Toyota Mark II saloons are proving popular with potential car importers.
THE government will soon allow private operators to open used car sales centres, following an announcement from the ministries of Industry 1 and 2, Rail Transportation, and Commerce in Nay Pyi Taw on October 26.
Approximately 2000 used cars will enter Yangon port in early November to replace cars taken off the road as part of the government’s substitution plan for cars 40 years and older. The sales centres will open soon after the cars are imported.
U Soe Thein, the Minister for Industry 1 and 2, said a plan will also be undertaken to import newer cars worth about US$6000 after the three-phase import substitution plan was completed.
The used sales centres are a response to a volatile car market, said Rail Transportation Minister U Aung Min.
He bemoaned the critical and inaccurate reporting on car prices published in weekly journals when he met with reporters in Nay Pyi Taw on October 26.
“The government wants the public to own cheap cars. Some people are acting in an opportunistic way to make money out of this program,” U Aung Min said. He said the government was working to limit corruption in the import process and urged anybody who witnessed corrupt behaviour to contact the ministry and complain.
Dr Pwint San, Deputy Minister for Commerce, said about 60 companies had applied to the ministry to operate the sales centres but only five had met the government’s criteria.
“We know that import permit holders will be excited and I want to say ‘Please wait because we are scrutinising the condition of roads, parking, traffic in Yangon and Mandalay and how much foreign currency will leave [the country]’,” he said.
“Car prices will go down when the sales centres open and customers will be able to choose the vehicles they like,” said U Soe Thein.
Potential importers have reported being confused about how much it will cost to import a newer vehicle in terms of taxes and service fees, which was one reason the press conference was called in Nay Pyi Taw.
According to an information brochure given out to journalists at the event, the total cost of importing a new car would be about K9 million, with the value of the old vehicle to be subtracted from that amount.
One example given shows a car with a Free on Board (FOB) price of $3500 (K2.8 million) and using an exchange rate of K800. In that example the shipping cost was calculated at $1500 (K1.2 million), online and permit fees amounted to K5250, commercial tax charged by Customs Department at 55 percent of cost, insurance and freight (CIF) was K2.2 million and the Road Transport Tax was levied at 100pc of the FOB price plus a primary registration fee amounted to about K2.83 million.
The total cost in that example was K9.033 million, or about $11,290, with a maximum of K840,000 to be deducted as payment for the value of the car handed in to be scrapped.
Sales centres will not be allowed to charge more than 10pc above this cost when selling to customers, the meeting was told.
Since trucks and buses cannot be purchased for $3500, the Ministry of Commerce is allowing an FOB price of up to $10,000 for trucks and $15,000 for buses.
Sales centres must have enough space to hold at least 50 cars and a bank account with a balance of at least $100,000. This is necessary to pay customs duties and commercial taxes in advance.
One company waiting to begin selling used cars is Sakura, which was formerly a private automobile auction centre located in the Cherry Garden housing complex in South Okkalapa township.
The company bought about 200 used cars in Japan and is waiting for ministerial approval to sell the cars.
“We are ready to open now, we have a spacious area and 30 years experience selling cars and just need approval form the ministries,” said Sakura manager, Ko Aung Naing Htun.
He said that the ministries will check details of the companies such as their background and whether or not they meet the standards set by government. Sakura also wants to import brand new cars when the government allows it to, he said.
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