The authorities will suspend issuing car import permits to senior government officials, U Zaw Htay, spokesperson from the President’s Office, said during a press conference on January 31.
“We are reviewing how such an incentive will impact the car market. Private businesses should not be disrupted and price should be stable. The government should not lose out on tax revenue, ” U Zaw Htay said.
However, the suspension of the plan was communicated verbally. There has not been an official announcement so far.
The development comes after opposition from the local automotive industry in response to a January 2 announcement by the Ministry of Commerce (MOC) saying that senior government officials, such as directors general, deputy directors general, and those with a minimum of 25 years of excellent service would be given import permits for vehicles on favourable terms – which included tax exemptions – as rewards for their work.
The vehicles approved for import would be determined by the ministry on a yearly basis and would be allowed into the country directly without going through a showroom or car dealership.
At a January 29 press conference opposing the move, the Automotive Association of Myanmar (AAM) said the plan would raise feelings of unfairness among people who have to pay taxes to the government for the cars they buy through ordinary channels. It would also cause price instability in the local car market.
It further stated that the plan would damage companies assembling vehicles for sale in the local market, and car sales centres owned by local companies.
U Aung Win, chair of the AAM, said the car market will take a short-term hit as traders and investors are likely to wait for further developments before continuing with any expansion plans.
“The market remains uncertain as the government has temporarily suspended the plan while the MOC reviews the situation. There is no official announcement to cancel yet, ” he said.
Critics said the government should be more aware of the challenges in the local car market.
U Aye Chan, a businessman from Yangon, said that while incentives are necessary to reward good performance by public servants, the government should avoid setting new policies or making changes to existing policies without warning or thoroughly reviewing the situation, as these could cause instability and volatility in the industry.
According to government information, there are over 34,000 government officials who would qualify for the permits.
At the January 31 press conference, Peter Beynon, chair of the British Chamber of Commerce, said that if the government implements the plan, Myanmar would lose an estimated US$400 million in tax revenue that could be used for building roads and other infrastructure.
