Strong US Dollar is negatively impacting the market for car imports and car prices look set to continue to rise in Myanmar

The strengthening US dollar is negatively impacting the market for car imports, and car prices look set to continue to rise, said chair U Soe Htun from the Myanmar Automobile Manufacturers and Distributors Association (MAMDA) on July 18.

“The increasing price of the US dollar has affected car importers more than other industries,” he said. The kyat has fallen by 20 percent versus the greenback since the start of the year, according to data from the Central Bank of Myanmar.

Car importers are required to pay commercial tax as well as custom duties assessed on the value of the imported vehicles.

Companies must also pay a 3.5 percent tax on payments for vehicles imported under a consignment system.

“The price of importing cars has risen much more than the prices of other commodities. For other goods, importers are only required to pay a custom duty tax. As for us, depending on the type of car, the price has risen by between K500,000 and K2 million, and could potentially rise even more,” said U Soe Htun.

Because of the rise in import costs, companies have had to put up the price for the buyers. As a result, customers no longer want to buy, said car dealers.

“When the car parking recommendation price was lowered, customers thought they would benefit. But as the US dollar strengthens, the market has grown quiet. We want the dollar price to fall so that we can trade as before,” said car dealer Ko Oo.

Car sales have slowed since the government introduced a rule stating that importers must obtain a recommendation letter from their local township administration officer, proving that they have adequate space to park the cars.

The policy was put in place in December 2014 to attempt to limit the number of vehicles on the road, though industry insiders say in some cases it has become an unnecessary bottleneck for sales. Officials say that some townships have taken very different positions on issuing these letters than others, with some complaining about the need for informal payments to secure the permission letters.

Most car dealers and importers want these restrictions requiring proof of a parking space removed, said U Soe Htun.

“Trading is very quiet now. However, during June the schools are open and it is rainy season, so if we were to import a lot of cars it could lead to problems. So we are still cooperating with government policy on parking without arguing,” he said.

“But the US dollar price can really hurt the car market.”

Source: : http://www.mmtimes.com/index.php/business/15595-strong-us-dollar-hitting-car-importers-hard.html

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