FG review of tariff on imported used vehicles may encourage smuggling – Auto dealer

The proposed increase in tariff on imported vehicles by the federal government has become a major cause of concern for Nigerians. SHIPS & PORTS DAILY recently sampled the opinions of Nigerians on the impact of the proposal on the economy and gathered from its survey that Nigerians believe the measure was not properly thought out. Chairman, Progressive Auto dealers Association of Nigeria, Comrade Chinedu Ukaatu, who is also a member of the Nigeria Customs Service Consultative Committee in this interview with Shulammite ‘Foyeku said that until the environment is made friendly, local automobile production in Nigeria will remain a mirage. 
EXCERPTS:

What is your take on the recent government policy to ban importation of fairly used vehicles? 
The Federal Government never wanted to ban importation of tokunbo vehicles; some people are just misinterpreting the whole issue. They quoted the government out of context. What the government is saying is that there will be a gradual process that will encourage the production of new vehicles in the country and by the time we start producing new vehicles with time, it is will mean an indirect ban, you will not have anything to do with used vehicles again. Not that there is any policy banning used vehicles. What government did was to initiate a policy aim at making sure that any person that wants to go into automobile production will have the wherewithal to do that. It is just simply encouraging local production and with time if it is encouraged, the prices of vehicles will be cheap. If you can get a brand new car say for N800, 000 why will anybody want to buy tokunbo? Automatically, that will discourage importation of fairly used car. In my position and capacity we have gone ahead to challenge the government and they have made their position clear. So the federal government has not banned used vehicles and they don’t have any plan in the nearest future to ban it because we are not producing now.

What is your take on the recent review of tariff on imported used vehicles? 
Well I’m yet to study the tariff because I have not seen it. If government is increasing tariff at this time I don’t think it is acceptable to us. Because there are a lot of things the government should have done not increment of tariff. But in as much as they said they have increased the tariff now, I don’t think it is ok for us. It will encourage corruption from among customs officers because most of the importers will start looking for a short cut. Before now we are even pressing for this tariff to come down so that government will be generating more revenue. What government should focus on is standard. Let them maintain the standard that 15 years old car or more than will not be imported and not jacking up the price of the tariff. It is going to be to the disadvantage of the end users.

Are you saying this might prompt auto dealers to embrace smuggling of vehicles into the country again? 
Yes, that is my point. Because now, there is no new vehicle a Nigerian man can buy for N1million. By the time you bring in your own imported cars through approved routes and you pay the high tariff and somebody goes to cotonue and flies it in, they will start patronizing the person because Nigerian prefers that which is cheap. So it will encourage smuggling. They should have put these things in place gradually. If the minister made such a statement, I think he must have misunderstood the system. What we need now is to maintain a particular standard, when we say 10 or 15 we should maintain that and when the tariff is equally low it will encourage Nigerians to begin to buy locally made cars. There is nobody that does not like new things. You won’t see a brand new shirt in the market and go for tokunbo same is also applicable to new cars when the government make the environment conducive and put necessary measures in place and the production eventually kicks off, you don’t need to tell somebody to go buy a brand new car.

Has this increment in any way hiked the prices of vehicles? 
The prices of vehicles are still stable. I mean tokunbo vehicles, their prices have not gone up. The only thing that can possibly make it go a little bit high is the festive periods as a result of high demand but under normal circumstances the prices of vehicles are still normal. The prices of vehicles last month and now are still the same price. For instance last year, Sienna car 2007 model was sold for N3.5million but now with N3million you can get it. You can even get your cars cheaper now there is no tension at all. Everything is still stable. For now it has not affect anything even the prices of vehicles because nobody is complaining. As a matter of fact, in most cases, the value of vehicles is based on discretion by officers and that is what we are trying to sort out at the Customs Consultative level because it’s been done on value that is why you have the vehicle seat at the customs office.

The tariff increment according to the Minister of Trade and Investment Olusegun Aganga is to encourage local automotive manufacturers, what do think about this? 
It can’t encourage local production because the environment is not friendly yet. How many companies here in Nigeria have started to produce vehicles that we are going to buy? There is no competition yet. The government has not made the environment conducive enough for those automobile manufacturers to start doing that. How can you now say you jack up the tariff to encourage local production. Who and who is producing? That is only trying to encourage auto dealers to go back to our old ways of bringing in these cars.

Are you against local production? 
No no. What I’m saying is that they should have started; make the environment friendly for them because we don’t have one. Government should set the ball rolling first. Ajaokuta steel company is not yet functioning to an optimal level. How many car manufacturing companies do we have in Nigeria? That is the question we are asking. How many of them do we have in Lagos, East or in the North? Even the Pegout, Volkswagen companies have gone comatose. All these companies need to be resurrected, and then when they start producing, there won’t be much difference in the price of a new one and tokunbo. Competition will be healthy. Look at what happened to the telecomm industry. The government did not just fold Nitel overnight. I am not against boosting local production but I am saying it should be a gradual process.