February 2, 2023, Thursday
Nepal 1:37:26 pm

PM positive in lifting ban on import of vehicles

Impact on economy and public transportation must be at focus

The Nepal Weekly
July 12, 2022

By Purna N. Ranjitkar l

Recently a delegation of vehicle business organization and representatives of vehicle business houses met Prime Minister Sher Bahadur Deuba. During the meeting organised on July 07, Prime Minister Deuba was positive about lifting the ban on the import of private vehicles. He also suggested vehicle importers reduce the growing trade deficit by setting up an electric vehicle assembling plant in Nepal.

Chairman of Nepal Automobile Dealers Association, talking to the PM, had requested to open the ban before the upcoming NADA Auto Expo which is taking place between August 23 to 28, 2022 (Bhadra 7 to 12, 2079). The 15th edition of the NADA Auto Show will showcase four-wheelers, two-wheelers, commercial vehicles, electric vehicles, electric two-wheelers, garage and auto equipment, lubricants and some others.

NADA chairman also elaborated that the share of automobiles in the country’s growing trade and balance of payments deficit was very small but its revenue contribution was very high.

Earlier on April 05 this year, Government of Nepal has put a ban on the import of vehicles for private use.

Nepal Rastra Bank (NRB), the central bank of the country on Monday called a meeting with chief executive officers commercial banks and directed them not to issue letter of credit for this business.

NRB adopted a policy to tighten a loop on imports saying balance of payments has gone extremely negative due to high imports, resulting in decline in exchange reserves.

Since July 2021, Nepal has seen a decline in forex reserves due to the surging imports, declining inflows of remittance and meagre earnings from tourism and exports.

By February 2022, the country’s gross forex reserves had decreased 17 per cent to USD 9.75 billion from USD 11.75 billion in mid-July 2021, according to central bank figures. The forex reserves are now only enough to sustain the import of goods and services for 6.7 months, below the central bank’s target for at least seven months.

Mainly, the reasons behind ban should be analysed thoroughly once again. If the move was wrong the authorities have to stop it and continue the provision as earlier. On the other hand, if it is still relevant, the authorities must keep it on. The Government must perform with view of benefit to the nation.

In case, if the ban was lifted, Nepal Government will open a way to collect sizable amount of money as taxes in different headings. For example if vehicles were imported at the value of 10 billion rupees, the Government would collect 24.8 billion rupees as differently named taxes. Similarly, in the long run, tax on fuel, lubricants, spareparts will also added to Government revenue. Likewise, yearly renewal tax would also be added. That means the sum of money Government will collect will be a huge in volume.

The vehicle importers who are also known as agents or dealers of the manufacturing companies for sales promotion in Nepal will get a good ratio of profit added in the selling price of the vehicles. Similarly,the business community who deals on lubricants, spare parts and repair and maintenance will also get the all season harvest for many years.

The users will be benefitted with new and comfortable vehicles for their use. As most of them are not the first time car buyers, they just dispose the presently using ones. So there will not be big difference to them. However, bank financing will once again get a big market opened for the safest and fastest lending.   

It looks like, there is nobody to lose. But, this ‘move’ will result negative impact to the national economy which may not be a major issue but a reason associated to the broader causes. Similarly, consumption on fossil fuel will be increased. Air pollution and release of GHG will also be increased. Road uses and traffic level will also be naturally expanded.

The move will not contribute to lower use of public transportation. However, help create jobs of driver to a few.

As a matter of fact, the move should head to increase public transportation by enhancing service quality, safety, security and punctuality. But the Government has not been eyes and ears open to this simple theory. It is not doing anything significant to improve the existing status of public transportation. So, main target should be modalities to bring into effect to turn public vehicles for all, not for only low income people.

Moreover, keeping in view the commitments of the country in the global forums and national policies on climate change, environment, replace fossil fuel by electricity, reduce the wider difference in trade, energizing national economy through promotion and development of renewable energy technologies the Government must not make any delay in shifting to electric vehicles for public transportation. Therefore, import of fossil fuel run vehicles must not be a choice any way. As such, what the Prime Minister said to business community being positive in lifting ban on import of vehicles must not be taken as per one’s own convenience.