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Import ban takes heavy toll on car dealers’ business, suggest partial lifting of ban for survival

August 7, 2023
in Business, Other Stories
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With about a little more than a week to go until the moratorium on vehicle import ends, car dealers in the country are anxiously awaiting the finance ministry’s decision, preferably in their favour. They claim that the import ban is taking a heavy toll on their business with some even planning to lay off their employees if the ban continues.

The government banned the import of vehicles in August last year as an economic recovery measure to save the country’s depleting foreign reserves. The ban on the import of vehicles is in effect until next Friday.

The government issued a directive in August last year announcing a ban on the import of vehicles for six months with an exception on utility vehicles, heavy earthmoving machines, agriculture machinery and vehicles for the use in tourism industry and public transportation such as taxis and buses.

The finance ministry issued another circular in February this year extending the ban by six more months. Vehicle dealers said it has been difficult for the companies to run the business the past year.

“Till now, the internal expenditure for the office has been met from selling parts for the cars. If the extension continues, then we will have a big problem. This is because our main income generation is from selling cars. Maintenance and selling parts only is not enough to meet our administrative expenditure. If it continues again, we have 30 employees here and we have no income. So, we might have sent them on leave without pay,” said Kuenley Tshering, marketing manager of Bhutan Hyundai Motors.

“Till now we survived because of our savings. Though we have huge expenses like rental, salary etc., we met our expenses from our savings. If the government continue the banned import of vehicles, we have to lay off some of our staff,” said Kumar Subba, general manager of Shingkhar Pvt Ltd, Kia Motors.

As vehicle dealers wait for the government’s next decision, some of them are suggesting a partial lifting of the ban as an alternative to save their dying business if it remains in place for some more time.

“From the government’s side, when they ban vehicle import, it should come with few relaxations. These days, a car has become a necessity. The public should have an opportunity to drive a car. That’s why we suggest that the government should differentiate and identify small cars and give people the opportunity to drive,” said Kuenley Tshering, marketing manager of Bhutan Hyundai Motors.

“Earlier because there were no restrictions, we could import any number of vehicles. After this ban on imports, we are facing difficulties due to our overhead expenses. Though the government is having funding problems, they may allow us to import at least 30 vehicles a month. Vehicles worth around Nu 1.2M to 1.5M and below. If they allow us to import that, then we can easily sustain,” said Kumar Subba.

Bhutan imported around 8,000 vehicles in 2021. The import of vehicles is one of the main factors leading to depleting foreign currency reserves.

When the government imposed the ban in August last year, Prime Minister Dr Lotay Tshering said the ban will save the country more than Nu 5bn in the year.

According to the Royal Monetary Authority’s monthly statistical bulletin, the foreign currency reserve has come down to a little over USD 500 M in May this year from almost USD 780 M last year.

Although no decision has been taken yet, the finance ministry says they will soon submit a proposal to the Cabinet and the decision will be taken only then.

Samten Dolkar

Edited by Phub Gyem

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