The Lagos Chamber of Commerce and Industry (LCCI) yesterday commended the Federal Government’s decision to review the Automotive Policy.
Director-General of LCCI, Mr Muda Yusuf, gave the commendation in a statement in Lagos.
He said that the Automotive Policy which was established in 2013 by the last administration had failed to achieve the desired outcomes.
“It has adversely impacted the cost of doing business, welfare of the people, government revenue and the capacity of the economy to create jobs.
“The policy has also penalised stakeholders in the sector that are compliant with extant rules, taxes and tariffs applicable to the automobile sector.
“The cost of vehicles has risen beyond the reach of most citizens and corporate bodies; the impact has been largely negative with far reaching consequences,” he said.
The auto policy is an import substitution industrialisation strategy to reduce importation of vehicles and incentivise domestic vehicle assembly.
It has an import levy of 50 per cent on new cars and 25 per cent on used vehicles, asides the import duty of 20 per cent on new cars and 10 per cent on used vehicles.
He noted that import substitution strategy thrived in the context of high domestic value addition and within a framework that the economy could benefit from, saying the policy in its current form was not sustainable.
“Five years into the implementation of the auto policy not much progress has been made, even though over 50 Vehicle Assembly plants licenses have been issued.
“Total annual sales of new cars in 2017 and 2018 are estimated at less than 10,000 units.
“We have witnessed an increase in the prices of vehicles by 200 to 400 per cent, over the last five years, not many investors and the citizens have the capacity to pay these outrageous prices.
“These unintended consequences and collateral harmful effects on the economy and welfare of citizens are incalculable,” he said.
He urged government to reduce the import levy of 50 per cent on new vehicles to 15 per cent, and the import levy on used cars and commercial vehicles be reduced to 15 per cent from 25 per cent.
Yusuf said that tax concessions and waivers should be given to assembly plants, and Semi-Knocked Down (SKD) vehicles should attract five per cent duty to incentivise domestic vehicle assembly.