LG welcomes VAT waiver on handsets

June 18, 2009

, NAIROBI, Kenya, Jun 18 – The removal of Value Added Tax (VAT) on mobile phone handsets is set to significantly reduce the number of counterfeit phones in the local market, an electronics player has said.

LG Electronics Regional Marketing Manager George Mudhune told Capital Business that the VAT exemption which was recently announced in the budget evens out the playing field and renders trading in counterfeits irrelevant and uneconomical.

“Counterfeits were previously having a foothold in the market because most importers were avoiding paying the 16 percent VAT. This is the difference that was reflected at the shop level. But now that it has been removed, it makes no business sense for anybody to be in counterfeit,” he explained.

It is estimated that about 60 percent of the phones in the country are fakes but the manager expects that this grey market will eventually be wiped-out.

“We anticipate that the grey market will die. With the 16 percent gone, counterfeit days are outnumbered,” he enthused.

Mr Mudhune said that the move would also see the prices of mobile phones including those for the high-end market come down significantly making them more affordable to Kenyans.

While pointing out that the mobile phone has not only become an essential communication tool but also a way of life for many Kenyans, the marketer said they were keen on developing handsets that would enable their customers fully utilise the potential presented by the landing of fibre optic cables in  the country.

He spoke after the launch of three of LG’s touch screen handset models, which he said gives consumers the opportunity to enjoy this technology at competitive rates.

The new range includes ‘Renoir KC910’, ‘Arena KM900’ and ‘Cookie KP500’ each of which has a unique technological feature and is GPRS network-enabled to allow customers take advantage of high and cheaper internet access.

During the function, LG Chief Executive Officer for Middle East and Africa region Ki Wan Kim said they would soon launch a call centre from where they would serve their customers better. Sh8 million would be pumped into the facility, which is set to be operational by August this year.

“Through the centre, consumer inquiries on sales and support concerning all LG range of products will be addressed,” he said.

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