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Myanmar car importers struggle to survive

MYANMAR car importers are fretting that auto sales will continue to drop until the end of 2017 if the government does not come up with a clear, comprehensive auto policy.
Soe Tun, president of the Myanmar Automobile Manufacturers and Distributors Association and chief executive of Farmer Auto Showroom, said importers were waiting for the policy and the future did not look bright if it was not announced soon.

“Nowadays, every showroom is struggling to survive because sales have dropped sharply over the past few months. Now it is hard for most of the showrooms to meet half of the sales [they posted] last year,” he said, adding that lacklustre sales could continue until the end of next year.

Soe Tun said sales at his showroom were more than 50 per cent lower than the volume achieved by this time last year. Over the past four years, he has sold more than 10,000 cars.

The policy is being reviewed amid criticisms that the lifting of an import ban in 2010 worsened traffic congestion in Yangon.

Two weeks ago, the Commerce Ministry called for a meeting with relevant public agencies and the private sector to vet their opinions on a policy drafted months ago. The draft policy aims at four key criteria – a market environment that generates a certain volume of new car sales, favourable access to parts suppliers, incentives to build assembly plants, and a system that enables the government to administer auto policy.

The policy aims to establish vehicle standards, introduce a homologation system, strengthen the car-registration system, ensure fair taxation on car sales, revise the Generalised System of Preferences-based customs duty, strengthen the system for car inspections, deregulate foreign direct investment in the auto-related and distributor business, ensure incentives for domestic car production and sales of designated new car models, and establish industry infrastructure.

Before 2010, vehicle imports were restricted to companies such as an entity owned by the military. Private companies have since 2010 been allowed to import vehicles. Myanmar has imported around 600,000 autos over the last five years, against more than 200,000 old cars having been impounded so far.

As of June, 476,679 private cars and 28,970 passenger cars were registered with the Road Transport Administration Department (RTAD). Among them, 329,793 private cars and 15,524 passenger cars are running in Yangon.

Imports of brand-new cars have been allowed since 2014. More than 5,000 new cars were imported last year, of which about 2,000 are still unsold. The import market is also hit by the Yangon regional government’s ceasing to issue parking permits since April so as not to worsen traffic congestion. The permits are a must for those buying new cars. The city also bans new car imports and Maung Aung, secretary of the Yangon region transport authority, said the ban could stay until the end of this year.

Aung Win, vice president of the Authorised Automobile Distributors Association (AADA), an alliance of 16 international auto brands, urged a review of the ban, which he said had hurt sales of new cars.

“It is not a good sign for the auto industry as a whole,” he said.

Swan Sian Tiang, manager of the AADA, said sales by the association’s members from April to August amounted to fewer than 100 units. Toyota remained the best-selling brand, followed by Mazda and BMW. However, overall sales were less than half of those in the same period last year.

“We don’t have a clear auto policy yet. All the rules and regulations are changing over time. There are rumours that the parking-permit ban will continue for some time and that the Yangon government may allow only one vehicle per company. I heard they may limit the number of cars in a showroom, but we have international requirements to follow. The policy should integrate with these international standards,” he said.

There are more than 200 auto showrooms in Myanmar but only 75 per cent of them are active.

A Road Transport Administration Department official said the registration of new cars had been declining since June, from about 20,000 monthly to 3,600 in June, 4,300 in July and some 4,000 in August.

Khin Maung Lwin, assistant secretary of the Commerce Ministry, said the authorities aimed to set a comprehensive automobile policy and address importers’ concerns.

“We are negotiating with all the stakeholders to find the best solution,” he said. However, Myanmar is yet to learn from other countries on import rules and regulations. More discussions with Yangon regional government are also necessary, he added.

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