Ministry targets cellphone prices by changing import rules on refurbished devices

The Economy Ministry on Wednesday announced new import rules that would make it easier to import refurbished cellular phones, which it hopes will bring down prices for new and expensive devices.

“Opening import barriers in a variety of areas is incumbent upon us in order to create competition, to expand the variety of products and allow the consumer to enjoy a variety of prices,” said Economy Ministry Director-General Amit Lang.

Israel imports roughly 3 million new cellular phones a year, with an import value of about NIS 3 billion.

But until now, Israel was not able to import refurbished phones.

When, for various reasons, a cellular contractor or phone manufacture gets an old phone back, either because it is returned, a contract ends, or as part of a trade-in program, they often refurbish them, replacing some of the worn and used parts and making the device – for all intents and purposes – as good as new (or close to it).

The refurnished phones are then sold at a discount.

If the introduction of a less expensive option manages to reduce prices by even 1 percent, Lang noted, that could amount to millions in savings for Israeli consumers.

The new standards specify under what circumstances refurbished phones will be allowed onto the market, an attempt to ensure that false refurbishments and potentially dangerous unauthorized replacement parts (such as batteries) do not flood the market.

“We are committed to protecting, though barriers, the public’s safety, but as long as a barrier is not for that purpose, we will get rid of it,” he added.

Israelis pay significantly more for cellular phones than in some other countries. For example, Israel’s Partner Communications Company Ltd. cells the latest iPhone 6S 64 gigabyte model for NIS 4,479, about $1,160, or $991 before the 17% Value Added Tax. In the US, the same model costs $749 before tax. Without the taxes, that amounts to a 32% difference.

Part of the price difference stem from customs duties on electronics, but the Economy Ministry is hoping that some good old-fashioned competition will have an effect as well.