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Bangladesh - November 18, 2021

Recondition car business at stake

Tariff inequality and excessive rates blamed

Golam Mostafa Jibon : The business of reconditioned cars imported into the country from abroad is facing crisis due to tariff inequality and excessive rates. The crisis is compounded by the fact that imports of various models of reconditioned cars from Japan are subject to tariffs of at least 127 per cent. The situation is such that in some cases the buyers have to buy reconditioned cars of different brands at a higher price than the newly imported cars. As a result, car importers and consumers are now facing trouble.
A reconditioned car is almost new car that has been used for a short time, originally known as a second-hand car. However, there is a huge demand for these vehicles in the country due to their quality and resale value.
According to the concerned sources, the amount of trade and commerce in this sector has decreased due to the ongoing corona situation for more than one and half year. There are additional tariffs on it. As a result, the price of reconditioned cars of different brands is falling more. Importers-traders and buyers of reconditioned cars are getting frustrated despite the huge demand in this situation. Besides, the business of Japanese reconditioned cars is also declining day by day.
Car traders said, the country began importing Japanese reconditioned cars in the post-independence period. Japanese reconditioned cars are very popular in Bangladesh due to their high selling price, quality and fuel efficiency. Besides, the price of those cars is relatively low andthose are suitablefor the consumers.
National Board of Revenue (NBR) officials said, the government is collecting around Tk 4,500 crore in revenue from reconditioned car selling every year. At present Mongla, the second seaport of the country, is being used for importing these vehicles.
According to the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida), reconditioned vehicles imported to Bangladesh are mainly imported from Japan. At least 40 to 45 models of private cars and different models of other cars are imported to Bangladesh from there. These imported vehicles are subject to a duty of 127 per cent on the actual price. In some cases, the tariff rate is up to 145 percent. As a result, the buyers have to buy reconditioned car paying about one and a half times more amount than the actual price.
Traders said, there is a precedent of imposing certain tariffs in many countries. There are also opportunities to impose specific duties on CC and motor vehicle types. Meanwhile, before announcing the budget for the current financial year, reconditioned car importers demanded the National Board of Revenue (NBR) to take steps to reduce the existing tariff inequality. They proposed for redistribution of depreciation rate for budget consideration, rearrangement of CC slab and supplementary duty rate, fossil fuel vehicle (supplementary duty), determining thedefinition of reconditioned vehicle, revision of vehicle age calculation system for depreciation and extraction of microbuses used for transporting large number of passengers and reduction of import tariff of public transports. However, in the end, the government did not take any step in this regard in the budget.
Abdul Haque, president of Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) and former director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI)said that the business of importing reconditioned cars in the country is facing difficulty due to various reasons. In some cases, these older cars have higher tariff rates than newer cars.
He said, “The price of a brand new car is determined on the basis of the price declared by the importer. In this process, there is a tendency of under-invoicing and tax evasion by creating various loopholes. The total tax on old cars is higher than new cars due to inequality. The government is losing a huge amount of revenue due to the alarming decline in sales of reconditioned cars due to high tariffs.”
Abdul Haque further said, “At present, the number of entrepreneurs in this sector is about 700. Hundreds of thousands of people are being employed in this sector from the import stage till it reaches the hands of the consumers. In order to resolve the current crisis, depreciation facility for five years in old cars and its 45 to 50 percent determination and non-discriminatory tariff policy will have to be implemented.”
“In order to transform the country into a middle-income country, it is important to eliminate this inequality,” he added.

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