Yangon Car Showrooms Suffer from Policy Vacuum

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Since April 1, 2016, showrooms have been unable to import new cars for personal use, because the government in April told township officials in Yangon to stop issuing import recommendation letters, which are necessary to bring cars into the city for individual use. For almost a year since the halt, not much has changed and car showrooms are facing increasing difficulties with their business.

There is a general consensus in Yangon that the city is overcrowded with vehicles. To tackle the issue, the government has been restricting car imports to control the numbers of automobiles. When car dealers import cars, they need to prove that they have enough space – either at their residence or their business venue – by getting a letter of recommendation from the township administrators. The system of recommendation letters was introduced by the previous administration, in a bid to reduce traffic congestion in the commercial capital.

Since the government has suspended issuing car parking recommendations, importers are unable to obtain licenses from Yangon.

“We are in deep trouble because the government did not practice any of the systems for personal importing. Customers are waiting, and hoping, to get a Yangon license, but … nothing has changed. They [customers] have been waiting for months,” said U Myo Myint Thein, chief operating officer from Toyota Aye and Sons.

Car showrooms can’t sell cars – and have no chance to increase imports – because of restrictions that limit the number of cars imported per year. When car dealers sell a car, they need to transfer money back to where the vehicle was imported from. And after, they can import the next car by using an import license. This is the big problem, he said.

“We need to provide evidence that the cars are sold … Under this situation, we only have a chance to import the next 18 units,” said U Myo Myint Thein.

Although the government has suspended the issuing of Yangon licenses, importers are still able to import cars with licenses from other states or regions. Hence the number of cars in Yangon has not decreased.

“I don’t understand what government policy is. We can import, we can sell, but we can’t register. If they [the government] do not want to use the cars, then they should ban importing,” said U Chan Mya, managing director of Prestige Automobiles, the authorised importer of BMW vehicles in Myanmar.

The government has allowed showrooms to launch but not the sales of vehicles. Car dealers hope that this situation will change in the long run, he added.

After periods of waiting, some customers have been disappointed because they can’t buy the cars with a Yangon license, so they have withdrawn their orders and asked for their deposits back, even though the showroom has already ordered the cars.

“The government did not officially announce when they are going to stop the process. We return the deposit money back to customers because the customer is always right,” said U Myo Myint Thein.

At a press briefing held in January 2017, the Yangon chief minister said that they will use a Certificate of Entitlement (COE) system, but it has yet to be implemented.

“The government said that they will use a COE but they did not clearly explain what a COE is. If they use it, like in Singapore, the market will collapse. A few people will dominate the car market,” said U Myo Myint Thein.

According to Singapore Infopedia, a Certificate of Entitlement in Singapore represents the right to vehicle ownership in Singapore for a period of one decade. COEs are integral to the Vehicle Quota System (VQS), a scheme implemented to regulate the growth of the vehicle population in Singapore, which is among the densest internationally. The VQS determines the exact number of vehicles of different categories allowed on the road. The VQS was implemented on 1 May 1990 and the first bidding under the system started on 2 April 1990. Public buses, school buses and emergency vehicles are exempted from this scheme.

Whatever system the government will use, it should be the same standard for every importer, said U Chan Mya.

“The government can set the policy, but it must be for all. The policy will not be successful … if it is not for everyone,” he added.

Luxury car showrooms face more difficulties than others, especially Toyota, since it is very popular in Myanmar.

“Toyota already enjoys a firm market in Myanmar. Demand is increasing, but we can’t sell. The government should announce something as soon as possible,” said U Myo Myint Thein.

The government has planned to implement another process after imposing car importing, but the new policy remains to be seen.

“Some people think that our country can’t be like other countries … and that it is not the right time to implement new policies. As for me, our country has the power to compete with others.

“For now, the situation is that sellers, buyers and users are not trusting each other,” said U Chan Mya.

Last August, showroom managers told the Myanmar Times that the market for imported luxury cars has been severely damaged by the government’s failure to provide direction on its import policy.

At that time, U Chan Mya said he did not mind waiting for the new policy to come out, as long as it does not change too often. The previous government changed import regulations more than a dozen times.

 

Source: Myanmar Times
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