Mobile Industry in the Dark on Plans for New Import rules

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(BLOOMBERG/NORM BETTS)

The government is unilaterally working on a new regulation that would affect business deals between mobile phone principals and their importers, as shown by the unawareness of most industry players.

The new regulation, which will supplement a trade regulation on imported goods, is expected to broadly affect the robust growth of mobile phone sales in the biggest economy in Southeast Asia.

With the intention of guaranteeing the originality of gadgets in the market and curbing illegal imports, the government would require mobile phone importers to obtain import permits from the brands’ principals, in addition to sourcing imports solely from the brand holders.

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In an already saturated market where SIM card penetration is at 120 percent of the total population, mobile phone imports only grew by 2 percent to 44.8 million units last year, according to research by PT Sucofindo and PT surveyor Indonesia, with a total value of US$1.92 billion.

Budi Darmadi, the Industry Ministry’s director general for high-technology priority industries, said the regulation would enable the government to monitor mobile phone imports more effectively.

“The concept behind this regulation is also to encourage the manufacturing of medium-to-low-end mobile phone models in Indonesia,” he added.

The regulation is slated for completion this month or June, by the latest. Yet, players in the mobile phone industry say that they were not fully aware of this regulation.

PT Samsung Indonesia spokesman Willy Bayu Sentosa said that he has not received information on the matter.

Indonesia Cellular Phone Provider Association (ATSI) secretary-general Ann Gusnayanti said there were no meetings yet with the ministry to discuss the issue.

Similarly, Ardo Fadhola, the country product manager for PT Research in Motion Indonesia, said that he had not received exact information on the regulation either.

“What I can say is that we have appointed three official distributors for Indonesia,” he said, adding that the company and the distributors have already complied with existing regulations.

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“We have also guaranteed that whomever buys our products from these three distributors would be entitled to our after-sales service,” he said.

Djatmiko Wardoyo, the spokesman for PT Erajaya Swasembada, also said that he had yet to fully understand what the new regulation would entail.

However, he added that the regulation would most probably compel the company, whose three subsidiaries hold licenses over 11 global mobile phone brands, to reorganize the way they conduct business.

According to Djatmiko, if the regulation would order one company to hold one brand only, the company must then create additional subsidiaries, given that a subsidiary could hold up to five different mobile phone brands.

Their subsidiary, PT Teletama Artha Mandiri (TAM), for example, holds licenses for Samsung and Research in Motion, among others.

Erajaya went public last year. Their revenues went up to 221 percent to Rp 317 trillion (US$34.24 billion) in the first quarter of 2012 from Rp 989.2 billion in the same period last year following the acquisition of TAM.

Djatmiko pointed out that the cost of setting up these new units would be “insignificant” when compared to the effort they would have to put into renegotiating licenses between these new units and the principals.

“There should have been a three-party discussion between the government, distributors such as Erajaya, and the principals of the brands,” he said. (Mariel Grazella/The Jakarta Post)

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