Policy changes disrupting for car importers

Local car dealers tired of losing money due to frequent and erratic policy changes regarding imports blame the government for creating an unstable market.

Since allowing imported vehicles into the country in 2011 as part of nationwide reforms, the auto sector has seen gradual and sweeping policy changes aimed at regulating the market, while attempting to protect consumers from outdated and unsafe vehicles.

Where experts believe such changes are a necessary part of an evolving trade, the pace of reforms has been swift and car dealers are unable to keep up, resulting in a number of financial and logistical issues that result in dealers often winding up with huge losses.

“At first, policies changed step-by-step and then the government let everyone import vehicles. We didn’t expect that to happen when it did and we had some losses,” said Ko Nyi Nyi Zaw of Shwe Baho car importers.

Over the past three years, the government has imposed a number of new tariff reduction and subsidy programs geared at getting older cars off the roads and although car owners saw an opportunity to save or even make money, dealers claim they are not made privy to such changes – often announced through the state media.

In June 2012, owners of cars bearing licence plates 20 years or older received a registration fee reduction of 40-60 percent when importing a newer vehicle. Three days later, the prices of import licences decreased 15pc, undercutting orders by dealers made beforehand.

The import substitution scheme was originally implemented in September 2011, driving up the demand for cars with older plates, however the program was suspended in May the following year. Upon speculation of the launch of a similar program, potential car buyers withheld from purchases, driving down sales.

Shortly after the scheme was cancelled, a separate import program was implemented that allowed anybody with at least US$10,000 in a state-run bank to import a car made in 2007 or later, causing a flurry purchases, while driving down the demand for older cars.

“I think the government’s policy changes have been positive. But they don’t give us enough time to prepare,” said U Soe Htun, chief executive at local dealership Farmer Auto. “We want the government to announce policy changes three months in advance as it takes us about two months to ship cars to Myanmar.”

“The change in CIF [Cost, Insurance and Freight] rates was the third change. We would like it to be constant. If the importers know the CIF price in advance, they can manage their money, but now the CIF price has been increased for some models and decreased for others,” said Ko Khant Win of ASE Auto.

“We can’t guess what the prices will be later this year or next year … If the market is unstable because government policy is unclear, rumours can make things worse,” he said.

More than 231,608 cars entered Myanmar ports between 2011 and the end of 2013, according to data by the Myanma Port Authority.

Source: Myanmar Times

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