Govt plans to raise car procurement prices amid pressures from ministries
Wednesday, 29 October 2008
Shakhawat Hossain
The finance ministry has taken a move to increase prices of cars purchased every year for government usage, after it was hard pressed by other ministries and divisions, officials said Monday.
The increase --- ranging from five to 23 per cent over the existing prices of five types of cars --- has been proposed although automobile markets are cooling off across the globe due to the worst financial meltdown since 1930s.
Japanese carmakers suffered some of the worst sales declines in the key US market in September, with Toyota off by 29.5 per cent and Nissan down 34.2 per cent, the Financial Times reported early this week.
In Japan another looming recession has dragged domestic car sales down to a 34-year low, said the report.
The finance ministry, however, paid little attention to the ongoing turmoil as it readjusted the rates upward, being pressed by ministries and divisions, officials said.
The new rates would cost the government an extra Tk 500 million if approved by the authorities, they said.
Ministries have argued that the existing rates --- fixed several years back --- don't reflect the reality, making it impossible for leading car distributors to participate in government tenders.
There is also pressure from top car dealers like Navana Limited, Pacific Motors Limited and state-owned Pragati Industries Limited to raise the rates, said a senior ministry official.
In letters to the ministries, the car dealers have said they lost interest to compete in public tenders as the existing government rates don't match real prices.
"We told the ministries that increased supplementary duty on new car imports in the current fiscal has pushed up import costs substantially," said a high official of Navana Limited, which sells Toyota in Bangladesh.
Supplementary duty on new car import shot up by 40 to 60 per cent in the duty structure for the current 2008-09 fiscal.
"The latest supplementary duty and increased import cost have discouraged almost all the new car dealers to compete in government tenders," said another car dealer.
The dealers, however, ruled out any fall of automobile prices in the local market despite the prevailing economic downturn in major global economies and falling steel and oil prices.
Bangladesh government is the biggest buyer of new cars in the country, purchasing nearly 1500 new cars a year through open tenders.
The number comprises more than 50 per cent of the local new car market, according to the dealers.
The finance ministry has taken a move to increase prices of cars purchased every year for government usage, after it was hard pressed by other ministries and divisions, officials said Monday.
The increase --- ranging from five to 23 per cent over the existing prices of five types of cars --- has been proposed although automobile markets are cooling off across the globe due to the worst financial meltdown since 1930s.
Japanese carmakers suffered some of the worst sales declines in the key US market in September, with Toyota off by 29.5 per cent and Nissan down 34.2 per cent, the Financial Times reported early this week.
In Japan another looming recession has dragged domestic car sales down to a 34-year low, said the report.
The finance ministry, however, paid little attention to the ongoing turmoil as it readjusted the rates upward, being pressed by ministries and divisions, officials said.
The new rates would cost the government an extra Tk 500 million if approved by the authorities, they said.
Ministries have argued that the existing rates --- fixed several years back --- don't reflect the reality, making it impossible for leading car distributors to participate in government tenders.
There is also pressure from top car dealers like Navana Limited, Pacific Motors Limited and state-owned Pragati Industries Limited to raise the rates, said a senior ministry official.
In letters to the ministries, the car dealers have said they lost interest to compete in public tenders as the existing government rates don't match real prices.
"We told the ministries that increased supplementary duty on new car imports in the current fiscal has pushed up import costs substantially," said a high official of Navana Limited, which sells Toyota in Bangladesh.
Supplementary duty on new car import shot up by 40 to 60 per cent in the duty structure for the current 2008-09 fiscal.
"The latest supplementary duty and increased import cost have discouraged almost all the new car dealers to compete in government tenders," said another car dealer.
The dealers, however, ruled out any fall of automobile prices in the local market despite the prevailing economic downturn in major global economies and falling steel and oil prices.
Bangladesh government is the biggest buyer of new cars in the country, purchasing nearly 1500 new cars a year through open tenders.
The number comprises more than 50 per cent of the local new car market, according to the dealers.