With the fairly recent announcement of 'special car permits' that will allow senior government officials and the qualified-few lower ranks to import cars that would normally be out of their reach, there have been widespread criticism from both the media and the motor vehicle market. Even more recently came the announcement by the President's Office that those car permits will be suspended until further notice. The Daily Eleven had reached out to industry expert U Htut Htake, Managing Director of Distinct Trading Co.,Ltd for his professional views on the matter and the consequences following the car permits. 

Q: Can you briefly explain about the ‘special permits’ that had sparked controversies recently?

A: Applications forms were distributed for a special permit that will allow all those above and including Deputy Director-General (DG) as well as all other government personnel that had served for at least 25 years and had received Good Civil Service Award. What’s special about those permits is that with them, there will be no need to pay for the import tax and road department licensing fees as well as possible exemption or reduction to income tax if one can produce documents as recommended by respective government departments. Those in Yangon with a legitimate Yangon household census will also be able to obtain Yangon Region license. Those are a lot of opportunities from the permits.

Q: If the special permits were to officially go through, can it damage the market?

A: It will definitely hurt it because a car that usually fetches around Ks 600-700 lakhs will now only cost around Ks 350 lakhs with those permits. There can also be indirect harm to SKD and CKD motor vehicles that are being manufactured locally because there are a lot of difficulties for the local market to compete with a huge influx of foreign made cars that will each cost around Ks 300-400 lakhs. 

Once the prices of cars go down, there will be many that had purchased cars in installments that will stop their monthly payments or those that had put down deposit to buy cars but instead choose to lose their deposit and not go through with the transaction anymore. 

Q: Can you explain why the permits have been suspended?

A: The President’s Office DG U Zaw Htay officially declared the suspension of those special permits at a press conference on January 31, 2020. 

The reason why is because things such as the impact on the market, the amount of losses in taxes that the state will incur, to what extent will it hurt businesses and the amount of chaos that the permits will create in the market - all of that needed to be recalculated and reconsidered. 

Q: What are your remarks on the suspension?

A: There will be many different parts to the answer. 

First and foremost, it is not welcoming news for government staff that are qualified to receive the permit. Many of them had already applied for the permits. Everyone had hopes for it and the stoppage of the permits will have shattered their dreams. 

The second part is from the perspective of business owners, especially those that had invested millions of dollars into the industry to manufacture motor vehicles locally. They don’t want the permit to materialize because it is going to harm the market and the subsequent unrest it will create in terms of policy making will discourage investment as it will reduce the trust needed for FDIs. The suspension of the permits is something many businesses will be satisfied with. 

The third and final part is from the view of normal civilians. They are not qualified for the permits in the first place so they are not really that interested in this matter. But they want car prices to go down because everyone wants to ride nice cars at affordable prices. So they generally view the stoppage of the permits as a hindrance. 

Everyone has their own views and opinions. it will be hard to decide which decision is the most correct. 

Q: Can there be consequences to the market from the permit stoppage?

A: During 2019, policies regarding motor vehicles were steady and thus the market was also stable. There are older right-hand drive cars and the newer, imported or locally manufactured left-hand drive ones. They were getting along on their own just fine.

When the news of the special permits hit in 2020, it gave everyone worries and immediately the market went cold, almost to a grinding halt. Now that the permits have been stopped, there is hope that it will pick back up again similarly as it was in 2019. But it won’t be active immediately. Time must be taken, momentum must be built back up. 

Q: Any parting remarks?

A: The words “stoppage” or “suspension” are not very defining terms. The permits were not “abolished” entirely. So there is a chance that it will rear its head again anytime and people must be aware of that fact.

The government needs to compromise between the hopes of public servants and damages toward businesses. We will have to wait and see.