Second attempt planned for local car assembly

Developing a domestic car assembly and manufacturing industry may be a difficult task, but proponents claim it will help boost new car ownership levels in the country.

With as much as 99 percent of car sales thought to be used vehicles, largely imported from Japan, experts say locally assembled vehicles would help shift the tide in favour of new vehicles.

Previous attempts to build “made in Myanmar” automobiles by domestic companies floundered on shoddy workmanship and poor reception among buyers, though foreign companies are now eyeing setting up shop in the market.

U San Oo, a joint secretary of the Automobile Policy Industry Drafting Task Force, said that if foreign automakers commit to foreign direct investment in the country, they are likely to offer broader programs for potential car owners, such as more flexible hire-purchase terms.

“Generally, foreign investment in the auto industry will increase if the market develops,” he said. “We must create a good car market, so foreign investors want to come to Myanmar.”

Local hire purchase for automobile buying often require a down payment of at least 30 percent, with a relatively short one-or two-year terms for installment payments. U San Oo said these terms could be relaxed over time as more foreign manufacturers enter.

The country has experimented in the past with domestically manufactured automobiles. The previous locally made vehicles were widely derided, and were often put together out of second-hand spare parts. Many have since been taken off the road, as they can be traded in for a valuable slip necessary to import new vehicles.

Foreign carmakers have looked into Myanmar’s potential, but so far there have been few local investments. Japanese manufacturer Suzuki is one company that has invested locally, announcing plans for its second plant in Myanmar in April.

U San Oo’s Automobile Policy Industry Drafting Task Force finished drafting the new automobile policy on September 15, though some parts are different from the recently released Motor Vehicles Law.

Inviting foreign investment requires strong infrastructure and clear rules, for instance outlining how much of a local assembly and distribution business can be foreign owned. U San Oo said incentives will also be important to attract foreign manufacturers.

The extent to which the door should be opened to vehicle assembly and manufacture by foreign companies in Myanmar is a contentious issue, with some claiming local companies risk being crowded out.

“It is not totally right if we focus on foreign investment. Local businesspeople will not have a chance,” said U Khin Maung Kyaw, chair of the Automobile Policy Industry Drafting Task Force.

“But we need large amounts of money to invest in the new car market. If local businesspeople are able to do it, we must allow them to.”

Some say they are sceptical about plans for domestic companies to produce cars.

In the past, Myanmar had pushed development of local cars, but it was not a success.

“I have no idea why the government set this policy. Whether it was intend to develop industry or what, I don’t know, but it wasn’t effective,” said U Min Min Maung, managing director of Wunn Yan Kha car sale centre.

Companies would import two old Japanese cars, take the spare parts and make a single ‘made-in-Myanmar’ vehicle. “As far as I know, 100 percent of people didn’t like these cars. It’s not a long-term plan,” he said.

U Min Min Maung said that if there is a domestic automobile business driven by Myanmar companies, it would likely not be successful in the end.

He added that if cars can be produced locally, it would significantly affect the practice of importing used vehicles, as there would be many more previously owned cars avaiable locally.

“The government’s policy is important,” he said.

Another car dealer said he reckoned the government should not allow 100pc foreign ownership in the sector, adding that a chunk should be preserved for locals.

“We accept we need foreign investment to develop the auto industry,” said another dealer. “But the car industry can’t only be for foreigners.”

Source: Myanmar Times

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