Policy silence hurts car import demand
The market for imported cars has been damaged by the government’s failure to provide direction on its import policy, according to showroom managers.
THE market for imported luxury cars has been severely damaged by the government’s failure to provide direction on its import policy, according to showroom managers.
Showrooms have been unable to import new cars for personal use, because the government in April told township officials in Yangon to stop issuing import recommendation letters, which are necessary to bring cars into the city for individual use.
The system of recommendation letters – which confirm the importer has enough room to park the vehicle or vehicles – was introduced by the previous administration, in a bid to reduce traffic congestion in the commercial capital.
Customers who ordered cars and paid a deposit at the start of the year are still waiting to receive the vehicles, said U Myo Myint Thein from Toyota Aye and Sons.
Many customers have complained and some have withdrawn their orders and asked for their deposits back, he said, even though the showroom has already ordered the cars.
“We really had a lot of trouble in July with customers trying to cancel their orders. We have thought a lot about how to solve the problem because we have ordered around 100 vehicles,” he said. “We have apologised to the customers and tried to convince them not to cancel their orders.”
The regulatory issue has mostly impacted the market for luxury cars, while cars for business use and machinery do not require a township letter and can still be imported.
Sales centres and showrooms have been hoping for months that the government will announce a new import policy, but so far they have been disappointed, said U Min Min Maung from Wun Yan Kha sales centre.
“Demand for personal imports is so low now in Yangon. We only have demand from other states and regions,” he said.
Parking recommendation letters are not necessary for imported vehicles registered to addresses in other parts of the country, which do not suffer from the same congestion problem as Yangon, said U Min Min Maung.
“If a person lives in Yangon, they must apply with a Yangon address, but this is now not possible, so some buyers have borrowed national identity cards from friends or relatives in other states or regions, to register the vehicle in that person’s name.”
However, he said using a car in Yangon that is registered in Bago, Mandalay or Nay Pyi Taw could give rise to legal problems in the event of an accident, because they cannot be legally registered in Yangon.
“This can be problematic in the long term,” he said.
Other customers are buying cars through a program introduced in 2011 that allows owners to turn in an old car in exchange for permission to import a new one, said Ko Aung Naing Htun from the Sakura sales centre.
“We are selling second-hand cars for business use, as before. Some customers want to buy these with a replacement slip, while others are selling their slips to car sales centres or other parties, because they have to pay a 20 percent tax on the import price, which they don’t want to do,” he said.
“Most people now prefer to buy cars registered in other states and regions, even though they cannot use their own name on the ownership documents. To change the name on the documents, they have to pay tax, which nobody wants to do.”
U Myo Myint Thein said he had heard that the government would allow car showrooms to sell new imports without the need for a recommendation letter. “We have heard that the government will remove the restriction for models built after 2014 but this may just be a rumour,” he said.
U Chan Mya said he did not mind waiting for the new policy to come out, as long as it does not change too often. The previous government changed import regulations more than a dozen times.
“We hope and believe that the government will come up with the best solution,” said U Chan Mya. “It is true that Yangon suffers from traffic congestion, but people also require cars. We hope the government can find the best balance between the two situations.”
In July, during an awards event for the bus industry, Yangon Chief Minister U Phyo Min Thein said a press conference on vehicle imports was in the works, but this has not yet happened.
U Myint Cho from the Ministry of Commerce’s vehicle imports supervisory committee told The Myanmar Times he had not yet received any official direction.
‘We really had a lot of trouble in July with customers trying to cancel their orders.’
U Myo Myint Thein Toyota Aye and Sons
Imported second-hand cars fill a parking lot at Thilawa port in Yangon.