Gray market in mobile phones booms in Nepal

Shashi Dhungel

Kathmandu, May 1:

Despite cellular mobile phones having been introduced in Nepal five years ago, its development till date shows utter confusion.

With not a single authorised dealer for any brand, it is anybody’s guess how the 130,000 odd subscribers have managed to procure their cellphones. The absence of any dealer clearly

indicates how disorganised the market is. It also leaves it wide open for all sorts of smuggled products. Not to mention, the huge amount of revenue the government should have collected from the sale of handsets through legal channels.

In this backdrop, the poor consumer is left to fend for himself and try his luck with all sorts of shady dealers.

To prevent just this kind of a scenario and illegal import of handsets, the ministry of information and communication (MoIC), Department of Revenue Investigation (DoRI), Inland Revenue Department (IRD) and Nepal Telecommunication Corporation (NTC) on November 11, 2003 had made a decision to make Value Added Tax (VAT) bills mandatory for the issuance of sim cards. The buck was clearly to have stopped with NTC who was supposed to have refused customers sim cards in case they failed to produce a VAT bill for their handsets.

But the NTC spokesman, denied any such responsibility. Pramod Kumar Gurung, acting

director at new service directorate said, “It is not the duty of NTC to see whether a set is bought legally or illegally and ask for VAT bills. Moreover, how would we know whether a VAT bill is original or not?”

The other government department concerned with the issue, the Department of Custom (DoC), informed that only 132,970 telephones have been imported into Nepal under the generic category of ‘telephones’ in 2002-03. This figure, therefore incorporates the number for plain old telephones (POTs), cordless sets as well as mobile handsets.

Inland Revenue Department (IRD), the nodal agency for collecting VAT, does not have any specified data on how much VAT has been collected from the sale of cellular mobile sets. “Businessmen fill VAT forms on gross sales made in a particular month, which includes all the products,” said Rana Bahadur Shrestha, deputy director general at IRD.

“Unless a customer asks for a VAT bill, we do not give it. If a customer wants a VAT bill, he has to pay eight per cent extra,” said a shopkeeper in New Road, on conditions of anonymity.

The use of VAT bills is so rare that some shopkeepers don’t even have such bills.

DoRI has claimed to have conducted some raids at the custom office located at the Tribhuwan International Airport and different shops at Bishal Bazaar, to stop sale of smuggled mobile sets. “We can not keep a tab on every shop on a daily basis. A clear-cut policy is needed to stop the smuggling of mobile handsets,” said Deep Basnyat, deputy general at DoRI.

Deepak Ranjit, superintendent of police, commenting on the problem said, “The police conducts raids whenever it is informed about irregularities. The police is not responsible for conducting such raids on its own. It helps whenever a concerned department asks for assistance.”

While the gray market for cellular handsets keeps flourishing in Nepal and unscrupulous

operators have a field day, the users consider themselves lucky for not having to pay the added money for VAT.