Myanmar Changes Automobile Import Policy

MyanmarThe Automobile Policy of Myanmar, which transportation experts have been working on for the past two years, is expected to recommend the left-hand drive importation policy. The Myanmar Engineering Society (MES), which is drawing up the policy, has said the draft will be complete within six months.

Myanmar drives on the right. But its major source of imported vehicles, Japan, drives on the left. So most Japanese cars imported from Japan are right-hand drive. The word on the street seems to be that drivers prefer it that way, even though driving a right-hand drive vehicle on the right side of the road can cause inconvenience, and may even undermine road safety.

Many drivers seem to be so used to driving on the “wrong” side that they are reluctant to change. Some say they are not convinced that changing to right or left-hand drive will necessarily improve traffic. For many drivers, it’s a question of quality. Even though Japan, the most popular car-maker, does produce left-hand drive vehicles, some fear they are just not as good.

The New Japanese cars are the best, and the best Japanese cars are right-hand drive. The cars they produce for countries that drive on the right may not be as good.  Even used Japanese right-hand drive cars were better than new left-hand drive vehicles. Importers worry that any change in the law could affect shipping charges and waiting times if vehicles are imported from other countries, and the market potential for them could be reduced.

At a round-table expert discussion last November, one participant, the chair of the Myanmar Automobile Manufacturers’ and Distributors’ Association (MAMDA), even suggested that the government yield to the inevitable and declare that drivers should keep left instead of right, as they used to do before the country switched to right-hand driving in 1970. But after all discussion, it seems that decision is not so easy as right hand drive Japanese cars has already captured country’s roads more than the left hand drive cars.

Dealers reduced price of Japanese used cars

South African car dealers have started reducing prices of pre-owned vehicles mainly from Japan, Singapore and the United Kingdom at Beitbridge Border Post as they battle to clear huge stocks which have been necessitated by low business in the last four months. Major dealers such as Quest Royal, Wright Cars, Autonet, Kumura Motors, Jakes Auto and KDG have from Friday last week reduced prices of old stock to create space for new stocks from Durban.

It is also understood that other car dealers have reduced prices to meet their obligations with the South African Revenue Service (SARS) to sell the vehicles within a period of 12 months. One of the car dealers said on Friday that in the event that they violate the conditions of the bond with SARS they are fined R20 000 per vehicle.

Wright Cars Sales manager , Mr Clemence Mabidi said they had reduced vehicles including Nissan March, Toyota Ipsum, Mazda Demio, Nissan Xtrail, Toyora Runx, Toyota Voxy, Volvo F80, Toyota Passo, Toyota Nadia and Mazda Atenza to between $500 and $2 800.
“Business is very low these days after Zimra increased the import duty to around 96 percent. This has resulted in a fall in the demand of cars and at the sometime we want to meet our bond conditions with SARS,” said Mr Mabidi.

“We want to clear old stock so that we can be able to bring in new stocks from Durban. Business is relatively low as compared to the previous years.” Mr Mabidi said they were selling an average of four vehicles per day as compared to 40 in the previous months. He added that many car importers now prefer to use less busy ports of entry such as Kazungula, Plumtree and Chirundu to avoid the pressure at Beitbridge Border post.

Another car dealer, Mr Nasir Khan of Quest Royal Investments said they had reduced prices of vehicles by between $300 and $400. “Business is very low and we have to adapt to the market forces and hence we have slashed the prices. Furthermore we will be running special promotions so that we clear the current stocks,” he said.

Mr Khan said they were looking at selling vehicles at prices similar to those in Durban. A customs official at Beitbridge said though prices of vehicles had fallen on the South African border, duty tariffs were still the same. “We are calculating duty on all imported vehicles using prices on our national catalogue,” said the official.

Zimra’s director of Legal and Corporate Affairs Ms Florence Jambwa confirmed recently that vehicle imports through Beitbridge had fallen since the beginning of September. “Vehicle imports have generally decreased in September as compared to August. Between 1 and 14 September, we processed 610 car imports, a decrease when compared to the same period in August where a total of 864 vehicles were cleared,” she said.

She said at the moment they were are processing between 31 and 65 vehicles per day as compared to 32–133 vehicles per day in August this year. Cars sales started declining after Finance and Economic Development Minister Patrick Chinamasa increased Surtax from 25 percent to 35 percent on second-hand light passenger motor vehicles aged more than five years from the date of manufacture at the time of importation.

TPP Agreement would open Japanese Auto market for American cars

The Japan and United States agreement on autos trade as part of a sweeping Pacific Rim trade deal would have its own dispute settlement mechanism, including penalties, if Japan does not open its market enough to U.S. vehicles, a source close to the negotiations said on Friday.

