The Burmese government has kick-started a scheme to swap old cars for a permit to import a new one, in what it claims to be an attempt to promote fuel efficiency and reduce emissions in the country.
The state-run New Light of Myanmar newspaper said today that 281 vehicles had already been handed over to Directorate of Roads Authority offices. The scheme has so far targeted cars that are more than 40 years old, likely to the relief of many Burmese who have long been forced to drive decrepit vehicles.
Rules stipulate that the new vehicles must be built no earlier than 1995, and cost under $US3,500.
Analysts suspect however that the plan is also an attempt to cool the rising kyat, with recent months seeing it become the best performing currency in Asia, appreciating in value by some 20 to 25 percent.
Not only would issuing the vehicle permits, which are usually heavily restricted, induce spending of the kyat and therefore bring more money into the market, but as economic analyst Aung Thu Nyein told DVB, it would require those who have saved in kyat, and done very well out if it, to convert the local currency into dollars, thereby lessening the kyat’s value.
The New Light of Myanmar cryptically states: “Depending on the overage vehicles, the directorate grants 10-30 per cent of relaxation on conditions of vehicle.”
The importation of vehicles into Burma is usually heavily controlled, with licenses for the import of valuable commodities used as part of the government’s system of patronage. Imprisoned DVB reporter Hla Hla Win was initially sentenced on charges of owning an illegal motorbike to seven years in jail.
The extent of patronage was highlighted by a recently leaked US cable dated from 2007 surrounding business tycoon Zaw Zaw, owner of the Max Myanmar Group and known to be close to the government.
“Instead of being paid for the construction work, Zaw Zaw received ten permits, valued at $180,000 each, to import new cars. (Note: Tay Za and Steven Law each received fifteen permits for work done in Nay Pyi Taw.)”
Zaw Zaw is highlighted as a key man in the import of vehicles, but other cronies have profited from the intentional bottleneck created by government licenses. The owner of Eden Group, Chit Khaing, was also paid by the government for work done in import licenses. A leaked cable claimed this led him to sell two new Merecedes Benz’s for $200,000 each.
However locals in Mandalay alleged that the swap deal had caused prices of old cars to surge as speculators saw a business opportunity in any government subsidy offered.
Little information was given about the practicalities of importation of vehicles or who would facilitate the system.
