Import permits for mobile phones?

Get this. The latest issue of The Edge Malaysia reported that M Dot Mobile Sdn Bhd (M.Mobile) has proposed to the govt to allow it to collaborate with Sirim Bhd to develop a Malaysian standard for imported phones. In essence, they want mobile phone distributors to apply (and pay a fee) for import permits.

How did this ingenious proposal came about? M.Mobile to-date has yet to sell a single mobile phone and had posted a net loss of RM550,000.00 for the five months ended November 2005, while its shareholders' fund stood at RM155,205.00. Enter second boarder Kosmo Technology Industrial Bhd, an auto parts manufacturer aspiring to create a local mobile phone maker to rival Nokia and Motorola with the acquisition of a 30% stake in M.Mobile for RM11 million.

And how does Kosmo propose to compete in this lucrative business where 5 million phones were sold in Malaysia last year (and none whatsoever by M.Mobile)? By going NEP lah!

Kosmo's rationale is that all the 5 million phones sold last year were imported, resulting in a capital outflow of at least RM2.5 billion. This excludes the rest brought in by unauthorised dealers, the so-called grey imports which are estimated to be about 40% of all phones sold locally. By imposing stricter rules on the import of mobile phones, Kosmo was hoping to get a decent slice of the market and at the same time, in the spirit of Malaysia Boleh, prevent such a huge outflow of money from taking place yearly. Gosh, even if it couldn't sell a single phone, it could make some quick bucks from the processing fee imposed on import permits. Assuming the fee is RM10, this will generate RM50 million annually (based on last year's mobile phone sales figure), assuming again that the money goes to M.Mobile, the gatekeeper of the Malaysian standard for mobile phones.

Of course, this is still peanuts compared to the kind of money those guys get from the Approved Permits for imported cars. This clever idea though should give some other businesses in similar desperate situations the cue to look for the right solution in overcoming their sorry state of affairs. If you can't compete on decent terms, what's stopping you from cornering the market by the almighty and favourite tool of trade in Malaysia?