SILASH SUBBA
Thimphu
In a move to bolster the country’s foreign currency reserves, the Ministry of Finance (MoF) has extended the moratorium on vehicle imports for an additional six months. This decision, which came into effect on February 18th, 2024 to 17th August, 2024 is expected to have a continuous substantial impact on the automobile market.
During the extended moratorium period, only limited exceptions will be made for specific vehicle imports. The primary objective behind this extension is to ensure that Bhutan maintains a sufficient foreign currency reserve to cover the cost of essential imports for at least one year.
Utility vehicles, earthmoving machines, agriculture machinery, and also vehicles used for commercial purposes like promotion of tourism, buses, and taxis, both fossil and electric shall be exempt from this moratorium with some conditions. Those individuals who had plans to import vehicles during this period will now have to explore alternative options or patiently wait until the moratorium is lifted.
The impact of this moratorium extension on the vehicle imports market is likely to be significant. With a decrease in the availability of new vehicles, the demand for used cars is expected to rise. This shift in the market dynamics could potentially affect the pricing and availability of pre-owned vehicles.
While the moratorium is a necessary step to safeguard Bhutan’s foreign currency reserves and strengthen economic stability, it does present challenges for the automobile industry. “We understand and respect the government decision but our business has gone down by 70-80 percent,” says the employee of one of the automobile dealers in Thimphu.
He said, “It’s a private company, when there is no business, there is no money, and it’s hard for a company to survive and retain the employees and pay the utility bills.”
When it comes to electric vehicles, automobile dealers are urging the government to install more quick charging Stations, not just in urban areas, but also in rural areas. They also emphasize the importance of providing guidance and solutions for the proper disposal of batteries, as improper disposal can have detrimental effects on the environment. By addressing these concerns, it is believed that the increased availability of charging stations and proper battery disposal measures will not only boost the sales of electric vehicles but also reduce our reliance on petrol and other fossil fuels.
The automobile industry is eagerly anticipating government initiatives such as the introduction of new loan schemes or the reduction of EMI interest rates during the moratorium period. They said if govt could consult or discuss the issue with each representative of all the automobile dealers as they know the ground reality then there might be solutions that it would not affect as it is doing now, empty showrooms and few verge of close down.
“Only selling spare parts and giving car service is not enough to pay the loan, staff salary, and utility bills when business is already running into loss,” says another showroom employee and he also added, “If the government could come up with some quota where dealers could get a limited number of vehicles to sell, so we could meet up with the expenses.”
When asked about their perspective on starting of own local automobile industry, many dealers expressed their willingness to do so if they receive assistance from the government. They believe that doing this, would not only address the issue of foreign currency reserves but also minimize the need to import a large number of vehicles from abroad.
This would ultimately contribute to the growth and sustainability of the local industry. With the implementation of these measures, the government can foster a favourable environment for the automobile sector, ensuring its competitiveness and long-term viability. By supporting local manufacturers and encouraging domestic production, the government can bolster the economy and create employment opportunities.
The government and industry stakeholders must collaborate closely to devise effective strategies and think about starting the local automobile industry while addressing the challenges it faces. Together, they can pave the way for a thriving and self-sufficient automotive sector that contributes significantly to the country’s economic development.
The Ministry of Finance will closely monitor the impact of the moratorium extension on the vehicle imports sector. The government remains committed to effectively managing foreign currency reserves and ensuring the availability of essential imports to meet the country’s needs.
As Bhutan continues to navigate the effects of the extended moratorium on vehicle imports, industry stakeholders and consumers alike are eagerly awaiting further updates and developments.
