Phony Yangon car showrooms defraud dealers in Japan and Korea

Up to one-third of all Yangon car showrooms are fake, and some may be defrauding automobile dealers in Japan and Korea, local vehicle distributors say. Some may also be failing to pay tax on the cars they sell.

U Soe Tun, head of the Myanmar Automobile Manufacturers and Distributors Association, said MAMDA was negotiating with foreign companies over complaints that showrooms had failed to pay them for cars they had imported to sell in Myanmar.

“There are many such cases. If the foreign companies can’t reach agreement with the showrooms, they may have to sue them. About 50 showrooms are dubious, and many of them are swindlers.”

U Soe Tun said some showroom operators would open for business for just a couple of months, during which they would import cars from Japan or Korea. Then, without paying for the cars, they would reapply to the government for a new licence under a different name.

According to Ministry of Commerce statistics, more than 180 showrooms have been licensed to open second-hand car sales centres, and 15 are licensed to import brand new vehicles.

Of these, only about 120 showrooms are actually operating as advertised, he said, and the remaining 60 are not conducting business.

“Some car sale centres imported cars without paying tax on them. Then they applied for a new licence under a different name,” he said.

“We received a complaint from someone who had opened a showroom on rented land. The landowner then applied for a separate licence on behalf of a friend, and even hung a new signboard over the original one. The person complained to us that he didn’t get a licence, but the second applicant did,” said U Soe Tun, adding the practice is not uncommon, and has embroiled his association in many disputes between landowners and showroom operators.

The stakes are relatively high. “It’s not easy to get a showroom licence. An applicant must have K300 million and US$100,000 in the bank,” said a spokesperson for the Ministry of Commerce on October 1.

Permission is also required from the township office of Yangon City Development Committee and the administrative department concerned before the ministry grants permission to a showroom to import up to 200 vehicles.

A showroom owner who requested anonymity said many applicants prove they have the necessary funds in the bank, before spending them on something else.

Nearly half a million cars have been imported since 2011, many of them second-hand from Japan. The distributors’ association says about 30,000 cars imported from Japan are yet to be sold.

Source: Myanmar Times

NB: The best way to find information on this website is to key in your search terms into the Search Box in the top right corner of this web page. E.g. of search terms would be “property research report”, ”condominium law”, "Dagon City", “MOGE”, “yangon stock exchange”,"MECTEL", "hydropower", etc.

To learn about the business opportunities in Myanmar click here

To evaluate the various segments of the market that you could possibly enter base on your competencies you can do a Custom Market Entry Strategy Research. You can see a sample report at page "Actual Sample of Client Report”. Click here to go to page.

Do you know that IE Singapore is giving up to SGD 20,000 support for Singapore company to venture into Myanmar? To learn more click here