Taking advantage of Myanmar’s aged car fleet at present as well as tax concessions given for vehicle importers, 19 Sri Lankan car sale companies have teamed up to operate a vehicle business in this Southeast Asian market, vehicle importers said.
Indika Sampath Merenchige, President of the Vehicle Importers Association of Lanka, told the Business Times that these Sri Lankan vehicle importers have formed a company called Siam International Ltd to secure a slice of the car market after US sanctions on car imports were lifted a year ago.
He disclosed that Siam International is now managing a vehicle show room in Yangon, Myanmar with around 200 Japanese vehicles on display.
The initial capital investment for this venture was around Rs. 300 million (approx US$ 2.4 Mil), he said.
He pointed out that their association with over 250 members including dealers importing reconditioned and brand new vehicles has taken this initiative as the vehicle business in Sri Lanka suffered a severe beating in the recent past due to vehicle tax import tax hike.
The used vehicles and sport utility vehicle (SUV) imports have reduced drastically from around 5,500 units per month three years ago to almost zero at present, he said. Owing to this, the association has already rushed in to grab a slice of Myanmar’s huge vehicle market, he added. “We see tremendous potential and opportunity for Ford in Myanmar, and we’re now successfully servicing customers in this exciting market,” Mr. Merenchige said.
As a result of Myanmar’s decades of economic isolation, its cars are some of the oldest models still running on the region’s roads, similar to Toyota Corollas and Nissan Super Saloons, often with broken windows, exposed wiring and rickety doors.
Many people of that country are visiting the Sri Lankan showroom mostly with Japanese’s vehicles and it is good opportunity for Siam International to tap into a rising middle class previously shut out from these international brands, he said.
He said that cars even as old as 1996 (year of manufacture) are being permitted to be imported by Myanmar authorities, adding that they hope to ensure that Sri Lanka also benefits by repatriating profits from the Myanmar business. The setting up of a vehicle showroom in Myanmar was a result of the visit of senior members of the association to that country and the conclusion of successful discussions with Myanmar ministers in September last year.
The Sri Lankan car market has been in the doldrums since the government began reducing the age of the used vehicles permitted to be imported. For many reasons including pressure from the new car market importers, the government last year reduced the age to one year which led to protests from used car dealers.
The authorities have said that the strategy is to eventually end the import of used cars due to environmental pollution concerns.
Source: The Sunday Times, Sri Lanka