The Vice President of Myanmar Automobile Manufacturers and Distributor Association (MAMDA) has called for an effective consignment scheme to be imposed on automobile imports.
A traditional automobile consignment scheme is a credit system that eases the financial burden placed of the importer by collecting payment for the car only after the vehicle is sold to the end consumer.
In Myanmar, automobile importers are kicked in the shins by an upfront, 100 percent value added import tax depending on the size of the vehicle’s engine. This tax imposes a financial strain on car importers and makes foreign investors cautionary.
“Attracting foreign investors into Myanmar automobile market has many hurdles. A vehicle that costs K1 to 2 million in Japan is imported to Myanmar, where because of the lack of an effective consignment scheme or efficient import procedures, undergoes a laborious series of import fines and taxes that leaves the vehicle with a massive price increase,” MAMDA’s Vice President U Yan Myo Aung, CEO of Unity Land Automotive Co., Ltd, said.
Unstable automobile policies cause hesitancy among foreign investors who ultimately shy away from engaging in Myanmar’s automobile industry.
The USDP-led government introduced a trial-run consignment scheme for vehicle imports 6 years ago to little success.
The Ministry of Commerce instituted a consignment trial run between 2011 and 2015 for imported vehicles from 2001 to 2005. Because the sell-by date expired in December, the Ministry extended the date for an additional six months giving car dealers a grace period to sell the 2011-15’ models they’ve yet to move.
“The consignment system could be an effective tool to revive and support a struggling industry,” he said.
At present there are very few consignment systems in Myanmar’s automobile industry. The lion’s share’s of showrooms are paying the full value of the car in various import taxes before the tires ever touch asphalt.
Source: Myanmar Business Today
