FG moves to avert car price hike
The government may have tactically
bowed to pressure in its imposition of 70 per cent duty on imported cars
as it okays a concessionary duty for some dealers, RASHEED BISIRIYU reports
The Federal Government is considering a
new measure to avert a possible increase in the prices of vehicles in
2014 as a backlash of its new automotive policy.
Our correspondent learnt on Sunday that a concessionary import duty for some car dealers had been approved in principle.
As part of measures aimed at encouraging
local production and assembling of new vehicles, the Federal Executive
Council had last month approved the new national automotive policy,
which imposed a higher import tariff on fully-built vehicles.
But auto dealers and concerned economists
warned that the imposition of a 70 per cent duty on imported cars would
shoot up vehicle prices by about 60 per cent and disrupt the nation’s
economic activities.
The Lagos Chamber of Commerce and
Industry said in a statement that the sharp increase in the tariff on
vehicles would harm the economy and the welfare of the citizens.
The Director-General, National Automotive
Council, Mr. Aminu Jalal, told our correspondent in a telephone
interview that prominent car importers who could give the government a
serious commitment about setting up vehicle assembly plants in the near
future would be given a special duty on their imported cars.
This, he said, was to forestall a crisis
in the nation’s car business next year, especially with the fears that
the sudden high import duty on cars would skyrocket the prices of
vehicles.
He, however, did not give the details of the concessionary rate and the beneficiaries.
The NAC DG said there was no going back on the immediate implementation of the policy.
Government had set October 3, 2013 as the
deadline for the establishment of Form Ms to import and expected that
all previously ordered vehicles would have been delivered by February
28, 2014.
Jalal said, “We intend to give a
concessionary import duty to those dealers/importers that can offer a
strong commitment that they will go into vehicle assembling very soon.
But we’ll not shift the date of the new policy.”
A group comprising Toyota Nigeria
Limited, Elizade Nigeria Limited, Globe Motors, Coscharis Motors, SCOA
and CFAO had petitioned President Goodluck Jonathan, alleging that one
of them, Stallion Group of Companies, was privy to the content of the
new policy, ahead of others and had reportedly ordered sufficient
vehicles to beat the deadline.
The group, writing under the Auto
Manufacturers’ Representatives Group in Nigeria, said the nation could
lose N134bn in revenue as a result of this.
The President of the Coscharis Group, Mr.
Cosmas Maduka, later led other aggrieved dealers on a protest march to
the National Assembly, complaining that the notice for the commencement
of the new auto policy was too short.
The details of the new policy provided by
the Ministry of Finance stated that a fully-built car would attract a
duty of 35 per cent and a levy of another 35 per cent of the cost of the
vehicle.
Importers/dealers used to pay 20 per cent and two per cent as duty and levy, respectively on new cars.
Dealers have estimated that the showroom price of an imported car will rise by 60 per cent when other variables are added.
The LCCI has similarly said the new
tariff will bring about a higher transportation costs with impact on
inflationary conditions in the economy, as it notes that over 85 per
cent of the freight in the economy is being moved by road.
It added in a statement that the new
import duty would put vehicles “further beyond the reach of the Nigerian
middle class, especially in the face of poor credit access and high
lending rates.”
The LCCI called for the development of
ancillary industries for the production of batteries, glass, radiators,
tyres and other vehicle components as well as affordable finance for the
investors.
It stated that the industry should be
predicated on strong engineering infrastructure, including the
production of flat sheets, foundries and fabrication of vehicle
components needed in the vehicle production.
It stated, “Development of the sector
would not thrive in an environment where the cost of fund is between 25
per cent and 35 per cent per annum. Without the creation of sound
infrastructure, especially power supply and transportation, there can be
no enduring industrialisation.”
The LCCI recommended a robust
consultation with stakeholders in the entire value chain of the
automobile sector to develop a sustainable road map for the development
of the sector.
It said the framework for the utilisation
of the automotive development fund should be reviewed “to ensure proper
targeting for the development of domestic capacity for the automobile
sector while long term affordable finance should be made available to
the automobile industry manufacturers from the automotive development
fund.”
But Jalal noted that all relevant groups
were well consulted before the policy was announced and added that a
committee had been constituted, which comprised the aggrieved dealers,
for effective implementation of the policy.
