Car permit prices likely to tumble
Volume 31, No. 607
December 26 - January 1, 2012
Prospective buyers wait in line to file applications to buy Chery QQ3 sedans at the Ministry of Industry’s car sales centre in Yangon on December 14.
THE value of vehicle import permits are expected to fall in coming months as more become available and car sales centres open, a number of industry sources said last week.
Export companies and hotel and tourism operators with at least US$100,000 in domestic bank accounts, as well as Myanmar workers abroad who have at least US$30,000 in bank accounts here will be able to access permits in coming months, the Ministry of Commerce website states.
A ministry official told The Myanmar Times on December 20 that about 900 export companies and 700 overseas workers had applied for import permits, with about 30 percent already approved.
Soon after the government unveiled the “overage” car import substitution plan in September the price of import permits – obtained when a 40-year-old or older vehicle was submitted to the government for scrapping – hit a high of about K12 million.
But the ministry official said in coming months that permits would no longer be required because car sales centres would be opened, allowing consumers to buy vehicles directly.
In mid-December the Ministry of Industry briefly opened sales centres in Yangon and Mandalay to sell 1000 Chinese-made Chery QQ3 sedans. However, the cars sold out within a week.
The official added that nine service companies, including Sakura Technical Services Company, Diamond Auto Services Company and Sandrar Services Company, would open sales centres in Yangon and Nay Pyi Taw in January.
For the time being they would only be allowed to sell vehicles to people with import permits but in future would be allowed to sell freely, he said.
Under the overage car substitution program buyers were limited to selecting cars made between 1995 and 2002 but the companies and overseas workers with US dollar accounts will be able to bring in brand new vehicles.
About 6700 cars have already been imported under the import substitution program, with about 12,000 older vehicles submitted for substitution.
Ko Aung Naing Htun, the manager of Sakura Technical Services and automobile sales centre, said the price of selected Toyota models in Tokyo used car auctions had skyrocketed on demand from Myanmar since September.
Toyota Mark II sedans, colloquially called shwe ngar or gold fish, increased in price from US$2000 to $7000 for 2001-02 models because they were in such strong demand. Buyers have been circumventing the import substitution plan’s $3500 value cap by paying money to the sellers in Japan through the illegal hundi remittance network, he said.
“An organisation should be set up to monitor the prices paid at auctions in Japan to ensure that people don’t cheat the system,” he said.
U Aung Win, car trader at Yangon Hantharwaddy car trading zone, said import permits acquired by overseas Myanmar workers were only valued at between K2 million and K4 million because the market perception was that the import process was too complicated.
He added that import permits obtained through the car import substitution program had not fallen greatly in value yet because market demand was still strong. But he added that when the next batch of cars, with htasingtoo number plate prefixes, started being submitted for import permits prices would probably fall by about 20 percent because there were about 50,000 of these vehicles on the road, although most were government vehicles.