I am talking about everybody’s second favourite subject here; private cars. Myanmar citizens and residents pay between 175% – 200% of a vehicle OMV (Open Market Value) in import taxes, when getting a car into Myanmar. For a car with an OMV of $30,000 (Say, a fully loaded Camry), the locals ended up paying close to $90,000 to ride that saloon brand new.
Foreign consulates and embassy staff pay no such duties. They can buy the car right now at $30,000, import into Myanmar and enjoy a brand new vehicle. The issue is what happened when the diplomats leave at the end of their terms? And we are saying the Myanmar government is subsidising them at the expense of the country and local citizens.
There are two alternatives; for disposal one is simple, selling the used car to anyone within the diplomatic community. The other is more complex, registering the car for a black number plate (non-diplomatic use).
The latter process first require approval from MOFA. It is normally given if the price is reasonable and the diplomat has been in the country for around three years. The second checkpoint is a little more complicated. It has to go through Ka Nya Na aka Road Transport Authority (RTA), the governing body responsible for road transportation and vehicle registration. The purpose to compute the tax required to be paid in relation to vehicle model, type and age, for re-registration.
Even though the first checkpoint may not necessary be prone to misconduct, the person in charge can still abuse his authority by denying or approving the transfer or sale to a local. The second checkpoint is where the risk of corruption is high. The assessment of tax is in the hands of a senior RTA official and as such, dealers can pay him handsomely to lower the tax bill measured in million of Kyats. MI has spoken to one such dealer. He acknowledged paying the officials in millions prior and his willingness to bribe 10 million Kyats, if he can lower his tax assessment by 20 million. The tax quantum is not uncommon for even ordinary cars. The variations can even be wider if the cars are top of the range luxury cars such as Range Rovers or Mercedes S Classes.
With such potential profits at the dealers end, he is able to pay the diplomatic staff more. Some of the diplomatic staff that MI has spoken to said, owning diplomatic cars is Myanmar is a once in a life time opportunity. They never lose money. In fact, they will make profits out of that car after riding them comfortably for 3 years. They said they will never have that opportunity in other parts of the world.
How RTA taxes play a role in determining dealers and diplomats profitability…
| Exchange rate @4500 | Kyats (millions) | $ | Dealer Net Revenue | Dealer Net Profit |
|---|---|---|---|---|
| Market Price of a three year old Camry now | 200 | 44,444 | ||
| RTA Taxes (case 1) | 20 | 4,444 | 40,000 | 7,000 |
| RTA Taxes (case 2) | 30 | 6,666 | 37,778 | 4,778 |
| Dealer payment to diplomat for a 3 years old car | 33,000 | |||
| Original cost to the diplomat | 30,000 | |||
| Diplomat profit, after using the car free for 3 years | 3,000 | |||
This loophole has to be shut by making the system of converting white plats to black plates more transparent or making sure that the diplomatic cars (white plates) can only be sold among the diplomatic community or to the government. Else government and the people would continue to suffer at the benefits of private enterprise, a few bad apples of civil servants and the whole diplomatic community.
