Slashing import duty on vehicles will increase unemployment - THE NATION
NOVEMBER 20, 2020
By AbdulGafar Alabelewe, Kaduna
Government’s plan to slash import duties and taxes on tractors, buses and passenger vehicles will increase unemployment, Peugeot Automobile Nigeria (PAN) Limited, said on Thursday.
The firm warned that the measure would be a disincentive to local plants.
PAN Chairman Ahmed Aliyu Wadada, urged the Federal Government to reverse the auto tariff reduction plan.
He warned that the measure would further harm the ailing automobile industry and the companies involved in accessories. It will also debilitate the local content, the steel and petrochemical industries, which are to serve the local automobile plants, which President Muhammadu Buhari has been doing everything to revive.
Wadada said: “We got a disturbing information by the media aide to the vice president that the Federal Government is slashing down import duties and other taxes on tractors, buses and passenger vehicles. This is of concern to us on behalf of other automobile plants, as the leading automobile plant in Nigeria.
“The Federal Government should take a look at the policy and reverse it for the betterment of Nigerians. Such policy somersault is injurious to the survival and development of the automobile industry. Instead of creating employment opportunities, it would create employment problems due to lowering of activities by automobile plants.
“What informed the position of government is to cushion the socio-economic problems of Nigeria but it should not be addressed on ad-hoc basis measure. Tackling the socio-economic problem of Nigeria should be better done in a more sustainable and permanent way. If you create employment opportunities for the citizenry, it is a more effective and better way of dealing with it.”
Wadada said the tariff cut could affect Nesbitt Investment Nigeria Limited (the firm that recently acquired PAN) projection to inject $150 million within three years, wondering with such policy in place, how will PAN survive? He said the policy, if implemented, will be a disincentive to Nesbitt Investment’s objective of injecting such money when the corridor of importation is wide open and the automobile companies will not be able to compete.
He said: “We are therefore calling on the Federal Government to reverse the policy,” adding that “government should resuscitate the steel and petrochemical industries which it has been struggling to do.
“We are doing our best to migrate from being an assembling plant to a manufacturing company, which is all encompassing. But if you open the corridor of importation, that would serve as disincentive to the automobile industry.”
“No automobile plant does CKD (Completely Knocked Down) because of the policy on ground, but our plan is to migrate from SKD (Semi Knockdown) to CKD. What encouraged Nesbitt Investment to acquire PAN from AMCON (Asset Management Company of Nigeria) was the business environment, the policy of President Buhari administration which before now was encouraging.”
In October 2013, the government announced an Automotive Industry Development Plan (NAIDP), which aimed to expand domestic vehicle manufacturing. The NAIDP imposes a 35 per cent levy on automobile imports, above the 35 per cent tariff, bringing to total duty of 70 per cent. The NAIDP allows companies that manufacture or assemble cars in the country to import one vehicle for every one manufactured locally.