Used car imports bleed economy
Zvamaida Murwira Senior Reporter
Finance Minister Patrick Chinamasa has expressed misgivings on allowing the unregulated importation of second-hand vehicles, saying the country was losing a lot of foreign currency buying junk.Zimbabweans imported 206 519 cars worth over US$606 million between January and November last year, according to statistics from the Zimbabwe National Statistics Agency.
This translated to about US$250 million in import duty accruing to the Government.
Minister Chinamasa made known his reservations at a consultative meeting with tourism industry stakeholders and Tourism and Hospitality Industry Minister Walter Mzembi last week.
The meeting was to review Government’s introduction of Value Added Tax on accommodation for foreigners, a policy the tourism sector feels adversely affects its business as witnessed by cancellation of bookings.
The Government tried to ban second-hand vehicle imports four years ago, but backtracked following an outcry from local car dealers and the general public.
The sentiment was, it would be prudent to first capacitate Willowvale Mazda Motor Industries to satisfy local demand.
According to the Industrial Development Corporation, WMMI needs US$4 million to re-finance a line of credit from Itochu, Japan for the supply of completely knocked down kits for various Mazda models.
And if the US$15 million parliamentarians need to import vehicles is directed to WMMI, this figure can be cleared easily and the company can go into production and mop up some of the money being wasted on grey imports.
At the consultative meeting, Mr Vengai Nhau — a tour operator and professional hunter — had asked that those in the tourism sector be allowed to import second-hand vehicles duty-free as they recovered from the economic recession the country experienced in recent years.
In response, Minister Chinamasa said this was not possible, and he in fact had reservations on importation of second-hand vehicles.
“Already I have misgivings about the importation of second-hand vehicles. A lot of them are junk. The United States dollar is precious currency and what is being brought here is junk; and to spend our hard-earned foreign currency on that is a bit unfair,” said Minister Chinamasa.
“You know the problem with us is, because we are using US dollar we don’t regard it as foreign currency anymore, but it’s hard-earned. We should not throw it away to buy junk.”
Former president of the Confederation of Zimbabwe Industries Mr Kumbirai Katsande said Government should lead by example by compelling State entities to buy locally, for instance by supporting WMMI.
“They are using taxes created locally to buy vehicles from foreign countries. Why create an institution like Willowvale Mazda Motor Industry that you would shun? There is need to strike a balance between what the local industry can produce and allow the gap that would resultantly be created and allow imports to cover that vacuum,” said Mr Katsande.
He said WMMI was now a white elephant because most people and institutions, including Government departments, ministers and legislators were importing cars.
A manager with a major car dealership said there was need to introduce policies that protected local industry to allow it to adequately supply the market.
“We need credit lines so that our local car industry can be resuscitated. The capacity is there but what is lacking is the necessary supporting policy measures that include funding,” he said.
Four years ago Government promulgated a legal instrument banning importation of vehicles that were more than five-years-old.
This triggered a public backlash from car dealers who said this would throw them out of business, and from people who said it was cheaper to import than to buy from WMMI.
Analysts warned that such a policy would see Government losing millions of US dollars in import duty.
Late last year, Hurungwe West MP Cde Temba Mliswa (Zanu-PF) criticised Government in the National Assembly for buying state-of-the-art vehicles like Mercedes-Benz and Ford Ranger models from countries that were hostile to Zimbabwe.
He said Government was supporting the economies of countries that had imposed sanctions on the nation instead of reviving WMMI..