-budget customers can also fulfill their wish to use smartphones, say industry experts.
The last few fiscal years’ import and production statistics demonstrate that imports are steadily falling while domestic production of phones and phone assembly is rising.
Numerous phones continue to enter the nation unlawfully, though. Entrepreneurs and importers have occasionally claimed that the phones brought into the country in compliance with the baggage regulation are harming their industry.
Data from the Bangladesh Telecommunication Regulatory Commission show that three years ago, imports and domestic outputs were equal. But as local factories increased production, imports steadily declined.
Ten million of the 45 million phones that were sold during the fiscal year 2021–2022 were imported. 35 million sets were produced at facilities across the nation.
The first half of the current fiscal year saw the production of 12.91 million handsets in Bangladeshi manufacturers. Only 50,000 mobile phones were brought into the nation during this time.
In 2022, more than 31.47 million mobile phone handsets were produced, with only about 306,000 shipped. Less than 1% of the overall number of devices were imported handsets.
Local manufacturers are completely satisfying the local demand, according to those involved in the sector, by utilizing the tax and duty benefits provided by the government under the Made in Bangladesh campaign.
According to Mohammed Mesbah Uddin, chief marketing officer of Fair Electronics, a regional affiliate of the South Korean company Samsung, Bangladesh is now almost self-sufficient in the manufacturing of mobile phones.
The local supply has been able to meet almost all of the demand in the past six months, so not many handsets have been shipped.
However, industry sources claimed that the high cost of dollars and the requirement of a 100% cash margin for establishing letters of credit to control imports are also significant factors in the decline in imports.
THE POLICY OF “MADE IN BANGLADESH” OPENED THE DOOR
The policy for production with a 30% value added in the nation was implemented by the government in 2017.
As a result of the policy, which saw a rise in tariffs on imported phones, 14 companies, including Samsung, Walton, Nokia, Symphony, Xiaomi, Oppo, and Vivo, opened factories here.
According to the most recent statutory regulatory order statistics, a total of 58.6 percent duty—including 25 percent customs duty, 15 percent value-added tax, 5 percent added tax value, 3 percent regulatory duty, and 2 percent advance income tax—has been imposed on the importation of mobile handsets.
On the other hand, local manufacturers must pay 18% tax, which includes 10% customs duty, 5% VAT, and 2% AIT, for production-related imports.
IMPROVEMENT OF LOCAL VALUE
Despite initiatives to fully localize production, factories still produce phones by importing the majority of crucial components from overseas and assembling them.
Many of these components are now being made locally in some factories. Also produced locally are batteries, casings, and other components.
According to Mesbah, the addition of local value differs between handsets and brands. In industry jargon, “what most makers do today is referred to as assembling and PCBA (printed circuit board assembly).”
Worldwide, this procedure is also known as Complete Knock-Down, or CKD.
According to Md. Rezaul Hasan, executive director of the Walton Digi-Tech business intelligence section, local and foreign brands can still satisfy the requirement for 30 percent value addition to obtain Made in Bangladesh facilities through CKD and PCBA.
He claimed that Walton manufactures various additional components, such as headphones, charges, and batteries.
THE PILGRIMAGE
In FY18, BTRC approval was granted to Walton Digi-Tech Industries Ltd. and Fair Electronics Limited for the Samsung and Walton brands, respectively.
The approval for VIVO was granted to Best Tycoon (BD) Enterprise LTD, while Symphony was granted to Edison Industries Ltd, Winstar and Titanic to Anira International Ltd, and Itel, Tecno, and Infinix to Carlcare Technologies BD the following year.
The following year, Grameen Distribution Ltd. for the Lava and Maximus brands and Benli Electronic Enterprise Co. Ltd. for the Oppo and Realme brands each got the BTRC certificate.
The license to make Nokia phones was then granted to Bright Software (BD) Ltd during the 2020–2021 fiscal year.
For the fiscal year 2021–2022, Mycell Technology Limited, DBG Technology BD Ltd, and Linux Technology each obtained licenses to produce mobile devices under the Mycell, Xiaomi, Bengal, and Marlax brands.
After receiving the license, many began producing phones by establishing plants close to Dhaka. However, due to a lack of technical and production capacity, local businesses must catch up to international brands.
Jakaria Shahid, managing director of Edison Group, recently asserted that unless foreign companies are prevented from marketing inexpensive phones, domestic brands will not be able to live.
In addition, he claimed that if more businesses entered this industry, everyone would lose money. As a result, he thinks that the business needs to be under control.
According to BTRC Chairman Shyam Sunder Sikder, the government would continue to watch the sector. A new strategy will then be implemented to maintain order in the industry.