Local handset production booming

It is heartening to note that Bangladesh is emerging as a mobile phone handset manufacturing hub. Not too long ago, Bangladesh was a net importer of mobile handsets. Thankfully the scenario has changed. According to a report published in The Business Post on Tuesday, locally manufactured handsets are meeting as much as 70 per cent of the local demand. Policy support from the government and innovative initiatives of the local manufacturers have created a favourable environment for mobile device manufacturing in Bangladesh. Stakeholders point out that sound policies have been introduced to encourage domestic production, while the introduction of tariffs has made imports less than lucrative.

The business of mobile phone manufacturing is a Made in Bangladesh success story. Bangladesh started manufacturing handsets less than five years back, in October, 2017. The first handsets with the Made in Bangladesh tag hit the market in early 2018. In a relatively short period the sector has made remarkable progress. There are 15 manufacturing plants in Bangladesh, producing around 3.42 crore handsets. One more plant is planning to launch its operations shortly. Three more plants are awaiting approval to join the burgeoning industry. According to the TBP report, the current market size for Bangladesh’s mobile handset industry stands at around Tk 10,000 crore. The industry currently employs around 15,000 people, and this figure will increase to 25,000 at the end of 2022. So everything looks hunky-dory for the industry, which has the potential to grow further in the coming years. 

What is more encouraging is the fact that Bangladesh, in all likelihood, will be a significant exporter of locally made handsets. In fact, according to industry insiders, for the sector to grow, Bangladeshi phone makers need an export nudge. We believe that import substitution is not a good model for Bangladesh. To grow, the sector needs to boost exports. Posts and Telecommunications Minister Mustafa Jabbar told this newspaper, “We are well on our way to becoming an exporter of the commodity.” Already Walton – which began assembling phones for a foreign brand for export – dispatched its first shipment delivered to the USA in 2020. Walton handsets are being exported to neighbouring Nepal as well. Symphony is currently exporting “Made in Bangladesh” tagged mobile phones to Nepal. The brand has targets to reach four other countries – Nigeria, Sudan, Vietnam and Sri Lanka – in the next five years. Other companies are keen to follow suit and preparing to enter the global market. With the LDC graduation round the corner, Bangladesh’s export diversification needs cannot be overemphasized. Mobile handsets are a welcome addition to the country’s export basket. 

We appreciate the government for the effective policy support it provides to the sector. The report states that local manufacturers pay five 15 per cent tax on raw material imports. In comparison, handset importers pay 38 per cent tax. The tax benefits have offered lucrative incentives to global brands for making them invest heavily in this sector. There is a price gap of 15 to 26 per cent between imported and locally assembled smartphones, which encourages the entrepreneurs to get involved in the sector.

The government has to extend more policy and fiscal support to other potential export sectors like this sector.

According to pertinent observers, the industry is facing some challenges. The sheer volume of illegal handsets is alarming and is impacting prices. So the consumers are not getting the full benefit of locally-made sets. The authorities concerned should take adequate measures to eliminate the counterfeit device market, providing a level playing field for the Bangladeshi handset manufacturers.

A sprawling mobile phone ecosystem would benefit other electronics categories as well since a smartphone is at the heart of electronics, be it displays or batteries. Bangladesh has an opportunity to become a player in a global industry worth over half a trillion dollars. So far, the sector’s progress has been swift and effective. With continuing consistent policy support, Bangladesh can have a robust tech-oriented sector that can inspire similar industries.