Negotiators are working to finalize a trade deal which would stretch from Japan to Peru and autos trade has been one of a few remaining and politically charged sticking points. A broader deal on autos trade between Japan, the United States, Mexico and Canada was nearly complete, two people close to the closed door talks said, requesting anonymity because of the sensitivity of the negotiations.

“We are very close on cars,” one of the people said near the end of the third day of ministerial level talks. Remaining differences centered on “local content” thresholds for specific auto parts, a second person said.

The outline of the auto-related element of the Trans Pacific Partnership taking shape in negotiations in Atlanta would give Japan’s automakers led by Toyota Motor Corp. a freer hand to buy parts for vehicles sold in the United States from Asia.

But the deal would also contain a side agreement between the United States and Japan intended to open the Japanese cars market to American-made cars. It would also cut tariffs on Japanese vehicles exported to the United States, but over a period of time expected to be 20 years or more.

Although Japan does not impose tariffs on U.S.-made vehicles, U.S. automakers have complained for decades that the market is essentially shut to them because of barriers of other kinds, including difficulty in securing distribution networks and the need to meet separate safety certification.

The bilateral deal between the United States and Japan would include a first-of-its-kind dispute resolution mechanism that would impose penalties if Japan were judged to have fallen short of its commitments, the second person said.

At the same time, Japan’s automakers would be given clearance to buy more parts for cars manufactured in North America without paying trade tariffs under the terms of the deal being discussed. The North American Free Trade Agreement between Canada, the United States and Mexico mandates that vehicles have a local content of 62.5 percent. The way that rule is implemented means that just over half of a vehicle needs to be manufactured locally.

The set of rules under discussion in Atlanta would bring that to 45 percent, or about 55 percent under a separate calculation used by Japan’s auto industry and regulators, people with knowledge of discussions have told Reuters.

Mexico is keen to maintain high thresholds to protect its booming auto and auto parts industry. Since 2009, seven auto production plants have been announced for North America and all of them are in Mexico. Bolstered by its relatively cheap labor and proximity to the U.S. market, Mexico is on track to overtake South Korea as the sixth-largest auto producer by 2020, according to IHS Automotive.

By accepting a lower local content threshold for autos, Mexican officials would be betting that it would be able to sustain its post NAFTA-boom and attract new investment even if some cheap and lower-margin parts are imported for assembly, people involved have said. A Pacific trade deal would be a legacy-defining achievement for U.S. President Barack Obama, who has said it should also open export markets to Detroit automakers.

Imported Japanese cars price hike in Sri Lanka

The price of vehicles imported to Sri Lanka from Japan has gone up, after customs authorities started charging taxes on a deemed valuation, which is higher than that declared by an importer, reports said. Sri Lanka charged high taxes from motor cars imported by ordinary people, while giving tax slashed cars to state workers, while the elected ruling class which makes tax laws have given themselves tax free cars.

In a September 22, gazette notification, authorities discontinued using values supplied by importers, which is applicable from this month. The price of a Japanese used car will go up between 0.7 million to 1.2 million rupees based on the new valuations.

A Toyota Axio and Aqua hybrid will go up by around 700,000 rupees. The price of a Prius will go up by around 1.2 million rupees, car importers said. Earlier importers of used cars, who compete with brand new ‘sole agents’, had complained that the prices supplied by agents over-valued and in Japan vehicles could be purchased for lower prices.

The value is based on ‘super grade’ full option units some of which are never imported to the country, they said. Meanwhile some importers also started to bring ‘registered-de-registered cars’, which in actual practice were not used.

Second hand auction prices in Japan in part depend on the volume of vehicles demanded each month by some countries with Sri Lanka being a significant player in the segment below three years. Beside Sri Lanka, India, Bangladesh, and Pakistan allow to import used Japanese cars under 3 years of age.

The prices of used electric cars for example rose dramatically after a surge of imports to Sri Lanka, importers say. After a taxes on hybrids were raised, used car prices at auction fell for about two months, they say. The actual price paid for a car depends on the year of manufacture, mileage, condition and the number of options.

Deemed valuations which may over-value a car has can used as a tool to remit extra foreign exchange out of the country, analysts familiar with the matter say. The lack of a depreciation allowance up to three years also over-values vehicles. The lack of a depreciation table also encouraged the import of newer cars at a higher foreign exchange cost, they say.

Sri Lanka is now facing a balance of payments crisis due to massive monetization of debt with the central bank printing 186 billion rupees to keep interest rates down, triggering unsustainable credit and imports, of which cars is only one component.