Myanmar’s Automotive Market Faces Growing Pains

YANGON, Myanmar – Liberalizing Myanmar’s potential market for new cars is significant, but growth currently is hampered by regulatory uncertainty.

Although it has a population of 51 million, only 5,000 new cars were sold in the Southeast Asian country formerly known as Burma during the last financial year.

“The future is very good, potentially. But right now it’s a very primitive market,” says Htoo Aung Lin, executive committee member of the Authorized Automobile Distributor Assn., which represents Myanmar’s new-car industry. Having only a tiny assembly base, the country’s vehicle market for the time being essentially consists of imports.

That this situation even exists is something of a turnaround. Car imports effectively were banned under the military regime until September 2011. A half-million cars were imported during the previous quasi-civilian government’s 5-year tenure that ended in April.

This sudden influx of vehicles has caused congestion in the commercial capital of Yangon, as well as a number of arguably misguided policies designed to lessen it.

For instance, Yangon’s municipal authority in January 2015 introduced a policy requiring applicants for car-import permits to prove they have a parking space. The policy apes similar rules that apply in Japan, the source of most imported vehicles in Myanmar.

The policy created a black market in parking-permit recommendation letters, which cost applicants and estimated 700,000 kyat ($590) each. When Myanmar’s first democratically elected government in 50 years came to power in April, it did so on an anti-corruption platform.

A government committee announced June 20 it would allow certain commercial vehicles to be imported without permits. Passenger cars, however, remain subject to the permit requirement.

 

Source: Wards Auto

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