So far the government allowed the duty differential for CBU vehicles over CKD ones to encourage local automobile plans to assemble more vehicles here and grow to capture greater share of local market now dominated by expensive imports. But we are afraid the new move will put a serious brake to the expansion of local assembling plants. It will also check the expansion of local job market by halting expansion of local assembling plants. It appears that by increasing the supplementary duty on CKD vehicles that can be later assembled here; the government has given to the pressure of powerful import lobbies although it is harmful to the interest of the national economy. It is not a good policy and acceptable. We believe the move must be reviewed and the competitive edge for CKD must be restored for the development of local automobile industry.
Media reports said the government will increase SD by 150 percent from 60 percent for sport utility vehicles in the range of 2,001-3,000 cubic centimeters category. As a result, the cost of SUVs will rise by 45 percent. For pickups of the same category SD has been increased from 40 percent to 100 percent. The SD on CBU cars of the same category will not increase from next fiscal year to stay at 200 percent. Insiders say once the new CD rate will be implemented, people will be more interested in importing new cars rather than relying on locally made vehicle from local assembling plants. Because there will not be much cost differential between them. Countries like Thailand developed their local automobile industry in recent years by keeping import duty on CKD cars much less than that for CBU. It extended many other incentives. But we are moving at the exact opposite direction.
Apart from Pragoti, Rangs has already made huge investment to set up a factory. IFAD Autos is also going into production. It appears that the government is only interested in huge revenue target–no matter it will cause huge loss to private sector projects and bring major setback to the country’s ambition to develop a sustainable automobile industry that will provide cars and other vehicles to the people at affordable cost.
