Car traders have tipped prices to fall further in the wake of the Ministry of Rail Transportation’s announcement that registration taxes for vehicles with older number plates would be significantly reduced.
The notice was printed in the Myanmar edition of the state-run New Light of Myanmar newspaper on June 16 and stated that owners of cars bearing licence plates 20 years or older would receive registration fee reductions of 40-60 percent when importing a newer vehicle.
Within three days of the notice import licences issued under the overage car import substitution scheme, which can be used to import cars made between 1995 and 2006, had fallen to K5.5 million from K6.5 million, traders at the Hantharwaddy car trading zone in Yangon said.
The import substitution scheme was announced in September last year and was intended to remove older cars from the road, supposedly for environmental reasons. However, the program was suspended on May 7 at number plates with the pazuat prefix.
Shortly afterwards a separate import program was started that allowed anybody with at least US$10,000 in a state-run bank to import a car made in 2007 or later.
However, the June 16 notice is aimed at removing pazuat- and balachaik-prefix number plate cars from the road, although the announcement specifically states that the government will not forcibly remove them.
Pazuat cars will receive a reduction of 40pc when registering a newly imported car, while those with the balachaik prefix will be granted a 60pc reduction.
A Ministry of Commerce official said the latest changes were aimed at reducing the cost of importing a newer vehicle for owners of older cars.
“The situation is tough for old car owners because they must first give up their old car and then pay the tax on the import,” a Ministry of Commerce official said.
U Kyaw Nyunt, a car dealer at Hantharwaddy, said cars with 1350-cubic-centimetre or smaller engines made later than 2007 had become the most sought after vehicles.
He said prices for these vehicles started at about K15 million but would likely come down to K13 million as more arrived in coming months.
“Container ships carrying the newer model cars have just started to arrive at the port in Yangon so they will begin to hit the market in late June,” he said.
“Prices for 2007-model and newer cars should keep falling because it’s easy for people to import them and more will keep arriving,” he added.
He said buying replacement parts for the newer cars – as well as their small engines – would mean the newer cars would not retain their value in coming years.
The New Light of Myanmar announcement said about 54,906 vehicles had been submitted to the government for scrapping since to June 14, with 48,919 permits so-far applied for. It added that the government had earned about $97.35 million in import taxes.