Car Dealers Call for Consignment Plan

The Vice President of Myanmar Automo­bile Manufacturers and Distributor Associa­tion (MAMDA) has called for an effective consign­ment scheme to be im­posed on automobile im­ports.

A traditional automo­bile consignment scheme is a credit system that eases the financial burden placed of the importer by collecting payment for the car only after the vehicle is sold to the end con­sumer.

In Myanmar, automo­bile importers are kicked in the shins by an upfront, 100 percent value added import tax depending on the size of the vehicle’s engine. This tax imposes a financial strain on car im­porters and makes foreign investors cautionary.

“Attracting foreign in­vestors into Myanmar automobile market has many hurdles. A vehicle that costs K1 to 2 mil­lion in Japan is imported to Myanmar, where be­cause of the lack of an effective consignment scheme or efficient import procedures, undergoes a laborious series of im­port fines and taxes that leaves the vehicle with a massive price increase,” MAMDA’s Vice President U Yan Myo Aung, CEO of Unity Land Automotive Co., Ltd, said.

Unstable automobile policies cause hesitancy among foreign investors who ultimately shy away from engaging in Myan­mar’s automobile industry.

The USDP-led govern­ment introduced a trial-run consignment scheme for vehicle imports 6 years ago to little success.

The Ministry of Com­merce instituted a consign­ment trial run between 2011 and 2015 for import­ed vehicles from 2001 to 2005. Because the sell-by date expired in December, the Ministry extended the date for an additional six months giving car dealers a grace period to sell the 2011-15’ models they’ve yet to move.

“The consignment sys­tem could be an effective tool to revive and support a struggling industry,” he said.

At present there are very few consignment systems in Myanmar’s automo­bile industry. The lion’s share’s of showrooms are paying the full value of the car in various import taxes before the tires ever touch asphalt.

 

Source: Myanmar Business Today

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