Duty reduction on imported vehicle is policy somersault - Innoson chief
… rolls out IVM Connect, IVM 7-seater bus
Government’s plan to reduce import duties and levies on buses, tractors and other motor vehicles as contained in the recent 2020 Finance Bill will be a disincentive to investments, in addition to setting Nigeria’s automotive industry back by at least 10 years.
Chairman of Innoson Vehicle Manufacturing Company Limited (IVM), Innocent Chukwuma, while reacting to what he described as shocking decision by the Federal Government, lamented the policy would lead to the forced closure of many auto plants.
The Federal Executive Council (FEC) had last week approved a reduction in duties on tractors from 35 percent to 10; percent reduction of duties on motor vehicles for the transportation of goods from 35 percent to 10 percent; reduction of levy on motor vehicles for the transportation of persons from 35 percent to 5 percent.
The downward review of duties and levies as well as the introduction of “tax incentives” were intended by government to address the socio-economic problems arising from the COVID-19 pandemic and the recent hikes in the pump price of petrol and electricity tariff.
But, reacting to the news from his plant in Nnewi, Chukwuma argued that a reduction in duties on imported vehicles would lead to massive importation of fully built up vehicles, resulting in unfavourable competition that is likely to run the Nigerian auto makers out of business.
He said the duty review was an embarrassing policy somersault considering that the present charges on imported vehicles were prescribed by the Automotive Policy the National Automotive Industry Development Plan (NAIDP) to discourage the influx of fully built up products while helping to boost production by the domestic auto plants.
Chukwuma, whose plant was officially commissioned in 2010, feared that the reduction will erase the gains so far made in the industry since the Auto Policy took effect in July 2014, with total duties on imported vehicles pegged at between 35 percent and 70 percent,.
He expressed fear that the federal government’s plan would result in serious unemployment crisis as the local auto plants and related companies that will be adversely affected by the continents of the proposed bill, will be forced to lay off their workers in order to survive.
He said his plant had just designed and produced two new affordable IVM Connect valued at N4.5 million and 7-seater IVM mini bus going for N5 million models, stressing that the company invested heavily in the project with hundreds of units ready for delivery.
“With this kind of investment in very affordable vehicles built to suit the present motoring needs of the Nigerian masses, it is discouraging to hear that government is coming up with a policy that favours importation, rather than encouraging those making impact in the auto industry and the economy generally.”
Innoson recently launched an empowerment (ride-hailing) scheme in Enugu with 500 units of the IVM Connect for about 500 youths who are expected to make daily returns of N6,000 for about 30 months, after which they take full ownership of the vehicles. The arrangement, it was learnt, will gradually be made available to other parts of the country.