by May Kyaw
Wednesday, 15 July 2009 13:59
Chiang Mai (Mizzima) – In a revision of existing policy concerning vehicle parts, Burma's Ministry of Economics and Commerce has re-permitted domestic car industries to import spare parts.
The Ministry made its announcement, on July 12th, in a bid to resurrect the faltering domestic car industry, which is struggling to survive due to rises in costs and the scarcity of spare parts.
“The Minister announced on the 12th of this month that import licenses for car spare parts in the industrial zone would be permitted,” an official from the Mandalay Industrial Zone told Mizzima.
Though the Ministry had permitted industries to import car spare parts prior to 2008, it banned all imports during the 2008-2009 fiscal year with the exception of a select group of companies comprising TMC, U Thamardi, Yangon Myanmar and Mother Trading.
Domestic car manufacturing companies were thus forced to buy car parts from these four companies, with authorities only issuing car licenses if it could be proven that the car parts used came from these specified outlets.
Sources in the vehicle manufacturing business said the four companies raised the price of spare parts while the scarcity of parts made production costs soar amidst an already deflated domestic market.
As one example of the quixotic effect of the previous import regulation, the cost of manufacturing a jeep is estimated at about 6.5 million kyats (approximately $US 6,000) though the market price of the vehicle remains below 6 million kyats.
Domestic car manufacturers rely heavily on imported car parts – including engines, gear boxes and radiators – while using car bodies, bonnets, cabins and frames manufactured in local industrial zones.
At present, manufacturers are only producing light trucks as the line maintains a slight profit margin, while the production of jeeps has come to a near halt. But following the announcement of the new regulation by the Minister, manufacturers are hopeful that they might be able to resume production of jeeps as they will not have to depend solely on the four companies which previously held a monopoly over the import of spare parts.
“Right now, the ratio of manufacturing light trucks to jeeps is about 100 to five. The market demand for light trucks is higher. But we will consider manufacturing jeeps once again if it is profitable under this new regulation," Kyaw Myint from the KM Car Manufacturing Company told Mizzima.
Reportedly, industrial zones in Rangoon, Mandalay, Monywa and Taungyi are now discussing the new regulation and what ramifications it might have for their operations.
Thursday, July 16, 2009
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